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Polity
Published: 05 Feb 2004
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| Radebe: African Intermodal Africa 2004 (05/02/2004) | |
| Date: 05/02/2004 Source: Ministry of Public Enterprises Title: J Radebe: African Intermodal Africa 2004 REMARKS BY MINISTER OF PUBLIC ENTERPRISES, JEFF RADEBE, MP, AT INTERMODAL AFRICA 2004, CAPE TOWN, 5 February 2004 It is my pleasure to officiate at the opening of this second African Intermodal Conference hosted by the National Ports Authority of South Africa. Your deliberations come at a very significant moment in our South African port development, and our continent as a whole as New Partnership for Africa's Development's (NEPAD) overarching development agenda picks up steam. It is always wise to regularly pause, examine and assess progress, and this conference presents an ideal opportunity to do so. The Conference Programme, ladies and gentlemen, has a wide scope and its clearly designed to share experiences from all actors of the intermodal transport world, not least shippers, cargo owners, shipping lines, freight forwarders, ports logistics companies, terminal operators, railway operators and port/rail equipment services suppliers. I am confident that your deliberations will be energetic, fruitful and successful. The subject of inter- and multimodal transport systems and networks is a complex one, traversing international legal instruments, contract law, infrastructure development and maintenance, cross-border activity, import and export trade flows, the vagaries of currency fluctuations, logistics, procurement and so on. I am definitely not going to provide even an executive summary of all of these, both for your sanity and my own! I wish this morning to present an appreciation of the African context which your Conference subjects address, and follow this with an outline of where I think South African developments fit, particularly with respect to our ports policy and, finally, I wish to conclude with a brief summary of some major challenges that we as Africans face in the hurly-burly of the globalised economic and security environment. The United Nations Conference on Trade and Development's (UNCTAD) 2003 "Review of Maritime Transport" reports that African countries' economic performance was generally below averages recorded for the rest of the developing world. Political turmoil and conflict, even wars, in some regions of the continent resulted in the retraction or reversal of economic growth and development, as witnessed in countries like Sierra Leone, Cote d'Ivoire, Liberia, Burundi, Democratic Republic of the Congo and Rwanda, Chad, Gabon, Zimbabwe and parts of the Horn of Africa. The critical point however, is that notwithstanding the terrible cost in human lives, injuries and psychological trauma caused to people, such conflicts often take a heavy toll on infrastructure, transport and communication systems. Too often limited railway rolling stock and vehicle resources are taken over for military transport requirements and thus are lost to the economy that is already seriously disrupted through conflict and turmoil. Traffic is diverted away from war-torn or unstable areas towards other corridors, with the evident result that infrastructure that is already under pressure comes under even greater stress. These problems highlight again and again the need for Africa's security needs to be addressed through practical action, and the causes of conflict addressed timeously and collectively. But regional problems aside, Sub-Saharan Africa, including South Africa, accounted in 2001 for some 65% of Africa's exports, and about 62% of its imports. However, it is important to note the imbalances in our trade. The European Union accounts for nearly 50% of all African exports by value, and half of this is from crude oil, gas and petroleum products, whilst textiles make up about 25%, agricultural products a little under 20% and the remaining 10% or so of minerals. African imports from Europe comprise some 80% of manufactured goods, and about 50% of this figure again is machinery and transport equipment. A critical component of Africa's trade relates to transport costs and their impact on the import bill. The UNCTAD Review provides the following sombre note: "In 2001, the total freight costs of African developing countries as a proportion of import value was 12.65%, which is considerably higher than the average of 8.7% for developing countries. It is more than double the percentage for market economy countries and the world average." When we consider the continent as regions, Northern Africa has the lowest freight cost average, at 11.21%, and the island states of the Indian Ocean at 12.23%. East coast countries are also slightly below the continental average, at 12.35%, but as we go west and south, the picture gets worse: western African freight cost averages are 13.9% and southern Africa, some 16.42%. The average cost for sub-Saharan Africa, excluding South Africa, stood at 13.84% in 2001, but the highest cost was for land-locked countries at 20.69%. Delays that are often experienced at border posts also impede the development of a seamless transport system. In Southern Africa, for example, one survey suggests that delays range on average between 4 hours (at Pioneer Gate between South Africa and Botswana) and 36 hours (at Victoria Falls between Zambia and Zimbabwe), or 17 hours at Nakonde on the Tanzam corridor between Zambia and Tanzania. The cost to the region is estimated at some $48 million annually! A look at the average costs of transporting a container, for example, along the various road transport corridors in Africa is also instructive. In South Africa, the average cost for the Maputo-Johannesburg, Durban-Lusaka and Walvis Bay-Johannesburg routes is about US$1.4 per kilometre, which is slightly lower than costs in the European Union, but higher than in the United States. Estimates for other African routes are generally much higher. So, for example, to transport a container the 1 650 kilometres from Dar-es-Salaam to Kigali costs $3.02 per kilometre, the 1 600 kilos from Doula to Bangui, it costs $4.94 per kilometre, and the 1000 kilos from Lome to Ouagadougou, the cost is about $2.55. Significantly, non-distance-related costs such as port tariffs and border post charges range between 12 and 40% of the total costs of inland transport. The World Bank provides another