Two East African nations – Kenya and Tanzania – have sought the UAE-based Dubai Ports (DP) World to help it manage seven berths in the port of Dar es Salaam, as well as the Mombasa economic zone, deals that would give DP World a strong footing in East Africa.
DP World already has presence in nearly 10 ports across Africa and they include Djibouti, Senegal, DRC, Mozambique, Egypt, Algeria, Rwanda, and Somalia. DP World was also in advanced talks with Kenya to secure a deal to manage Mombasa, Lamu and Kisumu ports a year ago, according to media reports.
The Tanzanian officials hope that DP World will help double its revenues from the facility to $11.2 billion over the next decade, and double freight traffic to 47.57 million tons in 2023. The port of Dar es Salaam serves six landlocked countries: Zambia, Congo, Burundi, Rwanda, Malawi, Uganda, and Zimbabwe.
According to a report from the World Bank, it usually takes 10 days for ships loaded with containers to arrive and an additional 10 days to unload goods, which costs consumers more time and money compared to similar ports.
The World Bank report indicated that fees in Dar es Salam port are based on the value of goods, unlike the fixed value in Mombasa, which explains the high fees of about 74% compared to similar ports.
Tanzanian Minister of Transport Makami Mbarawa said that DP World would help reduce congestion and reduce the average length of stay for a vessel to 24 hours from five days and speed up clearance times to 60 minutes from 12 hours.
The Tanzanian port deal comes a year after the two countries signed an investment agreement under which DP World will grant $500 million to Tanzania to fund various projects aimed at improving efficiency in its ports.
Local media reports said that that Tanzania hopes to multiply the port’s revenue collection by 233.7% over the next 10 years under the deal.
“We have great confidence in DP World, and it is on that ground that we are planning to give to it berths five to seven to handle,” the Minister told local reporters.
“With DP World, we expect to see improvement in the port’s performance. We expect to see the discharge period of vessels being cut to one day from the current four to five,” the Minister said.
Private sector brings prospects for improved connectivity and the potential for expansion and modernisation of the port. With improved conditions at the port, Tanzania’s ease of doing business rate also improves attracting more investors to the country.
Scouting for Investors
In Kenya, the government is trying to find investments to manage the new, largely idle port of Lamu.
Kenya’s Minister of Investment, Industry and Trade, Moses Correa, said that his government was looking for investors willing to build 29 berths at Lamu Port. Once the concession agreement is signed, DP World could be awarded the ports of Mombasa, Lamu and Kisumu.
The Kenyan government plans to allocate four berths to DP World, which will convert them into modern multi-purpose terminals capable of handling one million containers.
In Lamu, DP World is expected to operate three berths and develop a special economic zone on a site of 500 hectares focused on agricultural activity, servicing the Lamu corridor linking the port with Ethiopia and South Sudan.
The Kenyan government will also put some state-owned companies up for privatisation over the next year, including the Kenya Ports Authority, the media reports said.
DP World is tasked with operating ports in the south and east of the Horn of Africa, such as Mozambique, Tanzania, Kenya, Somalia, Eritrea, and Djibouti. The company owns a majority stake of 51% in the Somali port of Berbera, which connects trade from the Horn of Africa to the Middle East.
Dubai Ports has been commissioned to develop Banana Port on the Atlantic coast of Congo in 2021. DP World is also investing $190 million in a multi-purpose terminal in Angola’s main commercial port of Luanda, as well as investing more than $1 billion to develop a port in Senegal.