OBG talks to Nils Smedegaard Andersen, Group CEO, A.P. Moller- Maersk Group

Interview: Nils Smedegaard Andersen

What opportunities do you see for improving maritime infrastructure or expanding capacity?

NILS SMEDEGAARD ANDERSEN: If South Africa is excluded, the growth is almost 6%, and here in Ghana growth is in fact above 8%. The abundance of minerals and natural resources highlights the fact that the potential for expansion here is tremendous. You also have lots of people getting better education, and an ever-larger number moving into the affluent middle class. As such, there is little doubt that growth over the medium and long term is very sustainable.

I headed the infrastructure, transportation and supply-chain working group at the World Economic Forum in Davos in 2012, and one of our conclusions was that merely removing a few bottlenecks in every country would enable the world to add 5% to its growth, not necessarily every year, but as a long-term effect. I think this impact is even more pronounced in West Africa given that infrastructure is lagging behind.

We are proposing to the government a port expansion that would double or even triple capacity from the current level of 800,000 twenty-foot equivalent units per year. This is urgent, and we need to take immediate action. We constantly experience capacity constraints in the Ghanaian ports, causing vessels to wait three to five days out on the sea. It is a risky and costly situation and it needs to be addressed now so it can be solved in three to four years.

Increasing trade between African countries will also require more specialisation, because as long as the economies of these neighbouring nations are structured so similarly, there is not much to trade with one another. This is something to keep in mind, that until you reach higher-level manufacturing and more systematic agriculture, there will be limited trade.

How can operating ports in Africa become more attractive for foreign investors?

ANDERSEN: In our experience, infrastructure is an attractive investment; as long as you make sure that as an investor, you deliver what you promise. A company must look at itself and analyse if it is prepared to do what it takes to be in it for the long haul. The most important factor for long-term investors is to have transparent and clear rules on how things work.

With port investments, you do not make any money for the first 10 years, so it becomes imperative to consider the length of tenure, and also ensure that the agreement you have with the government will stick through thick-and-thin. Otherwise, it is not an attractive environment for investors.

To what extent are ongoing piracy activities a concern for shipping operators, and what can be done to ensure this threat is minimised?

ANDERSEN: The activity has been declining in the last year. There is a lot of effective work going on among the navies that operate throughout the trade groups.

We have to be clear that to fight piracy, we also have to work with the problems that these people are facing on shore – if there is no alternative in terms of employment and opportunities, piracy becomes an attractive option. If people have a safe and good life in their country, however, nobody wants to go on the sea and risk their lives to become criminals. Piracy has to be controlled, but another effective measure in this endeavour is to improve the living standards and the opportunities in Somalia.

On the west coast, piracy has been considerably different, we have not seen hijackings of vessels; rather it usually involves attacks and robberies, and pirates fleeing the crime scene. This is not better or worse, but it is a different kind of piracy. The solution, however, is similar: to ensure people have jobs and an opportunity to have a better life. Living day-to-day as a pirate on the Niger Delta, or anywhere that piracy happens, is not an attractive life for people.

Additionally, of course, one of the clearest ways to stop or minimise the prevalence of piracy is to avoid having ships sit outside port waiting to be serviced.