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Financing may be tallest hurdle for Africa ports

Time:2016-04-10 Publisher:glafamily Num:7115

ACCRA, Ghana — African countries face the daunting challenge of securing continuous investment and project finance solutions to bring port infrastructure and supply chain networks up to par with those of the rest of the world.

Despite ongoing investment in port projects and related supply chain infrastructure, there remains a very large efficiency gap between port and supply chain operations on the continent and those of other regions, according to Ghana’s Minister of Transport Franklin Fiavi Fifi Kwetey.

“Africa currently trails other regions in terms of infrastructure quality and supply chain efficiency and this suppresses growth in our economic activity,” the minister told delegates at an intermodal conference here in the country’s capital.

A modernized regulatory regime that supports and facilitates private sector investment is crucial and has been prioritized by the government to help secure the required level of investment, the minister said.

“Our intermodal transport system is inadequate and additional investment is needed in port infrastructure and hinterland link systems including roads, railways and inland waterways.”

Close to 90 percent of goods in Ghana are currently transported by road. The poor condition of roads and widespread corruption in the form of informal payments and expensive risk mitigation efforts make inland transportation costs prohibitively high. Combined with a lack of harmonization in standards and permits, and cross-border customs requirements such as documentation, this severely limits the potential of the country to act as an effective seaborne trade gateway for landlocked neighboring countries such as Burkina Faso, Niger and Chad.

Ghana’s primary port at Tema, which handles 85 percent of the country’s seaborne trade, is being expanded to three times its currently capacity. The $1.5 billion joint investment by APM Terminals, French firm Bolloré Africa Logistics and the Ghana Ports and Harbour Authority will add four deep-sea berths with an ultimate annual capacity of 3.5 million 20-foot-equivalent units.

A six-lane highway connecting Tema with Accra is also being constructed to help ease the flow of cargoes to and from the port. It is stage one in the development of efficient transport corridors to support trade growth in Ghana and neighboring countries.

“This will enable Ghana’s trade for the coming decades, and support more efficient flows of exports as well as imports”, said Maersk Group CEO Nils S. in a recent visit to the country, his second visit in less than two years. Maersk Line and Safmarine, a Maersk unit, between them currently handle about one third of Ghana’s exports.

“Ghana is important to the Maersk Group. Ghana represents 5 percent of Maersk Group’s business in Africa, which is quite a lot and it’s a country where we want to invest more.”

A $400 million expansion project at the western Ghanaian port of Takoradi is also underway. The size and capacity of the port is to be effectively doubled with the addition of new dry bulk, liquid, container and roll-on, roll-off terminals as well as an oil offshore supply base, according to Paul van Eulem, a director with Netherlands-based Maritime & Transport Business Solutions, which is helping to structure the public private partnership arrangement and develop the tender processes for the project.

The initial expansion works are due for completion in the second half of 2017 and the tender for the first terminal, the dry bulk terminal, will be released within the coming weeks, van Eulem said.

An Eastern Railway Corridor project aimed at relieving congestion at Takoradi and Tema and connecting the ports with northern Ghana is due to commence this year, said Kwetey.

With multiple West African countries in broadly similar positions as Ghana in terms of seeking funding to develop port and supply chain infrastructure, there is significant competitive pressure to secure funding, said Richard Anamoo, director general of GPHA.

“We used to rely on public sector funding for infrastructure developments. But the requirements are too large and there are so many demands on the public budget that we can no longer do that.”

According to Anamoo, as well as challenges quite specific to Ghana and much of Sub-Saharan Africa generally, such as poor basic infrastructure, security and corruption problems, the country also faces normal industry challenges seen in other parts of the world, including dealing with the influx of larger vessels and new and changing regulatory requirements.

“We now have the container weight verification rule, which will be mandatory from July 1. We are looking at how to handle it, but I am not sure that we will be able to comply with the rule by the deadline of July 1.”

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