Port Managers Association of East
and Southern African
Conference
28 November 2011
Swakopmund, Namibia
Thoughts on the financing of ports within Sub-Saharan
Africa’s transportation networks
Peter Copley, Transport Specialist, Development
Bank of Southern Africa….
With great honour and some trepidation….
Subject matter more or less the following….
• How to attract investment in our ports?
• Partnership with Government
• Attracting international shipping companies to
our ports
How to attract investment in our ports
• Society decides
• Post 1994 South Africa saw great international
interest in internal investment
• This came from then Deputy President Mbeki,
highlighting the role of the senior political
patron
• Driven by permanent public servants
• Supported by project driven private sector
champions
How to attract investment to our ports
(2)
• Post Polokwane, when society elected President
Zuma to succeed President Mbeki, the
commercialisation/privatisation process
appeared to stall
• Current international PPP interest in Africa is in
Nigeria
• South Africa will have to see what happens in
Manguang next May….with the next societal
expression of direction
• To attract international investment you have to
show the World that you are investment friendly
Not that it matters TOO much…..look
to rail as an example
• Of the G7, USA, UK and Japan have private sector
rail systems (Japan the late comer as the national economy could no
longer carry the debt. It took 10 years to take that decision)
• Germany, Italy and France have state owned rail
systems
• Canada has a private system AND a state owned
system
• 50: 50 split, so there are no right answers
• Society ultimately decides whether the public or
private sector is the predominant source of
finance, or PPP’s
PRIVATE-SECTOR FUNDING EMERGING MARKETS
Regional Distribution
REGION
No OF
PROJECTS
Latin America
Asia
Europe
Sub-Saharan Africa
Central Asia, Middle East
and North Africa
SOURCE:
COST
US$m
%
38
20
7
3
5 980
4 947
1 007
102
48%
40%
8%
<1%
2
323
12 360
3%
100%
International Finance Corporation - Financing Private
Infrastructure Projects, again at the peak
Partnership with Government
• The Maputo Corridor started (1995) within
South Africa’s company and contract law
• Only followed with PPP legislation in 1998
• Maputo Corridor now essentially a private
sector driven corridor
• Walvis Bay Corridor Group a true Public
Private Partnership
• We can learn something from that
Real Gross Fixed Capital Formation by the South African General Government and Public
Corporations on Economic and Social Infrastructure, 1946 -2007 (Rm)
35
30
Percentage
25
20
15
10
5
General government
28 Nov 2011
Public corporations
PMAESA, Swakopmund
Private business enterprises
2006
2002
1998
1994
1990
1986
1982
1978
1974
1970
1966
1962
1958
1954
1950
1946
0
Total
Attracting international shipping
companies to our ports
• Safety and efficiency in turn around times!
• Vehicle carrying vessels are turned around in 4
hours at Maputo vs 24 hours in Durban
• Which would you choose?
