Ports & Shipping Sector Significant to Economic Growth – Report

A new report by PricewaterhouseCoopers (PwC) has identified ports and shipping sector in Africa as potentials for economic growth and unlocking of investment opportunities.

The report, ‘Strengthening Africa’s gateways to trade’, which  was developed in response to the challenges facing Sub- Saharan Africa’s (SAA) ports in attracting external investment and highlighting the regional economic and growth benefits, found that a 25 percent improvement in port performance could increase its GDP by two per cent.

In a presentation at the launch of the Report in Accra, Dr. Andrew Shaw, PwC Africa Transport and Logistics Leader, said ports were under increasing pressure to respond to the needs of shipping lines, logistic providers and multinational traders, as they sought to drive efficiencies throughout the value chain.

He said ports were a vital part of the supply chain in Africa, with many ports having a far-reaching hinterland often spanning a number of countries, which made them a natural focus for regional development.

Dr Shaw said the report showed that the global transportation and logistics industry could no longer afford to ignore developments in Africa.

He said the developments made a strong case for SSA to focus on investment in ports and their related transport infrastructure to advance trade and promote overall economic development and growth.

This, he said, was vital, particularly in emerging economies that were currently under-served by modern transportation facilities.

However, port investment must be channelled appropriately to ensure financial sustainability and economic growth.

“Investment is not always about building new ports or terminals – investment spent on infrastructure without cognisance of the efficiency and effectiveness of the performance of the port may not produce the desired results.

“Developing port infrastructure ahead of demand, focusing on the ports with the greatest potential (the ‘hub’ ports of the future) and improving the overall functioning of these ports so that through productivity gains they are increasingly attractive as destinations for global trade are key imperatives.”

However, with growing congestion in many African ports, the PwC’s report warned that countries in SSA run the risk of sacrificing further growth through lack of investment in port terminal infrastructure.

The report noted that access to effective ports, interconnecting infrastructure and efficient operations to cope with current demand and future growth, will lead to reduced costs and improved overall freight logistics efficiency and reliability – all of which were fundamental to the region’s future success.

Despite the high volumes of goods that required transport, the development and integration of ports in Africa’s wider logistic chains remained uneven, it said.

High port logistics costs, poor reliability and low economies of scale in trade volumes have a negative impact on trade growth in Africa.

According to PwC estimates, SSA doubling throughput at its major ports could result in an average logistics cost saving of US$ 2.2 billion per annum.

Dr Shaw said trade competitiveness required governments and key stakeholders to see ports as facilitators of trade and integrators in the logistics supply chain.

“Efficient ports can make countries and regions more competitive and thus improve their growth prospects.”

The reliability and efficiency of each port terminal, including minimising delay to shippers, was critical to enhancing future trade facilitation,” he concluded.

“As the larger West African economies embark upon, or seek to accelerate, the implementation of their economic development drives, new and/or expanded port access and capabilities are increasingly recognized as key tenets of these programs.

“This is exemplified by the number of active port development and expansion projects in Nigeria and Ghana.”

Source: GNA