Seven countries in sub-Saharan African countries are currently introducing new National Port Master Plans, which could potentially reshape their ports industry. Although not all of these plans are addressing institutional reform as such, the vast majority are tackling this area to some extent.

Despite this, virtually none of the countries appear to be interested in introducing the independent regulation of ports wanted by big investors; instead, this function remains in the hands of agencies often linked to a country’s Ministry of Transport.

African countries don’t appear to be interested in adopting the globally successful landlord model of port administration. Just two in sub-Saharan Africa – Nigeria and Ghana - have so far gone down this road, while a further eight –Sudan, Kenya, Namibia, South Africa, Congo, Benin, Cape Verde and the Democratic Republic of Congo - retain the old full service pattern, whereby the public sector not only owns the ports, but also undertakes handling operations.

Despite these fairly rigid structures, the various countries have been more flexible in respect of their container terminal operations, whereby at least nine have offered concessions to the private sector to run these facilities. In part, this need to source private sector know-how is being driven by rising throughputs. In the ten years between 1995 and 2005, for example, container throughput in Eastern Africa rose 176% to 1.39m teu; in West Africa the increase was 128% to 3.09m teu; while Southern Africa, with 3.12m teu, had the largest increase of all, at 364%. From a base line of 2.53m teu in 2005, 17 sub-Saharan African countries surveyed reported a 200% increase in traffic by 2005, when combined traffic reached 7.61m teu.

However, this growth, which is not purely confined to containers, is causing substantial capacity problems. This is as true for import/export traffic as it is for transhipment, where every region of sub-Saharan Africa is faced with a significant capacity shortfall.

There are many projects out there awaiting funding. Unfortunately, many governments in the region are unable to bankroll all needed infrastructure upgrades, leaving international terminal operators as the only source of new money. Other potential investors, such as pension funds, private equity funds and infrastructure funds, view Africa as simply being too risky unless some form of institutional reform takes place.

Ports also operate in relative isolation, with only limited amounts of cross-border container traffic being possible because of infrastructure inadequacies; just South Africa has a developed road and rail network.

To make matters worse, while there have been productivity gains in recent years, overall the handling of boxes, general cargo and bulks remains inefficient compared with global benchmarking. In East Africa, quay movements for containers vary between 9 and 20, while in South Africa they can drop to six per hour and only reach 18 under optimum conditions. In West Africa, anything between 6 and 20 hourly moves is normal.

All of this is resulting in congestion, to which only two solutions present themselves: increasing capacity or improving efficiency. Both ultimately require funding.

If that isn’t bad enough, African ports are expensive. This is caused by technical inadequacies, such as poor facilities, poor management and a relaxed attitude to maintenance; by structural weaknesses, namely limited planning, an inability to match supply and demand and the absence of an enterprise culture; and by institutional problems, of which a lack of regulation, the presence of monopolies and the use of outdated pricing structure and systems are the main ones.

Because of many of the aforementioned factors, most potential investors remain shy of putting their money into Africa. However, for those prepared to take a punt, the pay back could be substantial. There is huge potential demand for growth; therefore most development opportunities are financially viable. The lack of major hub ports means that those entering the market first may well establish a major advantage over rivals.

Information in this article was derived from the Africa Infrastructure Diagnostic Study undertaken by Mike Mundy and Ocean Shipping Consultants.