Opportunities in Africa’s maritime industry
Trade and tourism in Africa largely depends on maritime sector which plays an important role in the African economy, but it remains in relatively poor condition. The sector, which encompasses ports, shipping and shipyards, is in a worse state than the maritime sectors of other continents in the world. Poor connectivity infrastructure in Africa drives the continent’s logistics costs upward, making them more expensive than the average for global standards. African countries logistics costs constitute an average of 20 percent of their gross domestic product, while the average for developed countries is 5 percent. African ports have good market potential for development both in terms of their number and capacity. In the future, African ports will be capable of accommodating ships with capacities of 5,000 twenty-foot equivalent units and 10,000 TEUs will be required in the long run. In terms of shipping, the condition of the Africa shipping industry is expected to start improving in 2018 as the African economy starts to recover. The oversupply that has existed in this industry since the global crisis of nine years ago and is expected to continue decreasing. This trend is illustrated by recent rises in Africa ship leasing prices as well as ship prices. A maritime expert i spoke with recently informed me that discussions and debate about the sector in Africa tend to be focused almost exclusively on issues of industrial relations.She thinks the debate needed to be framed around the level of African content the continent expected from maritime services.Within the coastal trading sector, exclusively around the African coast line, it’s become increasingly difficult to compete with foreign ships that have almost unfettered access to foreign trade.
Then in international trade, it’s always been very difficult for an African-based operator, simply because foreign operators are provided with all kinds of incentives in their home countries. Although it was a vital transport sector, shipping in Africa is treated differently to other forms of freight movement.Several African countries government have changed maritime legislation, which she said would protect the coastal shipping sector. Such countries are Kenya, Tanzania, Nigeria and South Africa whose existing legislations was in serious need of updating few years ago.The said countries have changed the navigation acts although not fully protectionist laws but it looked at how can African flagged ships compete against foreign flagged ships.Also, they had changes to things like the taxation arrangements for foreign operators, both for shipping companies and for African seafarers. No African country has a free-for-all around its coast, just let vessels come in and have foreign flagged vessels, crewed by foreign seafarers being paid foreign wages.In my view, the attempts by African countries to streamline the permit system and reduce the bureaucratic red tape is a good approach.Africa’s future training is one of the extremely important aspects of the industry’s future as it would increase employment as well as add more direct tax revenue.And it could all happen without any kind of handouts to the industry. What Africa maritime industry need is the taxation system to be reformed to allow companies to set up business here and actually add to the tax take. It also need people to run its ports and to make sure that as a continent of more than one billion people it can actually function. Without that maritime skill-set, as a continent that enters into contractual arrangements with overseas cargo buyers, if it has no know-how left in Africa, the industry is going to get done over every single time when it comes to entering into those contracts.
In terms of ports, the competitiveness of Africa’s port infrastructure is still at a relatively low level. In fact, Africa’s port quality ranking is below that of its other infrastructure elements such as airports, railways and roads. Port utility levels at the local level were estimated to have been more than 70 percent in 2016. But the utilisation of inland ports in Africa like Lake Victoria is still low. In addition, port capacities in Africa in general are still relatively low. This is partly caused by the fact that most African ports have shallow drafts, limiting the size of the vessels that can dock in them.In terms of shipping, the capacity of vessels in Africa also remains relatively low. The majority of ships have a capacity of 300-800 TEUs. In contrast, in developed countries, vessels on average have capacities of 1,000 TEUs. In addition, more than 70 percent of the vessels in the Africa’s fleet are fairly old, over 15 years. Africa shipping fleet is only able to convey around 9 percent of total export-import cargo.For the shipbuilding industry, the productivity of most Africa shipyards is below 500 deadweight tonnage, which is still relatively low compared to several other developed countries. Constraints faced by Africa shipbuilding industry include a strong reliance on imported raw materials about 80 percent in Egypt and 60 per cent in South Africa. This means that fluctuations in the local currencies exchange rate can severely affect the performance of companies in this industry. The maritime sector is a development priority for many African countries. Africa governments plans to strengthen the continent’s identity as maritime continent. The concept of maritime highways requires a huge amount of funds, but the government has a limited budget, so the role of private participation is very important. There is a need for support to enhance Africa’s maritime reputation. First, there needs to be legal certainty, especially related to the land acquisition of port development like has been the case with Tanga port in Tanzania and Lamu Port in Kenya. Also, there needs to be a conducive investment climate to attract investors to invest in the maritime sector. Lastly I think African governments must guarantee maritime development. What is not in doubt is that Africa maritime sector will continue to grow.