MarketLine Blog

African ports are driving economic growth: Expanding the port network will bring big benefits

According to SAP, 90% of imports and exports to and from Africa are transported by sea, and with the global middle-class population predicted to balloon to five billion people in just over a decade, expectations are African ports will take on greater economic significance. Problems, therefore, must be solved. Durban in South Africa is one of the more egregious examples of ports failing: the port is highly expensive and suffers from crippling congestion in the surrounding areas, causing it to only operate at 75% of the efficiency expected of an international hub port. Changing this is vitally important to achieve long-term economic growth. Taking an internationalist approach to infrastructure development would help the continent. Some of the most successful economies are land-locked, making them dependent on other nations to develop the port network.

The extent of investment into the African port network is ramping up and projects are becoming more ambitious. Bagamoyo, a small fishing port 45 miles north of Dar es Salaam, Tanzania, could become the largest container port in Africa over the next decade. $10bn of funding will be invested from an Omani sovereign wealth fund and the Chinese Exim Bank to create port facilities that will extend 10 miles along the coastline. Geopolitics from within Africa is also helping to create an improved collection of port facilities. To what extent the expansion and improvement of African ports will continue on a long-term basis is dependent on close co-operation between states with coasts and those that are land-locked. The development of free trade zones is welcome, suggesting closer economic engagement is more likely to persist.

Compared to investing in much of the developed world, investing in Africa is a risky business, but China and powerful oil-states such as Oman are putting money into the continent. Ploughing money into African ports, especially those situated on the Horn of Africa, has dividends beyond economic gain: geopolitically east coast ports are very useful. Yet many projects are being funded through Chinese loans. The extent to which governments of African nations are indebted to China varies considerably. Beijing has frequently dished out loans to fund infrastructure projects, helping China to expand its economic international interests. Governments of African nations updating ports and building new ports must remain careful financed projects will bring the promised economic benefits.

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