Ports in Privatisation Storm. (Shipping)

By Ewens, Graeme | African Business, June 2002 | Go to article overview
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Ports in Privatisation Storm. (Shipping)

Ewens, Graeme, African Business

In common with the industries and public utilities discussed in last month's issue of African Business, the privatisation of sea ports in Africa is progressing spasmodically with different countries approaching the problem in different ways.

Nigeria is just one of the countries immersed in a vigorous debate with labour unions. However, few governments are following a policy of total privatisation, preferring to talk of partial privatisation of services and infrastructure, 'concessioning' or 'commercialisation'.

Privatising ports and harbour operations is intended to attract investment, increase profitability and accountability and also improve operational efficiency - and cut down on corruption and theft which can flourish in a port environment. Almost all the ports being considered for privatisation have suffered from congestion which stifles trade and incurs additional cost burdens.

Governments are not intent on selling-off the freeholds on port real estate, but wish to maintain the role of a landlord/authority while hiving off concessions to operate in various sectors. In most countries the development of container handling facilities has been the most urgent priority.

Moving towards divestment

Kenya appears to be leading the way in divestment of state control with the announcement of a programme for restructuring Mombasa port prior to privatisation. Other countries such as Egypt, Senegal and Cameroon are contracting out specific services such as container handling, crane operation, shipping agents and aspects of port management.

Ghana, which has made the ports of Tema and Takoradi autonomous, was forced to put plans for port privatisation on hold in the run up to the Presidential elections. A trade official at the High Commission in London states categorically that Ghana's ports are not being privatised although some services are being operated by private companies and more will follow.

South Africa has set up a state-run organisation called South African Port Operations (Sapo) which will compete with private operators in handling bulk cargoes, although keeping a virtual monopoly on container traffic.

Changes blowing in the wind

In East Africa, the privatisation of Mombasa port has been under discussion since the mid-1990s and in March, Cabinet Minister Musalia Mudavadi said Kenya Port Authority had to move fast to keep up with the wind of change that was blowing across the world over privatisation of port services. He called for Kenyans to support the imminent privatisation of services at the port, saying it would stimulate economic activity and increase revenue generation. He also promised that local investors would be given priority.

The first step will be to privatise the container terminal through a concession which was expected to be set up by the start of 2003. The existing container terminal is to be expanded and upgraded and two more terminals are to be developed. In addition, the government has given KPA approval to privatise conventional cargo handling. The port infrastructure is also due for redevelopment which will include dredging the harbour approaches to accommodate larger vessels.

As in other African countries, the major objections at this stage come from labour organisations which fear for the future of their members through inevitable redundancies and retrenchment. The secretary general of the Kenya Dock Workers Union, Kennedy Kiliku, claims that privatisation will endanger the job security of his members.

Mombasa is still East Africa's major port and congestion has been reduced significantly with average turnaround time down to two days. Uganda is the port's principal client and thanks to harmonising documentation and verification procedures, loads can now reach Kampala by train in four days as opposed to four weeks previously.

The Kenyan port which also serves Tanzania, the DRC, Rwanda, Burundi and Sudan is, however, under increasing competition from Dar es Salaam, where the container terminal has already been privatised and is now operated by Philippines International Container Terminal Services.

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