• Facilitated by effective use of ICT, clearing
customs while the vessel is still at sea
• We need to turn BRICs into BRICS
• Reflect on China’s balance of payments and the
role of coal
World Oil Production Forecast
Source: Energy Watch Group (2007)
Current Seminal Documents for Africa
• ‘The African Infrastructure Country Diagnostic
(Study)’:"Africa‘s Infrastructure: A Time for
Transformation”: The World Bank, released in
2009
http://www.infrastructureafrica.org/aicd
• ‘Infrastructure to 2030’: (ISBN 978-92-64-02398-7
OECD Publishing, May 2006)
• Amongst many other publications and studies
both local and regional, especially regional
integration (e g SADC)
28 November 2011
PMAESA, Swakopmund, Namibia
The Africa Country Infrastructure
Diagnostics Study backlogs
•
•
•
•
A huge number, of which the backlogs are,
50% energy
25% transport
15% Information and Communications
Technology (ICT)
• 10% water and sanitation
PRIVATE SECTOR FUNDING-EMERGING
MARKETS
Various Infrastructure Sub-sectors
SUB-SECTOR
Power
Telecoms
Ports
Pipelines
Railroads
Water
Roads
SOURCE:
No OF
PROJECTS
28
21
9
6
3
2
1
COST
US$m
%
5 706
46%
4 861
39%
222
2%
1 092
9%
117
<1%
362
3%
313
2%
12 360
100%
International Finance Corporation - Financing Private
Infrastructure Projects, at the peak
The fundamentals from a point of view
of the OECD
• OECD Publication ‘Infrastructure to 2030’
• Amongst 15 policy recommendations:
– ‘The governments of the World can no longer afford
to provide necessary infrastructure unaided. There
HAVE to be PPP’s’
– ‘Infrastructure is long term in nature and its provision
is necessary irrespective of political persuasions’
– ‘Asset management is as important as new capital
investment’
– (Recognise climate change, rising sea levels and extreme events)
Road Network Links: Current Quality and Potential Significance
(West - Southern Africa Link Enlarged)
South Africa’s logistic competitors:
(Source: PWC Germany ‘New spokes, new hubs’)
• China Logistics Performance Index 3.49 (#27)
• South Africa Logistics Performance Index 3.46 (#28)
•
•
•
•
•
Turkey Logistics Performance Index 3.22 (#39)
Brazil Logistics Performance Index 3.20 (#41)
India Logistics Performance Index 3.12 (#47)
Mexico Logistics Performance Index 3.05 (#50)
Russia Logistics Performance Index 2.61 (#94)
• South Africa’s World Competitiveness Ranking (#54)
SADC Intra Regional Traffic movement
(1996)……2011?
28 Nov 2011
PMAESA, Swakopmund
Thank you
Contact Details
Development Bank of Southern Africa
Registered office
Postal Address
Telephone
1258 Lever Road
PO Box 1234
+27 11 313 3911
Headway Hill
Halfway House
Fax +2711 206 3336
Halfway House
Midrand
South Africa
South Africa
1685
1685
WEBSITE ADDRESS:
www.dbsa.org
Peter Copley
Transport Specialist
28 Nov 2011
PMAESA, Swakopmund, Namibia
peterc@dbsa.org
Peter Copley, Transport Specialist, Development
Bank of Southern Africa….
With great honour and some trepidation….
Subject matter more or less the following….
• A broad background to funding of
transportation of infrastructure in general
• What lessons have we learned?
• Putting these lessons into some focus for the
future
Current Seminal Documents for Africa
• ‘The African Infrastructure Country Diagnostic
(Study)’:"Africa‘s Infrastructure: A Time for
Transformation”: The World Bank, released in
2009
http://www.infrastructureafrica.org/aicd
• ‘Infrastructure to 2030’: (ISBN 978-92-6402398-7 OECD Publishing, May 2006)
• Amongst many other publications and studies
both local and regional
28 November 2011
PMAESA, Swakopmund, Namibia
The World Bank’s ‘Africa’s
Infrastructure backlogs’
•
•
•
•
A huge Number, of which the backlogs are,
50% energy
25% transport
15% Information and Communications
Technology (ICT)
• 10% water and sanitation
Coverage
water
Chasing Moving Targets
sanit
Number of households (millions)
Water
Sanitation
Electricity
12
elec
10
cell
8
6
4
2
0
278 Nov 2011
PMAESA, Swakopmund
Backlog
10.0
1.8
11.1
1.4
9.8
2.0
11.2
1.3
8.3
3.5
10.0
2.5
3.8
8.0
9.1
3.4
Average Economic Rates of Return (% per annum) on World Bank
supported projects: 1974 –92 (Quoted from ‘World Development Report 1994’, The
World Bank, Washington DC)
Sector
1974 – 82
1983 – 92
Irrigation and Drainage
17
13
Telecommunications
20
19
Transport
Airports
Highways
Ports
Railways
18
21
Power
12
11
Urban Development
Water & Sanitation
Water supply
Sewerage
Not available
7
8
12
23
Infrastructure Projects
18
16
All Bank Operations
17
15
17
20
19
16
The water related rates are financial, not economic, rates of return
PMAESA< Swakopmund
28 Nov 2011
13
29
20
12
9
6
8
The fundamentals from a point of view
of the OECD
• OECD Publication ‘Infrastructure to 2030’
• Amongst 15 policy recommendations:
– ‘The governments of the World can no longer
afford to provide necessary infrastructure
unaided. There HAVE to be PPP’s’
– ‘Infrastructure is long term in nature and its
provision is necessary irrespective of political
persuasions’
– ‘Asset management is as important as new capital
investment’
‘The governments of the World can no longer afford to
provide necessary infrastructure unaided. There HAVE to be
PPP’s’
• A questionable statement?
