Africa’s port sector continues to attract private funding with $15bn invested between 2005 and 2019. Despite these numbers, the financial needs of the continent remain significant. ‘Smart’ investment remains the most effective solution for the long term, to allow for more significant investment and the development of lasting regional or continental hubs.
Infrastructure holds the key to Africa’s development. The ports, which represent 80% of trade on the continent, play a key role in the African economy and for goods in transit. However in the ‘crazy race’ to obtain shares in continental hubs, states are starting projects that are so ambitious that they risk having infrastructure that simply cannot cope with the priority needs that would determine the success of these initiatives (routes, storage capacity, strategic positioning etc.)
Indeed according to the ‘Ports in Africa – accelerating change’ report published in October 2020 by Africa CEO Forum and Okan consultants the ‘war for hubs’ and the ‘race for investment’ is raging today. According to the study, only ‘four to five’ ports would actually qualify as such: two in north, one in the west and two in East Africa as well as the ports of Tanger Med in the north west, Port Said in the north east and Durban to the south, which are already continental hubs.
To claim continental hub status, several criteria need to be met. They must have a: 1) ‘strategic position’, in other words a close positioning to regional and global routes, 2) ‘port offer context’, with no or other similar infrastructure in the region, 3) ‘resultant demand in traffic’ and finally 4) ‘good connectivity to the hinterland’ to ensure smooth circulation in and around the ports (road and rail infrastructure).
States can claim to be regional hubs as is the case with the port of Djibouti, or national hubs, for example Libreville. In this aspect, many African countries are running into difficulties, even failure. The port of Djen-Djen in Algeria is one such example. Harbouring the ambition to become a hub, the port didn’t analyse its local environment closely enough (the presence of nearby ports such as Tanger Med and Port Said, lack of infrastructure and bad connectivity with the hinterland). The conditions were therefore not suitable to make this an attractive and successful project.
The port of Berbera – a serious rival to Djibouti?
The port of Djibouti has major assets that qualify it as a regional hub. Facing Asia and the presence of a deep water site, the port benefits from a strategic geographic position. Serving Ethiopia almost exclusively, the port is in high demand and the construction of an industrial zone attached to it amplifies its storage and transit capacity. It also boasts a solid connectivity with the regions thanks to a modern road and rail network.
However, a more recently established port, situated in Somaliland, has ambitions to become a regional hub and thereby rival Djibouti. Berbera, a maritime town on the Gulf of Aden, underwent a huge transformation in 2018, following the agreement with the Dubai-based DP World, the multinational logistics company, to use its port for 30 years. It enjoys a key strategic position on the banks of the Red Sea and is situated at the entrance of the strait of Bab-el-Mandeb, the fourth largest maritime gateway for oil and natural gas shipments, which makes it an attractive target for foreign investors, notably the Gulf States which invest in the region. The port has been modernised thanks to an injection of $442mt, which according to Said Hassan Abdullahi, the director general of the Somaliland Port Authority, will approach the volumes of container numbers passing through Djibouti.
Ethiopia, which also has a 19% stake in the port (vs. DP World’s 51% and Somaliland’s 30%) plans to diversify its imports and exports, 95% of which go through Djibouti, via Berbera. The extension of the port, which is scheduled for March 2021, should therefore account for a part of traffic to Ethiopia, and the government of Somaliland hopes that this will be ‘up to 50% of Ethiopia’s traffic’. South Sudan, which is also landlocked, could also do the same given that Berbera is closer and avoids the congestion issues of Djibouti.
According to the World Bank, ‘97% of the volumes that go through Djibouti leave or arrive by lorry … which contributes to the traffic in the city’. But to be considered a true rival, Berbera will have to considerably develop and modernise its link infrastructure, multiplying its road projects like the one connecting the Ethiopian border town of Togochale to Berbera, created in 2019 and which cost $400m.
View the ‘Ports in Africa – accelerating change’ report