Future of Port Industry in Eastern & Southern Africa

2nd Africa Ports & Rail Summit, 2-3 December, Dar es Salaam, Tanzania

Ms Ms Ms Ms NoziphoNoziphoNoziphoNozipho Mdawe Mdawe Mdawe Mdawe –––– Secretary General, PMAESASecretary General, PMAESASecretary General, PMAESASecretary General, PMAESA

If one does not know to which port

one is sailing, no wind is favorable.

Lucius Annaeus Seneca

Agenda

• PMAESA Introduction

• Current situation – logistics infrastructure development

• Priorities for African Ports

• Challenges – fundamental, economic, social and environmental

• Blue economy

• Short term opportunities

• Value chain efficiency

• Way forward

What is the Global Picture?

• Global Economic Downturn

• Infrastructure development in Africa

• Cost of logistics is still high despite treaties/agreements

• Presence of terrorists and piracy

• Instability in Government

• High rate of unemployment

• High rate of population growth

Population of the World and Major Areas, 2015, 2030, 2050 & 2100, according to the medium-variant projection

Population Growth in EAC

Partner Partner Partner Partner

State/ State/ State/ State/

YearsYearsYearsYears

2000200020002000 2001200120012001 2002200220022002 2003200320032003 2004200420042004 2005200520052005 2006200620062006 2007200720072007 2008200820082008 2009200920092009 2010201020102010 2011201120112011 2015201520152015

Burundi 6,7 6,8 7,0 7,2 7,4 8,0 8,0 8,0 8,1 8,2 8,4 8,7 11,2

Tanzania 32,8 33,9 34,4 35,3 36,3 37,3 38,0 39,4 40,7 41,9 43,9 44,5 51,5

Uganda 22,6 23,3 24,1 24,9 25,7 26,5 27,6 28,6 29,6 30,7 31,8 32,9 41,5

Kenya 30,4 31,3 32,2 33,2 34,2 35,1 36,1 37,2 38,3 38,6 38,6 38,6 47,4

Rwanda- -

8,1 8,3 8,6 8,8 9,1 9,3 9,8 10,1 10,4 10,7 12,7

EAST EAST EAST EAST

AFRICAAFRICAAFRICAAFRICA105,8105,8105,8105,8 108,9108,9108,9108,9 112,2112,2112,2112,2 115,7115,7115,7115,7 118,8118,8118,8118,8 122,5122,5122,5122,5 126,5126,5126,5126,5 129,5129,5129,5129,5 133,1133,1133,1133,1 135,4135,4135,4135,4 164,3164,3164,3164,3

Angola

Burundi

Djibouti

Eritrea

Ethiopia

Kenya

Madagascar

Malawi

Mauritius

Mozambique

Namibia

Rwanda

Seychelles

Somalia

South Africa

South Sudan

Sudan

Tanzania

Zambia

Zanzibar

Zimbabwe

PMAESA MembersPMAESA MembersPMAESA MembersPMAESA Members

Angola

Benin

Cameroon

Cape Verde

Congo

Equatorial Guinea

Gabon

Gambia

Ghana

Guinea (Conakry)

Guinea Bissau

Ivory Coast

Liberia

Mauritania

Nigeria

Sao Tome & Principe

Senegal

Sierra Leone

Togo

PMAWCA MembersPMAWCA MembersPMAWCA MembersPMAWCA Members

Algeria

Egypt

Libya

Mauritania

UAPNA MembersUAPNA MembersUAPNA MembersUAPNA Members

Morocco

Sudan

Tunisia

Western Sahara

Legend:Legend:Legend:Legend:

PMAESA Region

PMAWCA Region

UAPNA Region

Darkened areas imply

membership to 2 associations

PanPanPanPan----African Association for Port Cooperation (PAPC)African Association for Port Cooperation (PAPC)African Association for Port Cooperation (PAPC)African Association for Port Cooperation (PAPC)

PMAESA Introduction

• Governance Body

• Objectives:• Strengthen relations among stakeholders • Promote regional cooperation and integration• Platform for exchange of information, ideas and benchmark• Works towards improving conditions of operation and management of ports in its region of

coverage with a view to enhance their productivity• Maintain relations with other port authorities or associations, regional and international

organizations and governments of the region to hold discussions on matters of common interest• Co-ordination and facilitation of activities ranging from safety and protection of the marine

environment, transit transport, port operations issues such as port statistics, the public sector-private sector partnership, communication, the cruise industry and regional cooperation are PMAESA's main areas of activity