– With emerging markets currently showing better
growth opportunities and return than mature
markets, funding is flowing into the emerging
economies BUT change is constant and cyclical.
– South Africa had a window of opportunity
immediately post 1994 and SANRAL availed itself of
that opportunity with the Maputo Toll Road, the N3
and the Bakwena Toll Road, together with two
prisons.
– That opportunity changed with Polokwane and the
deep pockets of the private sector investment
community are currently looking in Africa to Nigeria.
13 rail concessions had been awarded by mid-2005 and there
have been a further two since then.
Transrail
Senegal/Mali
2003
Sizarail
DRC
1995 – 1997
RSZ
Zambia
2003
Sitarail
Ivory Coast/Burkina Faso
1995
CEAR
Malawi
1999
Togo
WACEM
2002
Camrail
Cameroon
1999
CDN
Mozambique
2005
Transgabonais
Gabon
1999
Madarail
Madagascar
2003
Railway operated by state
railway company
Privatisation projects
planned or underway
Part of rail network now
under private management
Railway now under private
management
BBR
Zimbabwe
1997
Ressano Garcia
Mozambique
Not yet operational
Beira
Mozambique
2004
 Kenya/Uganda and
Tanzania have both been
awarded and are scheduled
to commence in 2006.
 Sizarail (DRC) was
‘cancelled’ following a change
in government
 Ressano Garcia was
cancelled in late2005
 Transgabonais was
cancelled in 2003 and is being
temporarily operated by the
losing bidder.
‘Infrastructure is long term in nature and its provision is
necessary irrespective of political persuasions’
• The Maputo Toll Road is now in its 15th year of operation; the N3 in
its 13th; and Bakwena in its 11th. No social unrest. No community
violence…..provided there are alternatives (eg Malelane and Parys
with no alternatives).
• South Africa HAS two PPP prisons which were built in 2000 and
which are referred to in very good terms by the Inspector of
Prisons, Judge van Zyl. Despite this the Minister has scrapped the
next round? Why? The market gets confused by conflicting signals
and people stop buying.
• Second round of PPP interest in South Africa appears to be coming
from the success of Maseru Hospital.
• Long may it last in the legal and procurement framework which has
now been established by the PPP Unit of the National Treasury
‘Asset management is as important as new capital investment’
• On a recent 3 000 km road trip from Gauteng to Lusaka the ONLY road
maintenance I saw being performed was on the PPP Bakwena Toll Road
(Polokwane to Tshwane) and by a trader outside of his shop near
Livingstone.
• Reality is that providing, operating and maintaining infrastructure IS
expensive…..and necessarily needs to be on-going.
• A fundamental rule is that you will spend the same again in maintaining
infrastructure over the life of the asset, if it is to be kept functional.
• In broad terms this means that road provision costs are about 2 to 3 times
what we would like them to be….and the same with rail….and the same
with electricity…..and I presume the same with water and sanitation.
• With communications we just pay! We are prepared to pay R2,60 per
minute to talk on a cell phone but we aren’t prepared to pay R0,53 per
minute to use an urban toll road? (The utility of time?!)
