The African revolution: Snapshot of the situation & opportunities in Africa

What is the current situation and what are the expectations?

African ports with its 28 Mn TEUs represent less than 5% of the world’s throughputs (vs 14% of the population), however the continent ports have been booming during last years increasing throughputs at a compound rate of 7%. This increase was mainly driven by Kenya, Tanzania, Nigeria, Morocco or Djibouti.

Although some of the countries are facing economic problems (i.e Oil exporters), most probably throughputs will continue increasing as there is still large room for increasing volumes as the GDP, population and level of TEUs per habitant are still far from the world wide average (1/3).

The African container traffic has being growing fast and new increases are expected.

Container throughputs and expected growth in the continent:
        Total throughput per country, 2014 (Mn TEUs) TEUs growth and economic prospects

What are the projects in the pipeline and what is happening?

As a consequence of the lack of adequate infrastructure and performance in the continent and the traffic increase, the governments and terminal operators started the development of large scale new projects in key places like Lagos, Tangier or Mombasa but also throughout the continent.

Most of the projects were developed by European and Asian companies (with an active role of the Chinese) looking for IRRs that most probably the will not get in any other part of the world.

Some of these projects were also linked to the deployment of extensive railway corridors (SGR Mombasa-Kigali, Walvis Bay Corridor, LAPSSET…) that had the intention of reducing the high costs of land transportation from ports to landlocked countries.

                                                         New projects in the pipeline and status

 There are a large number of projects in the pipeline with different levels of maturity and advance.

After the initial ecstasy of projects, some terminals have been put on hold, delayed or even cancelled. The reasons behind these decisions were in most cases change the change of the economic environment, institutional or political problems and of course financial problems. Even quite interesting developments such as the Mombasa second terminal were cancelled. Hopefully a new tender will be launched again son.

On the other hand other ports such as Tangier, Egypt or Djibouti are consolidating their positions in their respective markets due to their strategic position, their lower cost or their stable legal framework. Hopefully Nigeria will do the same thanks to the new ICTSI and APM Terminal projects and other developments to come.

Other countries such as Algeria or Tunisia, traditionally with conservative investment policies are also willing to enter in the game. Let’s see what the fate of these projects is, but what is sure is that there is hope in Africa!

About the authors
Pablo Ruiz del Real is MSc in Civil Engineering, Partner and Advisor at ALG
Ruben Naveiro is MSc in Industrial Engineering and Manager at ALG
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