Investment in ports is surging in Africa. Gabon has recently secured funding to expand capacity at its Owendo port in Libreville; Namibia has expanded its container terminal at its port in Walvis Bay and port expansion and development is well underway in countries like Côte d’Ivoire, Benin, Congo, Djibouti, Tanzania and Somaliland. Morocco’s Tanger-Med port is now the largest in the Mediterranean region. Meanwhile, Kenya is launching a master plan to transform logistics and shipping capacity. Investment in Africa’s ports is being driven by government spending and donor funding as well as private financing. China’s investment in Africa’s ports has surged and by some estimates, ports investment constitutes over 50% of China’s overall investment in infrastructure in Africa. These investment trends point to the necessity of expanding port capacity to facilitate trade and economic growth on the continent.


In Kenya, efforts to improve port infrastructure will help to bring down the cost of production and make Kenya’s manufactured goods more competitive globally, create employment opportunities, as well as raise the standard of living by making imported products more affordable. Much of the focus now is on how Kenya’s Port of Mombasa and inland dry ports are managed to create greater capacity and reduce delays for shippers. But the larger shift is towards recognising ports’ role in enhancing trade and development rather than a primary focus on their capacity to generate revenue. One of the challenges that countries like Kenya face is to develop port infrastructure ahead of the demand curve instead of responding (belatedly) to demand pressure, delays and inefficiencies.


Investors in ports are looking for clear information demonstrating that demand is rising and costs are coming down elsewhere in the logistics chain.

Another challenge is the balance of trade between Kenya and its trading partners; vessels arriving with imports as containerised cargo are not well suited to the goods being exported, which tend to be raw materials and agricultural products. In addition to rising demand and improving cost efficiencies, investors are also looking for more value addition in Kenya’s exports to justify expanded port capacity.

Facilitating competitive hub ports

Kenya’s master plan to transform logistics and shipping includes improvements to the Port of Mombasa to strengthen its position as a hub for the East Africa region and neighbouring inland countries. Our research, as reported in African ports: Strengthening Africa’s gateways to trade, shows that there are a number of factors that facilitate competitive hub ports including:


  • Sufficient draught, quay length and crane sizes to accommodate the largest container vessels;
  • Efficient transshipment facilities, as well as rapid loading and offloading performance;
  • Stack capacity and supporting intermodal facilities and dry ports;
  • Supporting efficient land transport connections along corridors leading into and out of the port;
  • Back-of-port effectiveness and landside transport connections and
  • Operations effectiveness, including rapid container handling and quick ship turnaround times.


Although there are plans to expand Terminal 2 at the Port of Mombasa, the port now does not have berth capacity configured for the increasing size of ships. Ships are increasing in size because shipping companies are trying to consolidate, reduce costs and carry more volume. United Nations Conference on Trade and Development (UNCTAD) predicts that the current largest container ship calling African ports will remain around the 13,000 Twenty-foot Equivalent Units (TEU) Currently, such large ships are docked alongside two or three berths. Equipment and capacity at ports also must evolve.


The Port of Rotterdam is often recognised for its digital transformation including automated operations and optical readers that can scan containers and transmit this information in real-time. At the Port of Mombasa, digital transformation is well underway but there is still a long way to go. To that point, some of the inefficiencies at the Port of Mombasa stem from poor information flow. Digitising the information flow will help, such as has been done at Rotterdam.


Processing inland-bound cargo at dry ports in Nairobi and Naivasha and using the SGR to transport that cargo from Mombasa should also improve efficiency and customer service. Although the SGR has helped to reduce the number of days for shipments to reach Nairobi, tariffs are still relatively high. Another challenge at the Port of Mombasa is that there are a great many stakeholders involved in operations and processes for cargo handling and clearance.

This complexity contributes to delays across the value chain. One of the improvements currently underway involves streamlining responsibilities amongst stakeholders so that everyone understands their roles, activities and target timelines, as well as implementing monitoring and evaluation processes that demonstrate whether the streamlining is as effective as intended.


Planned improvements will take time to realise value. In the meantime, shipping lines like Maersk have dedicated parallel staff on the ground at Kenya Ports Authority (KPA). These shipping lines have their own tally clerks who work alongside KPA staff to obtain a real-time recording of what’s happening at the port, all the way to the gate and onto the shipment’s final destination.


It is very expensive to run a shipping operation like this, and hopefully the changes underway at the Port of Mombasa will help to reduce such operational costs.

Beyond Mombasa, the development of Lamu into a regional port is expected to result in expanded transport and logistics along the Lamu Port-South Sudan-Ethiopia-Transport (LAPSSET) corridor as well as opportunities for the construction of rail, roads, airports, housing and utilities infrastructure.


However, since Djibouti is now serving some of the markets that the Lamu port would otherwise serve, the question is has demand for the Lamu port weakened in the long term? This has yet to be clarified convincingly. KPA is also developing the Kisumu port to allow bigger vessels to dock at the facility. Together with Kenya Railways plans to rehabilitate the old railway from Nakuru-Kisumu will make Trans-African highway a practical route thus facilitate regional trade.

In conclusion, there are many improvements underway that will improve the competitiveness of Kenya’s ports sector and related transport and logistics infrastructure. Improved agility, better planning and accurate benchmarking against other ports and developments in the ports industry will help. But the larger point is that ports only facilitate trade. Countries like Kenya still need to invest wisely to improve their balance of trade and the competitiveness of their exports, both in terms of cost of production including transport as well as value-addition.

Simon Mutinda

Partner,

PwC Kenya

Christine Chepkwony

Senior Associate,

PwC Kenya

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