Nigeria faces tall order to become hub of seaports in Africa
Abidjan, Tema, Lagos ports in close ranks in West Africa
Nigeria’s mission to become the hub of port of destination in the Sub-Saharan Africa is currently under intense pressure as four other countries are vying for the same position in the continent.
The countries are: Durban (South Africa), Abidjan (Cote d’Ivoire) and Mombasa (Kenya), Tema (Ghana). They have highlighted serious investment on Greenfield ports and at advanced stage in the development of existing seaports.
Factors that determine who will eventually emerge the hub status was highlighted in a recent report by PricewaterhouseCoopers (PwC) titled: ‘Strengthening Africa’s gateways to trade’. The report rated Nigeria behind four other countries, which appears to be growing faster in Africa.
The report picked only port of Durban as a hub at the moment, while Nigeria, Benin Republic and Ghana are in tight race to become hub in West Africa.
Hub ports are large regional container (or break-bulk) ports with high volumes (greater than 2 million TEUs per annum) and direct shipments carried by very large vessels. In addition to serving a large hinterland, hubs have a predominance of transshipment volume and terminals that can load containers via a stack from one ship to another
PwC estimates that $2.2 billion could be saved yearly in logistics costs if the average throughput at the major ports in Sub Saharan Africa is doubled.
“This is because the unit cost of transferring cargo through a port rapidly reduces as the volume of traffic increases. This has led to a stronger focus on hub and feeder ports for containers and a focus on enhancing scale for commodity bulk terminals in many other parts of the world,” it stated.
The Federal Government had declared its commitment to make Nigerian maritime a hub in the Sub Saharan Africa. But the PwC report showed that, “based on the degree of port centrality (shipping liner connectivity), the amount of trade passing through a port, and the size of the hinterland, Durban (South Africa), Abidjan (Cote d’Ivoire) and Mombasa (Kenya) are most likely to ultimately emerge as the major hubs in Southern Africa, West Africa and East Africa, respectively.
“The closest rivals to these ports are Lagos-Apapa (Nigeria) and Tema (Ghana) as alternatives to Abidjan, and Djibouti and to a lesser extent Dar es Salaam to Mombasa. Due to their better operational performance, both Lagos-Apapa and Tema pose significant challenges to Abidjan’s emergence as a hub, which might eventually be decided on factors such as on political stability, port performance and quality of inland connections,” it stated.
According to PwC, the emergence of the identified ports as hubs has been constrained by three major factors such as: hinterland corridors’ inability to have more than one truly competitive port outlet; lack of change in the maritime trade routes running up and down the east and west coast of Africa, which currently don’t feed from priority hub ports; and investment spend is not flowing to the dominant ports, but is being focussed instead on supporting smaller, less-viable port facilities.
“This is not to say that hub ports should always be prioritised for investment, but rather that the type of investment should focus on the ports’ inherent function, including deepening of channels and transshipment facilities.
“Although it may be tempting to leave the emergence of hub ports entirely to market forces at the one extreme, or government planning at the other, taking the wrong investment decisions might mean that hubs outside Sub Saharan Africa emerge as the preferred nodes,” it stated.
Durban is by far the largest port in Southern Africa, Abidjan in West Africa and Mombasa in East Africa. Of these large ports, Abidjan’s likelihood of developing into a major regional hub port is the most vulnerable given the likely future competition from North African (Tangier) and Mediterranean ports.
PwC noted that the shipping lines choose far-flung hubs (such as China) not so much because Africa does not have any, but because African ports are less efficient. 50 per cent of ports operators in West Africa strongly agree that they would like to expand their port facilities.
PwC Africa Transport and Logistics Leader, Dr. Andrew Shaw, said: “Trade competitiveness requires governments and key stakeholders to see ports as facilitators of trade and integrators in the logistics supply chain. Efficient ports can make countries and regions more competitive and thus improve their growth prospects. The reliability and efficiency of each port terminal, including minimising delay to shippers, is critical to enhancing future trade facilitation.”
Partner PwC Nigeria, Ian Arufor, said: “International trade is a primary vehicle for the international movement of capital to developing nations, which ultimately drives economic development.
“As the larger West African economies embark upon, or seek to accelerate, the implementation of their economic development drives, new and / or expanded port access and capabilities are increasingly recognised as key tenets of these programs. This is exemplified by the number of active port development and expansion projects in Nigeria and Ghana.”
Partner, Government & Public Sector PwC Kenya, Kuria Muchiru, said: “Efficient port operations in Mombasa and Dar es Salaam are critical to increased throughput and evacuation of cargo. Investments in rail are seen as a major step towards contributing to improved performance. Developments in multimodal operations and master planning of the ports to keep up to date with increasing throughput, which in turn fuels economic growth are critical to efficiency”.