Road Network Links: Current Quality and Potential Significance
(West - Southern Africa Link Enlarged)
The World Bank’s ‘Africa’s
Infrastructure backlogs’
•
•
•
•
A huge number, of which the backlogs are,
50% energy
25% transport
15% Information and Communications
Technology (ICT)
• 10% water and sanitation
What is the single fundamental issue?
• I submit that the single issue is whether these
backlogs should be addressed by public or
private funds, or a combination of both
through Public Private Partnerships,
commonly known as PPP’s
PRIVATE SECTOR FUNDING-EMERGING
MARKETS
Various Infrastructure Sub-sectors
SUB-SECTOR
Power
Telecoms
Ports
Pipelines
Railroads
Water
Roads
SOURCE:
No OF
PROJECTS
28
21
9
6
3
2
1
COST
US$m
%
5 706
46%
4 861
39%
222
2%
1 092
9%
117
<1%
362
3%
313
2%
12 360
100%
International Finance Corporation - Financing Private
Infrastructure Projects, at the peak
PRIVATE-SECTOR FUNDING EMERGING MARKETS
Regional Distribution
REGION
No OF
PROJECTS
Latin America
Asia
Europe
Sub-Saharan Africa
Central Asia, Middle East
and North Africa
SOURCE:
COST
US$m
%
38
20
7
3
5 980
4 947
1 007
102
48%
40%
8%
<1%
2
323
12 360
3%
100%
International Finance Corporation - Financing Private
Infrastructure Projects, again at the peak
Real Gross Fixed Capital Formation by the South African General
Government and Public Corporations on Economic and Social
Infrastructure, 1946 -2007 (Rm)
35
30
Percentage
25
20
15
10
5
General government
11 Nov 2011
PMAESA, Swakopmund
Public corporations
2006
2002
1998
1994
1990
1986
1982
1978
1974
1970
1966
1962
1958
1954
1950
1946
0
Understanding the types of PPPs applicable to
transportation projects
• BOT’s; BOOT’s; EPC’s; EPCM’s are possibly there
to confuse us
• Fundamental is that there can be a procured PPP,
from a body of government, or an unsolicited PPP
proposal, which has to be handled in terms of the
law
• SANRAL an example of a body with a policy on
unsolicited bids
• Fundamental to match the technicalities of the
proposal with the finances available
• You CAN’T and don’t want to print money
The spectrum of PPPs
Public
control
Private
control
Degree of private sector control of assets
Design-BuildFinance-Operate
Build-Finance-OperateTransfer
Turnkey
Operation
Lease-DevelopOperate
Operations &
Maintenance
Outsourcing municipal
vehicle fleets and
services such as
garbage collection,
tendered bus services
Water and
Wastewater
Facilities
Lease of
municipal land
South African Toll
Roads, Gautrain
Development of
cellular phone
network
Experience from South Africa’s Toll
Roads
• Entered into before PPP Legislation was in
place
• 30 year wholly private sector concessions
which have changed hands now twice in
about 12 years
• 20 investors each at about ZAR 100 m each
Strategic road network of South Africa (SANRAL:
2005)
Who are the investors?
• Contractors are the equity investors
• Thereafter FNB, Standard, Nedbank, ABSA as 8
year lenders
• Thereafter RMB, Standard Merchant, Investec as
12 year lenders
• Thereafter Old Mutual, Sanlam, Mine Officers’
Pension Fund, Mine Employees’ Provident Fund,
SASOL Pension Fund as 15 year lenders
• and Public Debt Commission, DBSA/EIB as 20
year Lenders.
How is this being modified as we go
forwards?
• Gautrain’s Special Purpose Group (10% of
equity)
• Reya Vaya’s 526 taxi drivers and operators
• Government Employee’s Pension Fund owns
60% of JSE, which is in the World’s Top 20
• Transnet currently looking for ZAR100 to 300
bn (Euros 10 to 30 bn)
• Will they get it?
