Tanzania will become a gateway to African trade
Last month, in the presence of Samia Suluhu Hassan, president of the United Republic of Tanzania, I signed a 30-year concession agreement with the Tanzania Ports Authority to operate and modernise the multi-purpose Port of Dar es Salaam. The direct impact of this agreement will see DP World operate and upgrade a number of berths at the country’s busiest port. It is yet another demonstration of our commitment to unlocking the trade potential of the entire continent.
Tanzania is a key part of the East African Community (EAC), and its strategic location on the Indian Ocean plus its wealth of natural resources make it a crucial player in the regional and global economy. The Port of Dar es Salaam has long played a central role in imports and exports to neighbouring land-locked countries like Uganda and Rwanda.
Yet infrastructure continues to challenge the speed of Africa’s and Tanzania’s progress. A study by the Infrastructure Consortium of Africa shows that poor infrastructure adds between 30% and 40% to the costs of goods traded among African countries. As a result, the African Union reports that intra-African trade stands at just 13%. By comparison, intra-EU trade is around 60%, according to the European Commission.
There are numerous challenges and structural issues that limit infrastructure modernisation in Africa, from weak feasibility studies and business plans to delays in obtaining licences and approvals, an inability to agree on risk allocations and poor delivery. But the key to addressing this gap is stronger investment and collaboration to unlock Africa’s supply chain infrastructure.
More freight, lower prices
DP World is aligned with the continent’s development goals. For example, Tanzania’s objective to become a middle-income economy by 2025 is the type of vision that can unlock the potential for constructive partnerships. By aligning our goals and investment with Tanzania’s national transport policy, we are able to strengthen our commitment with concession agreements, such as the one we signed October 22 which is designed to transform the Port of Dar es Salaam into a world-class gateway.
Over the next five years, we will invest more than $250m in the port to modernise its operations and improve cargo clearing, transport and logistics services throughout Tanzania and its hinterland. Improved port efficiency and access will attract greater opportunity from bigger vessels and shipping lines. This will lower ocean freight costs for importers and exporters, which can help lower prices for Tanzania’s consumers in everything from food and clothing to hi-tech machinery.
A modernised port will also strengthen Dar es Salaam’s role as the maritime gateway for central Africa’s Copperbelt, which is one of the world’s largest and most productive copper-producing regions. In the global race to reduce carbon emissions, these exports of copper and other vital minerals will become increasingly important in meeting the world’s growing energy demand.
Catalysing Africa
The World Bank estimates that sub-Saharan Africa needs to invest approximately 7.1% of its GDP each year in infrastructure to meet the UN Sustainable Development Goals. However, investment is currently running at half that. Boosting the flow of private funds into infrastructure is crucial to supporting the economic goals of countries like Tanzania.
DP World’s commitment to the continent goes beyond the EAC. In the Horn of Africa, our investment in Berbera Economic Zone and the modernisation of the Port of Berbera is unlocking opportunities for Somaliland and its neighbours, including the more than 100 million people in Ethiopia. In the Democratic Republic of Congo we have started the construction of Banana, the country’s first deepwater port. Our biggest port investment in Africa is the $1bn development of the Port of Ndayane in Senegal, construction of which started this year. These promise to build on our work transforming Kigali, Rwanda into a major east African logistics hub and unlocking international trade for businesses in southern Africa via Maputo in Mozambique.
We understand how supply chains can accelerate economies. Only through public-private collaboration, investment and commitment can we collectively develop and manage infrastructure that boosts local economies like Tanzania’s and accelerates Africa’s potential as a trading powerhouse.
