Tanzania invests in port infrastructure to boost traffic and efficiency

Enormous potential for future expansion exists in Tanzania’s maritime sector. The country’s coastline stretches approximately 1424 km across East Africa, acting as a central corridor linking the EAC, the Southern African Development Community and the Common Market for Eastern and Southern Africa. Its maritime industry benefits from an ideal location along Indian Ocean trade routes, with trade volumes slated to increase significantly in the coming years.

The government is in the midst of an ambitious infrastructure agenda, which targets boosting maritime traffic and cargo volumes by more than 400% by 2025/26. Much of the work will focus on its primary maritime centre, the Port of Dar es Salaam (PDS), which is expected to see handling capacity and cargo volumes soar following the launch of a major modernisation project in partnership with notable international lenders and development agencies. Indeed, traffic has been rising at PDS: between 2011 and 2016 throughput grew by 3.4m tonnes per year.

Ports Targets

According to the government’s Five-Year Development Plan II 2016/17-2020/21 (FYDP II), by 2050 up to 60% of aggregate global trade in all commodities will be shipped through the Indian Ocean. Mainland Tanzania, which is situated approximately halfway between the Horn of Africa and the Cape of Good Hope, is well positioned to become a leading global transport centre. There is significant scope for the facilitation of future trade, in addition to shipping, warehousing and bulk storage.

However, some industry stakeholders have said that the Tanzania Ports Authority (TPA) has to be more aggressive in promoting the sector, in order to avoid losing out to ports in South Africa’s Durban, Mozambique’s Maputo, Kenya’s Mombasa, Namibia’s Walvis Bay and other competitors.

To that end, Tanzania’s National Transport Policy 2011-25 targets a 50% expansion of lake and seaport handling capacity by 2020. The quality of port infrastructure index within the World Economic Forum’s “Global Competitiveness Report 2017-18” ranked Tanzania’s performance at 95th out of 137 countries, up from 98th out of 138 in the 2016-17 report. As a result, the sector exceeded FYDP II targets to be in the top 100 globally by 2020-21, and among the top 98 worldwide by FY 2025/26. Another objective is to boost cargo freight volumes from 15.4m tonnes per year in FY 2014/15 to 28m tonnes in FY 2020/21 and 84m tonnes in FY 2025/26.

Enhancing port infrastructure is a priority for industry operations in the country. Ashutosh Charan, the general manager of coils at roofing manufacturer ALAF, told OBG that “many port services have to be improved and there is a need for development at the ports of Tanga and Dar es Salaam.”

Upgrades

By far the largest domestic port, and one of three located on the Indian Ocean, the PDS handles roughly 95% of Tanzania’s international trade at 11 deepwater berths. It stands as a critical trade gateway for landlocked border countries.

The International Association of Ports and Harbours reported that the PDS is the fourth-largest African port located on the Indian Ocean coastline, after Durban, Mombasa and Maputo ports.

According to the TPA, the PDS handled 14.7m tonnes of cargo in FY 2014/15, with over 45% of cargo slated for re-export to landlocked countries, while the World Bank reported that cargo volumes stood at 13.8m tonnes in 2016. The country’s next two largest ports, Tanga and Mtwara, together handle approximately 1m tonnes of traffic annually.

Although the PDS’s chronic congestion has improved somewhat on the back of an extensive modernisation programme launched in 2000, which saw Hutchison Ports’ Tanzania International Container Terminal Services assume management duties at berths eight to 11, further upgrades are now needed to improve efficiency. In 2015 the World Bank, the UK Department for International Development (DFID) and donor-funded trade initiative TradeMark East Africa (TMEA) announced plans to invest in $596m worth of upgrades, which will notably include the deepening and strengthening of seven berths, as well as dredging the port’s turning basin.

PDS Project

In August 2016 the TPA announced that this project was among 163 currently under development to improve the country’s ports performance, with $690m of total investment expected for upgrades at the PDS alone, including a $600m soft loan from the International Bank for Reconstruction and Development, a $30m grant from DFID and TMEA, and $60m of government funding.

The TPA expansion plans include dredging and widening the entrance channel and turning basin to increase the draught at berths one to 11 and construction of a new multipurpose berth for the PDS at Gerezani Creek, as well as construction of two additional berths, 13 and 14. Additional upgrades include installation of a conveyor system, silos and improvements to surrounding infrastructure, including rail and road linkages and platforms.

In February 2017 Makame Mbarawa, the minister of works, transport and communications, reported that the government was discussing financing options for berth dredging at the PDS with the World Bank. According to Mbarawa, berths one to three will be deepened from 9.1 metres to 13.1 metres, while berths four to seven will be dredged up to 14 metres. The minister told media that planned berths 13 and 14 would provide an estimated capacity of 75,000 twenty-foot equivalent units annually upon completion.

The expansion of the PDS will provide Tanzania with an opportunity to maintain its competitiveness while also increasing regional trade. At the moment, the port acts as an important gateway to other neighbouring landlocked countries such as Zambia, Rwanda, Malawi, Burundi and Uganda.

Maritime Gateway

In July 2017 President John Magufuli officially launched the Dar es Salaam Maritime Gateway project, valued at approximately TSh926.2bn ($421.3m). The development is expected to reduce waiting times at berths from 80 hours to 30 hours, significantly reducing congestion. The project will also involve intermodal improvements to both rail and road linkages. When complete, the port’s handling capacity is expected to more than double from 13.8m tonnes of cargo per year to 28m tonnes by 2020. Local media reported that it will be implemented over 28 months and supported by $63m of public expenditure, as well as $12m of DFID funding, a $345m World Bank loan, a $12m World Bank grant, as well as additional funding from TMEA.

To improve operational efficiency at the port TMEA is also providing the TPA with technical support in rehabilitating access roads to reduce traffic congestion. Beyond the positive impact that increased capacity will have, efficiency should also prove a boon – a 2014 World Bank report found that inefficiencies at the PDS cost Tanzania and neighbouring countries up to $2.8bn annually in lost revenues.

The importance of Tanzania’s maritime investments appear all the more important when examined alongside the similar upgrades that are currently being carried out in regional countries that also cater to similar neighbouring markets. A number of major facilities on the Indian Ocean, such as the ports of Mombasa and Durban, for example, are also undergoing significant expansion programmes at present.