(2015-05-26) The Tanzanian port of Dar es Salaam was once the most efficient in sub-Saharan Africa.
The performance of the port, which is the second-largest in east Africa, has slipped dramatically over the past 20 years.
Ships are often forced to wait to dock and the transit of goods through the port is slow. The World Bank estimates that trade costs are 60 per cent higher between Tanzania and China than between Brazil and China, despite the distance between the Latin American country and the world’s second-biggest economy being almost double.
The port is also unable to accommodate larger vessels, which is becoming increasingly problematic. “Container ships have become bigger. For economies of scale, shipping companies prefer three large ships docking than 10 smaller ones,” says Smak Kaombwe, an adviser for TradeMark East Africa.
“You need ports to become bigger because of that. [Otherwise] you can find your port becoming irrelevant.”
Dar es Salaam port’s constraints are a problem for Tanzania because demand for imports is set to rise dramatically as the population, currently about 51 million people, continues to grow. Its population will double every 25 years if the current rate of growth continues.
Tanzania also wants to increase its exports significantly. The country currently imports more than it exports, a trend that the government wants to reverse.
“The plan is to become a net exporter,” says Mr Kaombwe.
Any plans to boost Tanzania’s trade must focus on Dar es Salaam as about 90 per cent of the country’s international trade passes through its port.
The Dar es Salaam port situation has not just been a problem for Tanzania. It has also held back neighbouring landlocked countries Rwanda, Burundi, Zambia, Uganda, Malawi and the Democratic Republic of Congo.
“[Dar es Salaam] port handles a significant proportion of the external trade of Tanzania and the region,” says Richard Martin Humphreys, the lead transport economist at the World Bank. “Greater operating efficiency will benefit all users of the port.”
Kenya’s Mombasa port, which is the largest in the region, is much more efficient. If Dar es Salaam port reached the same level of efficiency as Mombasa’s, the Tanzanian economy would gain almost US$1.8 billion a year, according to World Bank analysis. The region would gain $800 million a year.
It is for this reason that Tanzania put the revitalisation of Dar es Salaam port at the centre of its “Big Results, Now!” programme. A memorandum of understanding to expand the port was signed by Tanzania Ports Authority, TradeMark East Africa, the World Bank and the UK’s department for international development (DFID) in September.
The expansion project will double the capacity of the port to 28 million tonnes by 2020 and more than triple it to 34 million tonnes by 2025. The project will be carried out in two phases and cost an estimated $750m in total.
The upgraded port will be suitable for bigger ships. Infrastructure outside of the port will be improved, too. “We are also improving roads and railway system,” says Mr Kaombwe.
Improving Dar es Salaam port may ease the pressure on other ports in the region that are struggling to meet demand.
“Traffics are growing in all ports in the sub-region reflecting the vibrancy of the regional economies, and a number of ports are bumping up against their capacity constraints,” says Mr Humphreys.
Without significant upgrades, Dar es Salaam port may be at risk of falling behind rivals. “If the current situation is not remedied, the port of Dar es Salaam might lose its existing market share in regional trade, particularly when other ports and railways become operational in neighbouring countries,” according to the World Bank.
Kenya is upgrading Mombasa port, to the north of Dar es Salaam, and plans to push ahead with an even bigger port at Lamu. However, that project has already faced many obstacles. The port, near the border with Somalia, is part of an ambitious scheme for a trade route with railway lines crossing South Sudan and Ethiopia, along with road upgrades.
Plans have also been mooted for a port within Tanzania that would compete with Dar es Salaam. An $11bn facility at Bagamoyo, which would be larger than Mombasa’s, has been proposed as a way to export Tanzanian gas, once its resources are exploited, and other goods. However, the proposed port location is far from Tanzania’s natural gas resources.
China Merchant Holding International and the Oman Investment Fund had agreed to partner for the project. A groundbreaking ceremony was planned for July but has been postponed indefinitely.
“The approach with Bagamoyo is to use the private sector as a PPP project,” says Mr Kaombwe. “A lot has been said but we haven’t seen the investment materialise.”
The scale of the project and the costs associated with it have led some to believe it is highly unlikely to go ahead. “It is too costly,” says Mr Kaombwe. “It will need a lot of dredging.”
In the short term at least, the expansion of Dar es Salaam port is the only project likely to have any effect on trade. “Mineral traffic will be boosted hopefully, and surplus grain when it’s there,” says Mr Kaombwe.
In 2013, Tanzania exported goods worth just over $5bn, according to World Trade Organisation figures. South Africa, India and the European Union were the biggest recipients of Tanzanian goods in 2013. It imported more than $12bn worth of goods.
Agricultural goods account for almost 30 per cent of Tanzania’s exports, its largest export sector. The country’s agricultural imports are make up less than 10 per cent of the total. Tanzanians are currently paying a high price for imported food relative to other developing countries. The upgraded port may help to change this. “Pricing for the customers should come down,” says Mr Kaombwe. “We expect customers to benefit.”
The World Bank estimates that Tanzanians will be $40 better off each as a result of the Dar es Salaam port upgrade. “The Port of Dar es Salaam is arguably Tanzania’s most important infrastructure asset,” says Ros Cooper, the acting head of office for the DFID.
“Future growth of the economy depends on the port’s ability to improve, to become more efficient and to be able to handle more trade,” he says.
“[It] will help Tanzania to be more competitive and will support economic development and growth across the region. And through this, improve the lives of millions of people.”
Source: The National
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