Vertical PPP’s?
• This does open a door to ‘vertical PPP’s’ recognising
that PPP’s are NOT fixed instruments. They are living
businesses which run for the duration of the asset and
quite possibly for longer. They are tradeable
commodities.
• Equity investors; commercial banks; merchant banks;
pension funds; DFI’s; Governments all have horizons.
Recognise them and use them.
• We don’t have to look at the entire life of the asset to
make a single successful PPP.
– (Interesting to reflect on Anglo PLC and the Chilean State
miner at present)
13 rail concessions had been awarded by mid-2005 and there
have been a further two since then.
Transrail
Senegal/Mali
2003
Sizarail
DRC
1995 – 1997
RSZ
Zambia
2003
Sitarail
Ivory Coast/Burkina Faso
1995
CEAR
Malawi
1999
Togo
WACEM
2002
Camrail
Cameroon
1999
CDN
Mozambique
2005
Transgabonais
Gabon
1999
Madarail
Madagascar
2003
Railway operated by state
railway company
Privatisation projects
planned or underway
Part of rail network now
under private management
Railway now under private
management
BBR
Zimbabwe
1997
Ressano Garcia
Mozambique
Not yet operational
Beira
Mozambique
2004
 Kenya/Uganda and
Tanzania have both been
awarded and are scheduled
to commence in 2006.
 Sizarail (DRC) was
‘cancelled’ following a change
in government
 Ressano Garcia was
cancelled in late2005
 Transgabonais was
cancelled in 2003 and is being
temporarily operated by the
losing bidder.
Putting the partnerships in PPP: How
to ensure best practice in PPP projects
• The World remains of differing opinions
• G7 rail systems equally split between private
and public ownership
• Recognise that reality and recognise
fundamental need against fundamental
constraints of affordability
• Recognise the term of ‘Public Private
Partnerships’ and be true to that term
SADC Intra Regional Traffic movement
11 Nov 2011
PMAESA, Swakopmund
Road Network Links: Current Quality and Potential Significance
(West - Southern Africa Link Enlarged)
The rail networks of sub-Saharan Africa are capable of carrying 23 million
tonnes per annum. They currently carry 3,5 million tonnes.
Applying lessons from successful BOT /
PPP processes
•
•
•
•
•
•
•
Three way institutional linkage
Top level political patronage
Ongoing public sector leadership
Clear set of rules
Ongoing private sector leadership
Reality in costing and in revenue streams
Consistency in application of the rules,
including taxation
Where to from here?
• Basic thresholds of sustainable PPP’s, from 4
000 vpd for road; 300 000 tonnes per annum
for rail; 3 m tonnes per annum for ports; 250
000 passengers per annum for airports, with
proven growth
• Think in terms of BRICs and the reality of
southern Africa
• A fundamental need to think regionally.
The Ports of Sub-Saharan Africa
• Djibouti, Mombasa, Dar es Salaam (incl Tanga,
the lakes and Mtwara)
• Pemba, Quelimane, Nacala, Beira, Maputo
• Richards Bay, Durban, East London, Nqura,
Port Elizabeth, Mossel Bay, Cape Town,
Saldahana
• Luderitz, Walvis Bay
• Namibe, Lobito, Luanda, Benguela, Pont Noire
DEVELOPMENT CORRIDORS AND SDIs IN THE SADC REGION
Showing the Current and Potential Regional Corridor Traffic Flows
Current / Medium Term Potential in million tonnes per annum, year 2000
"A Kis angani
"A Mbandak a
"A
"A Librev illeGabo n
Port Gentil
Great Lakes Region
Import Export Vols
1.6 / 2.4 mtpa
"A
Kenya
"A Nairobi
Rw and a"
A Kigali
Agriculture
"A Bujum bura
Co ng o
"A"ABraz zaville
Kins hasa
"A
Pointe N oire
Dem ocrat ic Rep ub lic
Bu rund i
of Cong o
"A Matadi
LOBITO Dev. Corridor
0 / 1.0 mtpa
"A Kananga
Kahem ba
"A
Luanda
"A
"A
Malanje
Manganese
Zimbabwe Import Export plus
Transit 4.0 / 8mtpa
Namibe"
A
Huambo
Menongue
"A
Copper
Lum umbashi
Copper
Malawi
Nacala
"A
"A Lus aka
"A Beira
Chrome
"A Bulaw ay o
Nam ib ia
Windhoek
"A
NACALA Dev.