illustrative example. It costs about $1 000 and $1 200 to ship a container from Baltimore in the United States to Dar-es-Salaam or Durban respectively, but to transport the same container from those ports to Bujumbura and Mbabane in turn costs $10 000 and $12 000 respectively! What does all this mean in real terms? Simply put, excessive transport costs inflate consumer prices of imported goods, that as we have seen are essential items for consumption, construction and transport infrastructure itself, and furthermore, high transport costs bounce any exports from these countries right out of the competitive international market. The UNCTAD Review concludes that the "major elements accounting for the high freight costs of landlocked developing countries include inefficient management of transport facilities, poorly maintained infrastructure and equipment, imbalanced trades, inadequate overall infrastructure and cumbersome government regulations." Indeed, excessive transit costs to landlocked developing countries are a much more restrictive barrier to trade than the tariff regimes in major markets such as the United States, Japan or the EU. If I may turn now to ports themselves. Last year, at the 23rd International Association of Ports and Harbours held in Durban, I had occasion to suggest that we should emphasise the strategic and critical link that ports and harbours represent to countries and regions as well as to the global economy itself in an era of increasing interdependence and reliance. The global economic system, and its component parts of which the transport systems are core, is fragile and subject to potential disruption as much through terrorism as through inefficient operations, the proximity of certain ports to major trade routes and major hinterland import and export markets. The real answers to problems such as congestion, unreliable arrivals and departures of vessels and cargo, inadequate information and communication systems, inadequate or overstretched infrastructure may indeed rest on a better sense of how the whole system itself works, is integrated, and is subject to numerous threats of disruption all along the chain. Since we met in Durban last year, African ports around the continent have continued to undergo reform and restructuring. UNCTAD assures us that, although findings are preliminary and in some instances too early to identify trends, in ports where some form of concession or partnerships with the private sector have been introduced, general improvements in efficiency, increases in containerised traffic throughput, improvements in container handling and decreases in the average turnaround time of vessels have occurred. The drive towards seeking private sector participation in ports around the world has been influenced by the impact of containerisation itself, which has brought into focus dramatically increased costs of infrastructure such as cranes, IT systems, and massive improvements in the road and rail access to ports and harbours. Perhaps it could be suggested that the dramatic increase in infrastructure costs has finally outstripped the capacities of even the richest states to afford a single role for governments towards partnerships with the private sector itself. There appears to be strong evidence that "regional competition for transit and trans-shipment of the lucrative trade of neighbouring landlocked countries and port capacity are the basic elements which provide motivation for the introduction of reforms in African ports and attract the private sector." Indeed, reforms are most advanced precisely in those ports with a large "hinterland with intense regional competition." Some examples would include the ports of Abidjan, Dakar, Dar-es-Salaam, Djibouti, Doula, Maputo, Mombasa and Tema. But we should also note that efficiency gains and productivity improvements "have also been recorded in ports run by State corporations with administrative and financial autonomy and subject to performance requirements, such as Port Louis and Walvis Bay." Significantly, "The results obtained by these ports show that this is another option for the vast majority of African ports, which tend to find it difficult to attract private investment owing to the limited volume of traffic, and where the dangers of a switch from a State to a private monopoly raise the problem of striking a balance between wholly private and State management." UNCTAD believes that "the landlord port option, whereby operations are run independently by an autonomous department - private and/or state - of the port authority, is thus the most appropriate solution for the majority of Africa's ports." The South African case fits quite neatly into processes taking place elsewhere in Africa. Thus, the former state entity Portnet, was split into two independent bodies; the National Ports Authority responsible for landlord activities, and SAPO, South African Port Operations, who are in charge of port operations. South Africa's seven major ports are complex institutions with a variety of tasks and designations. It would be a mistake however to think that SAPO controls 100% of port operations at the moment. In fact, whilst SAPO manages all of the container terminals, private operators manage some 23% of miscellaneous merchandise terminals and 65% of bulk terminals under lease contracts. Currently, important ports legislation is before Parliament and I trust that we will see a conclusion to their deliberations shortly. Government aims to improve productivity and efficiency throughout our ports system to ensure improved capacity to handle future demands. Some debate still rages about the precise nature of the congestion that affected most of our ports last year, whether 2002 was an exceptional boom year or that it represented an increasing trend generally. I am not going to attempt to be a referee in this debate, except to point out that the fact remains that inefficiencies remain in our system that need to be eliminated as these add on to the indirect and direct costs to consumers, to our neighbours and to importers and exporters alike. There has been some speculation recently about Government's commitment to a total concession of all port operations and the slow withering away of SAPO compared to our preferred position of seeking solutions that take cognisance of the complex yet different set-up that operates in our ports. Thus, Government will soon invite proposals for private sector