High Court Stops Kenyan Mega-Port

LAPSSETKenya’s high court on Friday ordered a halt to the long-delayed development of a mega-port on the country’s northern coast for at least two weeks to allow a lawsuit lodged by local landowners over compensation to move forward.

The $25.5 billion project, known as the Lamu Port-South Sudan-Ethiopia Transport (LAPSSET) project, would eventually link landlocked countries South Sudan and Ethiopia to the Indian Ocean via Kenya and include a port, new roads, a railway and a pipeline.

The LAPSSET project involves the development of a new transport corridor from the new port of Lamu through Garissa, Isiolo, Mararal, Lodwar and Lokichoggio to branch at Isiolo to Ethiopia and Southern Sudan. It will comprise of a new road network, a railway line, oil refinery at Lamu, oil pipeline, Isiolo and Lamu Airports and a free port at Lamu (Manda Bay) in addition to resort cities at the coast and in Isiolo. It will be the backbone for opening up Northern Kenya and integrating it into the national economy.

It was first conceived in the 1970s but has been gaining traction after commercial oil finds in Uganda and Kenya.

Judge Oscar Angote suspended the project and said the land compensation case would be heard on 8 December 2014. Source: Maritime Executive

African States urged to begin prioritising economic transformation

2014 Africa Transformation ReportThe inaugural Africa Transformation Report ranks Mauritius as the most economically transformed country out of 21 sub-Saharan African countries measured in its African Transformation Index, which takes account of a country’s economic diversification, export competitiveness, productivity, state of technology upgrading and human wellbeing.

The continent’s largest economy, South Africa, ranks second and Côte d’Ivoire third, while Nigeria, Burundi and Burkina Faso prop up the index.

The ranking has been included within a larger 207-page study, which cautions that, while many African economies are growing strongly, most economies are not transforming sufficiently to support a sustainable reduction in poverty, inequality and unemployment.

Six of the world’s fastest growing economies are currently in Africa, including Angola, Nigeria, Ethiopia, Chad, Mozambique and Rwanda, while several others are expanding at growth rates of over 6% a year. However, much of this grow is still premised on the extraction and export of natural resources and is not being broadly spread, leaving more than 80% of the continent’s labour force employed in low-productivity farming, or informal urban business activities.

Compiled over a three-year period by Ghana’s African Centre for Economic Transformation (ACET) in partnership with South Africa’s Mapungubwe Institute for Strategic Reflection (Mistra), the study urges African governments to position economic transformation ahead of growth at the centre of their economic and development policies.

Speaking at a launch in Johannesburg, lead author and ACET chief economist Dr Yaw Ansu said growth was “good” and had arisen as a result of macroeconomic reforms, better business environments and higher commodity prices.

“But economic transformation requires much more,” Ansu stressed, arguing that countries needed to diversify their production and exports, become more competitive and productive, while upgrading the technologies they employed in production processes.

ACET president Dr KY Amoako said the transformation narrative had already been accepted by the African Union in its Vision 2063, as well as by the African Development Bank and the United Nations Economic Commission for Africa. He added that the African Transformation Index provided policymakers with a quantitative measure for assessing their transformation performance and for guiding future strategies.

Mistra executive director Joel Netshitenzhe argued that to turn growth into an “actual lived experience” for Africa’s citizens there was the urgent need to form national social compacts between government, business and civil society to support transformation.

Finance Minister Pravin Gordhan emphasised the same point in his recent Budget address, when he highlighted the work being done to secure a social compact to reduce poverty and inequality and raise employment and investment. Gordhan stressed this could not be a “pact amongst elites, a coalition amongst stakeholders with vested interests. Nor can it be built on populist slogans or unrealistic promises”.

“Our history tells us that progress has to be built on a vision and strategy shared by leaders and the people – a vision founded on realism and evidence,” the Minister stressed.

Netshitenzhe also highlighted the report’s emphasis on coupling growth with social development. “In fact, rather than merely being a consequence of economic growth, a reduction in poverty and general human development can be part of the drivers of economic growth.”

The report highlights key transformation drivers as being:

  • Fostering partnerships between governments and the private sector to facilitate entrepreneurship, investment and technology upgrading.
  • Promoting exports, particularly outside of the natural resources sector.
  • Building technical knowledge and skills.
  • And, pushing ahead with regional integration.

Four transformation pathways are also highlighted, including labour-intensive manufacturing; kick-starting agroprocessing value chains, improving the management of oil, gas and minerals; and boosting tourism.

“It’s good that we are growing – we are no longer the hopeless continent. We can transform this hope into reality, but to do that governments must put transformation at the top of their agendas,” Ansu asserted.

He also called on African citizens to begin to demand transformation. “Ask your government, how come we are not diversifying? How come our productivity remains stuck? How come our technological levels and our exports are not growing?” Source: Engineering News

Uganda says it’s time to talk in Africa

Africa-mombasa-mct-aerial

Port of Mombasa (Credit – Port Strategy)

Not for the first time a landlocked country in Africa is attempting to have a say in a remote port operation which functions as a major gateway for its import and export trade. This time it is Uganda proposing that it has a say in the management of Kenya’s major port, the port of Mombasa. In the recent past it was Ethiopia attempting to secure a dedicated terminal in Djibouti.

The Ugandan initiative surfaced at a recent ‘Validation Workshop on Uganda’s Position on the Single Customs Territory for the East African Community. The Permanent Secretary Ministry of EAC Affairs, Edith Mwanje said that Uganda should have a say in the management of gateway ports because of “the many delays that negatively impacted trade”. Ugandan cargo accounts for the largest body of traffic handled by the port of Mombasa for the landlocked countries surrounding Kenya.