• 2050 AFRICA MARITIME INTEGRATED STRATEGY• BLUE ECONOMY• MARITIME WOMEN DEVELOPMENT

PMAESA Introduction

• Role of PMAESA• Strengthen and enhance relations in all sectors relevant and influential to the

maritime industry

• Promoting regional cooperation and subsequently regional integration

• Influence policy framework

• Create a platform for exchange of knowledge, ideas and information

• Keep and abreast and share benchmark through research and development

• Works towards improving conditions of operation and management of ports in its region of coverage with a view to enhance their productivity

• Maritime safety and protection of the marine environment, transit transport, port

• Influence public sector-private sector partnership, communication, t

• Promotion of the cruise industry

• Facilitate training and development initiatives

Development of Ports is considered the life line of most economies

Ports are critical economic gateways, provide employment and are key points of entry into a country - Chief Executive Officer, Namport, Mr. Bisey Uirab.

Ports play an important role facilitating EU's external trade (90% of the total, in terms of weight) and internal market exchanges (40% of the total). Ports provide a service to many other industrial sectors & are nodal points of inter-modal logistic chains of key importance for the sustainable growth of transport in Europe. Ports also generate jobs. – EU Press Release

Ports are also important for the support of economic activities in the hinterland since they act as a crucial connection between sea and land transport. - Review on the Role of Ports in the Development of a Nation

Current Picture• The continent has shown strong economic growth in recent years

• Highlights how infrastructure development has not kept pace, placing an increasing strain on existing assets.

• Investment in African infrastructure has risen sharply and some notable projects have been completed.

• However despite the impressive flow of projects and policy reforms, • The continent’s infrastructure development has failed to keep up with the average annual GDP growth of 5%. • The development of so called 'soft' infrastructure, such as the legal and regulatory frameworks that enable

physical infrastructure to be built and maintained, has also fallen short of requirements.

• To overcome these continent-wide infrastructure deficits, • US $93 billion will be required annually, with only around half of that amount currently available. • e.g. Sub-Saharan Africa currently spends around $6.8 billion per year on paving roads, when the figure needs

to be closer to $10 billion.

• PPPs are an increasingly popular model to fund projects and the regulatory frameworks supporting them are improving.

• Resource-rich countries are using their commodities as leverage to obtain infrastructure investment.

The African Port System faces several fundamental challenges• Major Traffic Growth

• Port container traffic demand is expected to quadruple by 2020 and has already triggered the need for more than US$9.5 billion in terminal developments. Is this enough?

• Capacity limitations• Struggle to adjust to the ever-larger ships that container lines have deployed

over the years.

• Shipping lines have serious concerns about condition, capability and future reliability of ports, road and rail services and infrastructure.

• What are the infrastructure expansion priorities and how can African ports attract private sector funding?

The African Port System faces several fundamental challenges

• Port customers demand competitive service and prices• Strong competition exists among global supply chains to attract customers,

• Transportation is increasingly important in buying decisions.

• How can African ports improve their competitive position to retain existing business and attract new business?

• Lack of coastal trading impacting on trade facilitation

• Low volume of export cargo in African countries which leads to high cost of shipping and thus is detrimental to intra-regional trade and inland infrastructure development

Economic, environmental and social challenges facing ports

• Growing and concentrated traffic volumes brought about by ever increasing ships size

• National budget constraints limiting the possibilities of public funding for transport infrastructure

• Volatility in energy prices, the new energy landscape and the transition to alternative fuels

• Increasing societal and environmental pressure

• Potential changes in shipping routes from new or enlarged or new international passage ways

African Ports Priorities

• Response to growing city populations• Large markets not only demand more freight but generate more traffic

• Congestion (Vessels, Trucks etc.) and conflict with passengers increasing in metro areas around the port

• Increased pressure on infrastructure capacity• Ability to accommodate larger vessels

• Alignment of port capacity with that of the corridors

• Investment in technology

• Preservation of the environmental • Increasing environmental awareness

• The freight and logistics industry is a major contributor to CO2 emissions and has a significant impact on local air quality

African Ports Priorities

• Development of future competence• Sea time training

• Training Programs particularly in port supporting services marine pilots, port engineers, crane drivers etc.

• Increasing compliance requirements• Safety and environmental regulation require improved monitoring and

management

• Security of the ports and accountability

• Response to piracy and terrorism• Security measures require increased information about cargo, its movement

and history

Harness the Blue Economy• “The Blue Economy conceptualizes oceans as ‘Development Spaces’…”

• It is marine-based economic development • Leading to improved human well-being and social equity, while significantly reducing environmental

risks and ecological scarcities.