participation in certain of our port operations, starting with the Durban Container Terminal. In reaching our decisions, we have taken into account African experiences, and engaged organised labour thoroughly to ensure that the policies affecting ports in our National Transport Policy White Paper are implemented swiftly. Whilst this conference concentrates on the role of ports in the transport logistics chain that link maritime trade with land-based multimodal road, rail and in some instances airfreight systems, a few remarks on Africa's railway system will serve to identify another problematic in the equation. For even if we were to develop all of Africa's 80 international and regional ports into paragons of efficiency and world-class standards, without a related push forward in our rail and road networks, any progress in ports would be short-lived. Rail systems exist in all but about 6 countries on the continent, and account for perhaps 75 000 kilometres in all. Sub-Saharan Africa boasts about 83% of all Africa's railways, and South Africa's share of the African total is some 35%, or 42% of Sub-Saharan Africa's system. South Africa accounts for about 47% of the total number of locomotives of all types in Sub-Saharan Africa or 32 of the African total. However, South Africa's dominance of electric locomotives is nearly complete, with about 96% of Sub-Saharan locos and 92% of the continent's total number of electric locomotives. The African freight wagon fleet is small by international standards, and here too, South Africa's dominance is notable, with about 62% of the total African fleet and 74% of the Sub-Saharan total. The amount of rail freight tonnes moved also occurs mostly in the South African system, with about 71% of the African total and some 91% of Sub-Saharan traffic. These are formal figures and do not account for lines or rolling stock that are out of service or idle, a situation that impacts more in some regions than others. Thus, from any angle, it seems clear that the number of rehabilitation and new railway projects that have emerged in the last 5 to ten years or so, have come not a moment too soon. A number of so-called "missing links" in Southern Africa involve a focus on providing a rail link between the Democratic Republic of the Congo (DRC) and Namibia, completing the Trans-Kalahari railway linking Namibia and Botswana, a line linking Botswana and Zambia through Kazungula, and indeed even consideration of a link between Mtwara port in Tanzania and Malawi. Rail upgrade work is steaming ahead in Mozambique, Angola and more recently the DRC, where once again, the decline of conflict and the emergence of peace have enabled these projects to take off. Moving freight from country to country often has to rely on a wide variety of different modes of transport, with all sorts of complications along the way. A nice example provided by UNCTAD is the export of 40 000 tons of maize from Uganda to Zambia during 2001/02. "After being concentrated in Kampala, the maize was railed to Portobell on the shores of Lake Victoria, from where it was ferried to Mwanza, Tanzania. From this point, three different networks, namely Tanzanian Railways, Tazara and Zambian Railways, were used to reach the final destination in Zambia." Some lines that branch out our from the central spine link landlocked countries to the coastal ports. Interspersed along this spine are other critically important, but frequently forgotten elements: the inland or dry ports, or container terminals, the largest Southern African one of which is in Johannesburg, but with others in Maseru, Botswana and further north. However, a number of routes that cross Africa also have the potential to become spines of their own. Thus, It should be no wild leap of the imagination sometime in the not too distant future to transport freight and passengers across from Dar-es-Salaam in the east across the hinterland, to embark by ferry at Kigoma and cross Lake Tanganyika to Kalemie in DRC, then entrain again towards Kindu in the north, or Ilebo in the west via Kamina, and then to sail the great waters of the mighty Congo to sweep on towards Brazzaville and Kinshasa, and from there to the west coast itself. Let me move towards a conclusion. The plight of African countries generally, but of the 15 landlocked countries in particular, depends to a significant extent then on problems of infrastructure and network systems that cross transport modes and cross national borders. The challenges are huge, but we are confident that we are up to meeting them and of enacting programmes that will begin to provide the continent as a whole with the necessary means to accomplish greatness once again. Already we have seen the inclusion of a number of items in regional and national development programmes that stress the enhancement of physical infrastructure and transport services generally, and in rail, road, inland waterways, port facilities and even in airfreight arenas. I have mentioned some of the rail developments earlier, and we should remember the massive investments into Maputo, the Nacala corridor, Tema and the related rail expansion with Accra, or new terminal and modernisations taking place in Doula, Abidjan, Cotonou, and Dakar. Don't forget the extraordinary developments around Djibouti and of course the new harbour development at Nqura in South Africa. At the same time, we need to concentrate on improving transit facilities and support services across the board. The maintenance, development and operation of dry ports in particular could do with some major overhauls, and I just make passing reference to the processes that are underway through United Nations agencies at the moment towards developing a single international legal instrument to cover issues such as liabilities in the multimodal transport environment. But it is time now to move on. I am delighted to note that alongside this Conference is an international exhibit of a whole range of port-related and transport-related equipment, technology and services. I wish you all a highly successful conference, pleased with the knowledge that the presence of so many stakeholders and experts will assist greatly in providing the information and wherewithal that governments around the continent can usefully employ. I thank you. Contact person: Ms Miranda Strydom Cell: 082 908 8976 Issued by: Ministry of Public Enterprises 5 February |
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