Co-operation is key to unlocking Africa’s trade potential

04 May Co-operation is key to unlocking Africa’s trade potential

Andre Didace Ciseau, Secretary General, Port Management Association of Eastern & Southern Africa, discusses the need for development of proper logistics corridors in Africa and the importance of collaboration between African nations.

Q: How important is the continued development of Africa’s ports?

Sub-Saharan Africa is expected to have an average annual economic growth rate of 6 percent for the next 30 years, which will trigger an explosion in trade from 513 million metric tons in 2010 to 3.6 billion metric tons by 2040. The region’s population is expected to grow from approximately 1 billion to 1.8 billion over the same period. This will have a major impact on the demand for logistic corridors and infrastructure within eastern and southern Africa. The anticipated high growth in trade will place significant pressure on ports and require the development of transshipment hubs.

Establishing an efficient port requires investment as much as it does a key location.  The busiest ports in Africa have good proximity to established markets. We believe that at least one hub port will emerge in both western and eastern Africa. However, development of transshipment hubs can only happen when modern trade facilitation measures are implemented, we are solidly connected to the hinterland and we have built up efficient facilities.

Q: How can government’s finance the required revamp of Africa’s logistics infrastructure?

Financing for infrastructure in Africa has historically come from the outside, and local funding remains a key challenge. Ports are expensive to develop. Necessary items such as cranes are costly and are not generally fabricated in Africa. Local banks are often not able to supply the types of loans that are necessary.

African nations need to work as a region and support each other rather than compete. Collaboration can ease the pressure on governments and spur development that will benefit all parties. However, there must be strong political will and educated leaders to move in this direction. Repeatedly, the lack of political will for a regional push is absent. Issues of national debt and sovereignty have taken the center stage until now.

Co-operation between public and private sectors is also necessary for the continent’s infrastructure backlog to be cleared. Private participation in infrastructure development in Africa has historically been a sensitive issue. Infrastructure is perceived as a national asset and the notion that it is operated by private investors has been difficult to swallow. However, is necessary that we form local consortia that includes minority shareholding by private investors.

Africa is the next frontier for potential investors. The democratic development of the continent has given people the freedom to express themselves and monitor and question existing frameworks. Africa is striving to improve the way of doing business, increase transparency and reduce corruption–and investors are noticing.

Q: What do African’s governments need to do to foster growth in trade?

Sub-Saharan Africa has the lowest intra-regional trade in the world. Commerce between nations in the continent is estimated to be only 10 percent of current trade operations, compared to 40 percent in North America and 60 percent in Western Europe. Trade among African nations is key to fostering growth and development.

To unlock this potential, countries will have to focus more on the modernization of trade procedures through soft infrastructure, such as information and communications technologies and human resources. Trade barriers such as excessive document requirements and red tape hold back growth. Implementing a single-window system and creating a one-stop joined border post for land-based movement will harmonize procedures and greatly reduce the cost of moving goods across borders.

Luckily, the pandemic created a better understanding of all levels of the logistics chain by port administrations, governments and involved parties. It also created opportunities to build more resilient systems to ensure continued functioning in times of crisis.