• Reframing the oceans as “Development Spaces” that are subject to spatial planning

• Integrated planning to integrate “conservation, sustainable use, oil and mineral wealth extraction, bio-prospecting, sustainable energy production and marine transport”

• Incorporating the value of the oceans into economic decision-making

• Establishing policies that favor low-carbon, resource-efficient, and socially inclusive development (mirroring the Green Economy framework in this regard)

• Prioritizing the use of the seas to benefit people, alleviate poverty, generate employment, and promote equity

• Decoupling socio-economic development from environmental degradation

• Improving relevant international law and governance mechanismsfast, cost effective and reliable transport solution.

• Source - SIDS Blue Economy Concept Paper

Harness the Blue Economy

1. Human needs• Food, water, energy, materials, recreation and health, as well as jobs, livelihoods,

community wellbeing, and political stability

2. Ecosystem sustainability • Ensuring that ecosystem goods and services are harvested, focus on improvement, of

ecosystem biodiversity and productivity

3. A systems approach• Inter-linkages between and among different economic activities and ecosystems

4. Sustainability standards • Adoption of global standards and guidelines for sustainable business operations,

investment, and financing, and extending or refining these where necessary“The Blue Economy conceptualizes oceans as ‘Development Spaces’…”

• Source - SIDS Blue Economy Concept Paper

Blue Economy – Examples:

• Infrastructure for energy imports such as fuel and liquefied natural gas, cruise liner facilities at ports, waterfront and marina, aquaculture farms and fishing harbours.

• A marine supply base for offshore and gas industry in ports and facilities to provide ship and oil rig repair services.

• Building port capacity to accommodate mining vessels and their repair of the marine mineral mining industry.

• Building tugs and ships

Driving forces of future growth & Emerging Short term Opportunities

• Ship Building & Repairs

• Passenger Cruise Liners facilities

• Bunkering & Bunkers can also be provided by a bunker barge at all berths

• Container Freight Stations

• Road & Rail infrastructure construction

• Dry ports

• Embrace logistics corridor concept

The importance of value chain efficiency to enable effective port solutions

• Decisions and/or inefficiencies of one actor of the chain impact all the others

• It is imperative to get rid of the silo mentality

The importance of value chain efficiency to enable effective port solutions

Examples:

• PEV Crisis (2008) in Kenya dealt significant economic and social repercussions in the East African Region

• In 2010 piracy attacks damaged the tourism industry, caused losses in revenues for economies and the costs “loss of use” and “loss of man-hours” while ships and their crew are held hostage are also significant.

• Terrorism remains a concern too, particularly since there are a number of locations that are particularly crucial to the smooth flow of supply chains – and therefore potentially most vulnerable to attack.

Investments in Freight Rail

• Transnet’s MDS allocates a huge chunk of investment to rail. It is SouthAfrica's ambition to accommodate the fifth-largest railway system in the world by 2019.

• LAPPSET Corridor will feature SGR which will ease the heavy burden on road transport on this Corridor.

• Ethio-Djibouti Railway project is expected to play a significant role in Ethiopia's import-export trade and as well as in the economic cooperation between neighbours, contributing to regional integration

• TAZARA gets investment lifeline from China to buy locomotives and rolling stock

Future of Freight Rail

• Increased tonnage by rail can improve a country's overall efficiency

• Transforming rail infrastructure will have a direct impact on a country's key industries (mining).

• Inherent efficiency, be it in land usage or energy consumption or cost of moving a ton mile of freight.

• Railroads suffered in the past because they were, and remain, relatively less convenient than trucks. But in an era of scarcity and pressure on costs, there will be a growing focus on efficiency.

Way Forward

• Port development plans should include the logistics corridors

• Remodel/restructure ownership of ports – PPP models of ownership

• Increase awareness on environmental concerns: African port operators must look beyond the terminal gates to ensure future sustainability of their operations and the local economy, including the health risks that come with needed port expansions

• Sensitize shippers on standardization of products (exports)

• What has PMAESA done

• The Conference will contribute to the development of a port focused strategy for its inputs

in terms of investment in projects.

• The thrust is to gain in-depth understanding of the Blue Economy concept, envisaged

initiatives and regulatory issues that may impact on the ports as organizations.

www.pmaesaconferences.org