It is unlikely, of course, that any country will give up even partial control of a national asset to another country. It is akin to relinquishing sovereignty in the minds of countries owning port assets and being asked to participate in some form of power sharing. Djibouti fought hard to prevent Ethiopian Shipping Lines gaining control of dedicated terminal assets in the old port of Djibouti and won this battle. It is very unlikely that Kenya will even consider the idea of a foreign power participating in the management of its number one port.

It may, however, be a wise course of action for countries such as Djibouti and Kenya to consider establishing some sort of regular stakeholder dialogue. This is the path to a long and sustainable relationship as opposed to a short opportunistic one.

It is known, for example, that in the past Ethiopia has been frustrated by the high price of gateway container and general cargo operations in Djibouti and this has led to tensions. Since these days, however, Djibouti has put considerable effort into having a sensible dialogue with Ethiopia and this has matured into new projects such as the signing of an agreement with Ethiopia and Djibouti to build an oil pipeline that will reduce South Sudan’s dependence on crude shipments via neighbouring Sudan, and plans for a $2.6bn liquefied natural gas terminal in Djibouti, including a liquefaction plant and a pipeline, that will enable the export of 10m cubic meters of gas from Ethiopia to China annually from 2016.

Source and Picture credit: Portstrategy.com

Ethiopia Becomes World’s Fourth Largest Flower Exporter

Revenues from flower exports have grown from $27.9 million dollars in 2002-03 to $178.3 million dollars in 2010-11. Photo Chellelek Files

Revenues from flower exports have grown from $27.9 million dollars in 2002-03 to $178.3 million dollars in 2010-11. Photo Chellelek Files

Indian-owned firms in Ethiopia are making flowers the country’s third-largest export earner after coffee and khat, a kind of chewable cannabis. In the last five years, the Ethiopian floriculture industry has become the second largest flower exporter in Africa (after Kenya) and fourth largest flower exporter in the world. According to one estimate, the export value earned by the country is expected to rise up to $550 million by 2016.

Ethiopia has a comparative advantage in the production of roses, especially with favourable climate conditions and availability of labour. The Ethiopian Government also offered incentives to investors. Ethiopia has the ideal climate, appropriate conditions and stable, year-round temperature that can ensure better production and quality flowers. The region is acknowledged as one of the best flower growing areas. Source: india.nydailynews.com

The African transhipment race

Have you noticed the debate in the on-line Global Ports Forum about who will become the main container terminals in East and West Africa? Portstrategy.com has taken it upon themselves to score some of the suggestions.

Nigeria is strongly identified as a hub for the west coast of Africa – we score that 7 out of 10. It has the potential but will new port development be delivered in time? Will the off-take infrastructure development be implemented in concert with port development at places like Lekki? Will Lekki’s hub function be undermined by other deepwater facilities being delivered first on the African coast?

Generally, they agree with the view expressed by one wise head in the Forum that the race for hub status on the West African coast is now a fierce one. However, we don’t agree with the contention that Angola will have a serious say in becoming a major hub for West Africa. It will struggle for some time yet to meet its own port capacity needs let alone fulfil a regional function. We score this suggestion 2 out of 10; go to the bottom of the class!

South Africa as a hub for East and West Africa? Well to a limited extent it does already fulfil this role but when South Africa booms its priority has to be gateway cargo and it is limited in terms of its economic and geographical reach. It is also not ideal because of position; we won’t score the suggestion down but conversely we also won’t score it up because it is a fair point. We do, however, see as a negative the continuing emphasis on the public operation of this country’s ports – it spells very high cost comparatively speaking and coupled with this, ironically, not the best service.

Doraleh Container Terminal, Djibouti? Yes we would agree that this has a role to play in container transhipment for East Africa and particularly with its phase two expansion now underway. The price is right for transhipment here but the cost of cargo movement to the main transit destination of Ethiopia is coming in for increasing criticism. It also has a limited reach along the East Coast. Another score of 7.

Mombasa? Yes huge potential for the East Coast of Africa but as history shows no political will to deliver new port capacity in line with demand. Nine in theory but five in practice.

The new port of Lamu? Designed to act as an export gateway for South Sudan, construction has begun on the $23bn (£14.5bn) port project and oil refinery in south-east Kenya’s coastal Lamu region near war-torn Somalia’s border. With a planned multi-purpose port function, because it is a ‘clean slate’ it could take on the hub function. Another 7.

So what is Port Strategy’s view?

In West Africa, we note that new purpose-built, deep draft container port capacity has either recently been installed or is about to be installed in West Africa in six or seven locations. In Lome in Togo and Pointe Noire in the Congo, for example, new facilities are set to come on-stream by end 2014 at the latest which will be able to handle vessels of up to 7,000 teu. We therefore suggest that there will be a split of hubbing activity between all these locations but with the first two or three terminals on-line grabbing the main part of transhipment activity. We also see a continuing role in the short-term at least for hubs such as Algeciras that ‘face’ Africa.

In East Africa we cannot escape the logic of Mombasa and Dar es Salaam but will they pick up the pace quick enough to seize the opportunity? Sadly, not so far. Lamu, therefore, may have a big role to play. Source: Portstrategy.com

Who Will Be Africa’s Brazil?

Will there ever be an “African Brazil”? Who will that be? Angola? Congo? Ethiopia? Nigeria? South Africa? Flip that question: what will it take for an African country to become a new Brazil? A lot. First, it will take governments that do not spend or borrow too much, and independent central banks that keep inflation low. That is, the first order of business is a stable “macroeconomic framework.” Brazil managed to do that, but only after decades of rampant inflation and financial crises. Many African countries are making progress in that direction, but none is quite there. Read this objective review by Marcelo Giugale, World Bank’s Director of Economic Policy and Poverty Reduction Programs for Africa. Source: The Huffington Post