Overview of African ports and logistics

Introduction

In recent years, Africa has managed to attract the interest of numerous regional and international investors due to the availability of natural resources, growing economic power and existing gaps in infrastructure. This has led to an unprecedented level of investment in the continent’s ports and logistics sectors, particularly in ports, while other transportation infrastructures are lagging behind. This White Paper is intended to provide a summary of the port and logistics landscape especially for those parties less familiarized with the continent, reviewing highlighting the remaining opportunities

Key macroeconomics and trade facts

  • African economies have grown in recent years, but per capita income has stagnated while debt has risen. Population and GDP are expected to continue growing in the coming years
  • Africa is heavily dependent on external trade, intra-African trade, accounts for only 15% of the continent’s global trade, remained flat, or even declined, in recent years
  • The AfCFTA could change the status quo and gradually develop intra-African trade. AfCFTA aims to create a single market for goods and services across Africa by eliminating tariffs on 90% of goods traded among member states. The aim is to increase trade by at least 50%

Track record of investments

  • African ports managed to attract relevant volumes of investment, helping to modernize the sector. The profile of FDI in Africa has changed, with the GCC countries increasing, while ASEAN countries have seen a decline.
  • During the past years there has been a relevant investment in new terminals in the continent, specially in North Africa and in the Gulf.
  • Some of the past projects included large terminals or expansions in TangerMed, Abidjan TC2, Lekki LCT, Tema, Kribi Container, Matadi or Mombasa (non-exhaustive)
  • Some future relevant projects include Dakar new port, Lamu expansions, Banana, different projects in Nigeria, Cotonou, Gambia deep sea or expansions in Dar es Salaam or Matadi to name a few.

Existing opportunities

  • Privatizations: Privatization opportunities in Africa are becoming increasingly rare, but there are still some available for operators to take advantage of. These include ports in countries such as Kenya, Algeria, Egypt, Cape Verde and Gambia (non-exhaustive) Some of these ports have initiated privatization processes (e.g. Gambia or Cape Verde), which could be completed shortly. Others have initiated privatizations, but the process has been derailed (Port Sudan, Kenya). They could resume in the future. New privatizations could also occur in the short or medium term.
  • Greenfield projects: In addition, there are some greenfield projects in the pipeline with option to incorporate the private sector. Some of these projects may have problems with their financial viability due to heavy investment and moderate traffic.
  • M&As: There are still some small independent terminal operators in the area that could be taken over by international players willing to invest in the region.
  • Dry ports: There is also a broad opportunity to develop dry ports, especially in West Africa

Success factors

  • Project selection: There are numerous port and maritime transportation projects in the pipeline on the continent. However, it is advisable to make an appropriate selection to ensure that the project has robust demand, acceptable capital expenditure and controlled risks.
  • Local content: The local component, including the various stakeholders involved (public institutions, employees, trade unions, political and economic players, etc.), continues to play a very important role in the development and implementation of logistics projects in Africa.
  • Integrated approach: The isolated development of maritime or logistics assets without an associated corridor or adequate connectivity may affect its demand and even lead to failure

Alhambra Advisors

Alhambra Advisors team has more than 20 years of expertise in the African market having worked in most of the countries. Alhambra Advisors provides services ranging from the strategy definition (market assessment and definition of the value proposition) to assessing the feasibility of port developments (concept design and business plan), support in PPPs or M&As and master plans.

 

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