ICTSI: Africa should learn from India's box experience - good and bad
AFRICA should exploit its full potential with greenfield ports away from major cities to avoid congestion as well as ending cross border-trade barriers, but most of all, learn from India's experience not repeat its mistakes.
This the view of Gagan Seksaria, chief financial officer and head of the Manila-based International Container Terminal Service Inc's (ICTSI) African regional investment, writing in Port Strategy, of Fareham, Hampshire, England.
"There are a great many 'how-tos' and 'how-not-tos' to learn from others further down the public-private partnership route," he said.
"India especially makes for an interesting comparison as the subcontinent has been successful in attracting private investment into its 7,000-kilometre coastline, allowing capacity to treble to 18 million TEU and volumes to reach 11 million TEU between 2000 and 2012," Mr Seksaria said.
"In the same period, if you exclude Egypt, Morocco and Djibouti transshipment centres, Africa's 26,000 kilometre coastline has only taken capacity up to 17 million TEU with actual volumes reaching two million TEU below this." he said.
"What's missing is large-scale greenfield projects. This is due to the splintered nature of the African coast; Africa has a large number of relatively small economies, which in themselves don't warrant such development.
"Unfortunately, although getting cargo across borders is a cumbersome and costly affair, the business case for a 'regional' project focused on a cluster of countries still isn't gaining traction," he said.
Sub-Saharan development, he said, has been limited to refurbishing and expanding existing ports, with capacity only freed up by private operators deploying optimisation techniques and technology.
Ports, like Lagos, Dar es Salaam and Mombasa, are located in the metropolitan hearts of big African cities causing chronic congestion with an impact on port productivity, supply chain efficiency and costs," Mr Seksaria said.
"Mumbai was India's premier container facility until 1998 when P&O Ports developed a private-public green field container port in Nhava Sheva outside the congested city. Since then, volume at Mumbai has shrunk from 600,000 TEU in 1998 down to 50,000 TEU, while JNPT [Jawaharlal Nehru Port Trust] has grown to four million TEU and has expansion plans to double this," he said.
ICTSI's Katupalli container terminal near Chennai, India's second largest container port market, is another example. "Katupalli has only been operational since January, but there are indications that it is following the same pattern," he said.
Mr Seksaria was optimistic about Lekki in Nigeria, "poised to jump into the large and fast growing regional market".
Lagos port handled 1.4 million TEU in 2012 and volumes are rising at 15 per cent a year. "You can see the pattern: Lagos is severely curtailed by the city, and the total capacity potential after all expansion programmes will probably be limited to 1.8 million TEU. On top of this, there are issues with the wider port and road connectivity. So, when deep-draft Lekki becomes operational in 2016, it will be well positioned to corner a large share of the market almost immediately." Mr Seksaria said.
Another important aspect, he said lies in getting the investment model or transaction structure right. India continues to face challenges imposing deals that are unattractive to terminal operators and Africa can learn from this.
Africa should also avoid unnecessary, arbitrary, anomalous tariff regulation, and failing to deliver infrastructure commitments, he said. Such things slow down development and create distrust among foreign investors.