Africa’s continued economic success will be determined by how well the continent’s ports are utilized, experts from SAP Africa, a Kenya-based market leader in enterprise application software, have said.
Statistics indicate that 90 percent of imports and exports in Africa are driven by sea. With a global middle class set to reach 5 billion people by 2030, global trade is set to continue to grow at an unprecedented rate, the experts have affirmed.
Reports suggest that global freighter fleet is expected to double over the next decade due to the growing consumption demands of the ever-increasing middle class.
“Beyond fulfilling their respective countries’ trade needs, ports act as gateways to land-locked countries such as Ethiopia and Chad, that have significant agrarian and raw materials export potential, and great need for imports of finished and processed goods from the East and West,” explained Gilbert Saggia, Managing Director for the East African region at SAP Africa.
“Without these gateways, landlocked countries that have much to offer in world trade are figuratively closed for shop,” he continued.
In a statement issued this week, Mr. Saggia argued that if Africa is to play a meaningful role in global trade, its seaports will be key to ensuring that success.
However, African ports face the primary challenges of under-developed infrastructure and inefficient operations, leading to significant losses in potential revenue. According to a report by leading auditor, PricewaterhouseCoopers (PwC), of the 72 percent of world container output commanded by developing countries, Africa only sees 1 percent.
“A hypothetical improvement from 1 percent to 3 percent would increase the economic value of trade by sea by a magnitude equivalent to the GDP of certain African countries. There is clearly a need to drive improved performance at African ports if we are to take advantage of the economic promise that the future holds,” said Saggia.
He noted that the primary challenges shared by most African ports are long cargo clearance times; under-developed basic port and hinterland infrastructure; usage of dated equipment and low levels of automation; and container and cargo theft.
To help address some of these challenges, global donor organisations are funding the development of various African trade corridors. This is witnessed in the significant investments that are going into port infrastructure capacity expansions.
SAP research indicates that the key to efficiency is for ports to do more with their existing resources, particularly those focused on moving cargo.
“To improve terminal operations, African ports need to adopt automation as a means of standardising and simplifying port operations,” Saggia said.
