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the coastal states of Kenya, Tanzania and Mozambique border on nine of Africa’s 16 landlocked countries. With the external trade of so many states concentrated through so few, this littoral stretch has long represented a concentration of culture and economic activity, clearly evident in what is known as the Swahili Coast. With these economies now showing near-universal growth, and East Africa representing the most natural shipping gateway to the mineral-hungry Asian markets, competition between its ports is intensifying.
East Africa’s ports infrastructure is a fraction of what it could be. The 15 states of the Economic Community of West African States (ECOWAS) are home to six ports capable of handling over 300,000 twenty-foot containers (TEU) per year. The five coastal countries stretching from Djibouti to Mozambique and all the landlocked countries they could potentially serve are home to just three. “When it comes to mining for all of the land-locked countries, the ports are the biggest bottleneck,” said Deanne De Vries, vice president for Africa at Agility Logistics.
Yet the past few years have seen the announcement of transportation infrastructure investments that overshadow those of any other global region. $17 billion of transportation projects are in the pipeline in Mozambique. Kenya’s Lamu Port-South Sudan-Ethiopia Transport (LAPSSET) corridor is forecast to cost $25.5 billion, in addition to upgrades at Mombasa Port and a $13 billion regional railway project. Tanzania has proposed ports and transport corridors representing investments of over $40 billion, in addition to upgrades at Dar es Salaam Port and elsewhere.
These investments are good news for companies operating in the region: especially the mining sector, in which the viability of a mine can often depend on its export routes. Yet they are also leading to a shift in regional trade routes that companies should be aware of. With South Africa, home to the continent’s largest and busiest port Durban, anchoring the southern end of Africa’s eastern seaboard Kenya, Tanzania and Mozambique are looking to increase market share from their western and southern neighbours, bring them into competition with each other.
Mozambique Seeks Botswana’s Coal
In Mozambique the government has invited bids for a $2 billion 525 km railway that will link the coal fields of the Moatize Basin to a new port at Macuse and announced plans for a new $7 billion deepwater port at Technobanine. Expansion work is also underway in the ports of Maputo, Beira and Nacala, the three largest of Mozambique’s seven main seaports.
In addition to increasing physical infrastructure, strong efforts are being made to increase efficiency. In partnership with its port operators, Mozambique has implemented Janela Único Electrónica (JUE), an online, electronic port processing system. “The establishment of the JUE has lead to at least a 50% improvement in efficiency at the ports. The system as a whole has now stabilised, it increases the speed which documentation is finished therefore speeding up the whole system. All three major ports in Mozambique can now be considered efficient and much credit should go to the operators DP World, MPDC, Cornelder and Portos do Norte. However, since the recent unrest companies have been reluctant to transport goods by road and we have seen some backlog at the ports as a result. Particularly in the case of Beira, which acts as the transit port for Zambia, Malawi, Zimbabwe and, to a lesser extent, Botswana. In general the ports system in Mozambique has improved vastly over the past year,” explained Karen de Almeida, general manager – finance and administration for UTi.
Mozambique has much work to do before its infrastructure is global best practice standards. Container dwell time at its ports still average far higher than those of its northern peers; let alone South Africa. Upgrades on the Sena line, connecting the Tete province to the Beira seaport, will increase capacity from 3 million mt/y to 6.5 million mt/y, yet this more-than-doubling still falls well below the total capacity of the Tete province, which at maturity is estimated will reach 100 million mt/y. The African Union, in a study done for the Programme for Infrastructure Development in Africa, estimated that even with currently planned port and terminal expansion, Mozambique will still suffer from short-term port container capacity gaps by 2020.
These worries have not stopped Mozambique seeking to serve as the trade route for their neighbouring countries in the region. Its Nacala Railroad, being expanded by Vale, connects to the Central East African Railway of Malawi. The Beira Railroad connects to Harare in Zimbabwe and the Maputo Railroad connects to South Africa, Zimbabwe and Swaziland.
One of the largest competitions being played out at the moment is for the coal of Botswana. In August the Mozambican Minister of Mineral Resources invited his Batswana counterpart and the Batswana Minister of Transport and Communications to discuss the export of coal and acquisition of fuel through Mozambique. “Evaluations are currently being made to decide if existing railway lines between Mozambique and Botswana should be refurbished, which would better connect the country to the ports of Maputo and Matola,” explains the Honourable Onkokame Kitso Mokaila, Ministry of Minerals, Energy and Water Resources of the Republic of Botswana.
Yet Walvis Bay of Namibia is also hoping to secure Botswana trade, as well as that of other landlocked countries, and can at the moment boast shorter transit times. “As a relatively new port, we cannot compete on volumes with Durban at this stage but we can reduce the cost of doing business in southern Africa. Walvis Bay has five competitive advantages: Namibia is safe, it is secure, is it easy to do business in, our transit times are much better than the rest of southern Africa, and we are efficient along the complete corridor” suggest Johny Smith, CEO of the Walvis Bay Corridor Group. “Namibia has a coastline of 1,500 km and Walvis Bay is very strategically located. Walvis Bay can cover southern Angola, Zambia, southern Democratic Republic of the Congo (DRC), Zimbabwe, Botswana, and also parts of South Africa.”
While the need to support its own mining industry will restrict, though not stop, Mozambique’s regional transport corridor ambitions in the medium-term, they will nonetheless also restrict any attempt by Tanzania to increase its regional influence southward. Like Mozambique, Tanzania is not free from port problems. “There are long delays at the Port of Dar es Salaam, which we know the authorities are working hard to rectify. In the meantime Minesite Tanzania is using the Port of Mombasa to ensure zero loss of production and downtime for our end users,” said Damien Valente, country manager for Minesite Tanzania, a mining service provider based out gold-mining hotbed Mwanza.
Located in the horn of Africa Africa, Ethiopia is home to more than 91 million people, and less than 30 percent of the population has access to electricity. Under the Growth and Transformation Plan, the country’s government aims to boost energy potential through recent construction projects.
Thanks to an investment partnership between a French firm and the government, Ashegoda Wind Farm was opened at the end of October 2013. The 52 MegaWatt farm is estimated to cost slightly over 200 million euros.
Have you heard of the Grand Renaissance Dam?
Though the structure’s estimated year of completion is 2017, it hasn’t stopped the $4.7 billion project from making headlines. Announced in 2012, Grand Renaissance will be Africa’s largest. It will rest along the Nile River and run between Egypt and Ethiopia. If executed, this could be two milestones marked for the East African country’s development, but debate about the dam’s potential effect on the water supply of neighboring Egypt has halted construction.