Corr.
"A Toamas ina
"A Antananariv o
0.3 / 0.8 mtpa
Mad agascar
Bo tswana
Coal
"A Toliara
Gaborone
"A
Pretoria
"A
"A
"A
"A
Johannes burg Mbabane
Walvis Bay Dev. Corridor
2.0 / 3.0 mtpa
TAZARA Dev. Corr.
0.5 / 1.5 mtpa
LilongweA
"
Zamb ia
Zim bab we
"A
Walv is Bay
Mtw ara
"A
Coal
Harare
"A Liv ingstone Agriculture
"A
Mozam bique
Coal
Steel
Botswana Inports Exports Plus Transit
1.5 / 2.0 mtpa
Alternative road route from Zambia
"A
Lake Tanganyika
Transport, Mpulungu
Dar es Salaam
"
A
0.1 / 0.3 mtpa
"A
Forrestry
Benguela
"A
"A Dodoma
Tanzania
Ang ola
Zambia Import/Export plus Transit
1.6 / 4.0 mtpa
"A Mombasa
"A Kigom a
Map uto
BEIRA Dev. Corridor
2.0 / 5.0 mtpa
Swaziland
Manufactured Goods
Kim berley
"A
"A
"A Maseru
Bloem fontein
Coast-to-Coast Corridor
0.2 / 1.0 mtpa
Sout h Africa
Leso tho
"A
Cape T ow"A
n
"A
"A
Durban
Eas t London
Port Eliz abeth
MAPUTO Dev. Corridor
3.0 / 6.0 mtpa
Options practiced in SADC
Vehicle Road
s
Leasing
Franchi
sing
Conces
sioning
Contrac
ting out
Bond
financin
g
Equity
investm
ents
Venture
capital
Rolling Rail
Stock
and
Locomo
tives
Port
Port
Ports
facilitie equipm
s
ent
Pipeline Aircraft Airport Energy Water
s
s
DBSA : N-S CORRIDOR TO GREAT LAKES REGION: DEFINITION OF NORTH-SOUTH CORRIDOR
Kisangani
Lobito Corridor - Benguela Line,
closed at present. Distance to
Copper Belt longer than routes to
Dar es Salaam and Beira
Kampala
Kindu
Matadi
Road connection between Kafue
and Lions Den. Shorter than rail
route through Bulawayo by more
than 800km
Kigoma
Ilebo
Luanda
Dodoma
Kalemie
Mpulungu
Kamina
Malange
Lobito
Mbeya
Possible new 130km rail link
from Kasama to Mpulungu
Lubumbashi
Huambo
Ndola
Kapiri Mposhi
Menongwe
Namibe
Chipata
Lusaka
Kafue
New Bridges over Zambezi
Tete
Lions Den
LEGEND
Windhoek
Gobabis
Walvis Bay
Main Rail Routes - operational
Sena
Beira
Sena railway line, closed at
present. Only regional railway
connection to Malawi and
Nacala Corridor
Gaborone
Pretoria
Luderitz
Main River / Lake Routes
Johannesburg
Gauteng
Maputo
Maputo
Richards Bay
Durban
Main Centres & Ports
Saldanha
Cape Town
Beira Development Corridor
Beira Port: the shortest distance
by road / rail from Ndola /
Lubumbashi by approximately
600km
Beitbridge
Main Rail Routes - non operational
1000km
Nacala Nacala
Blantyre
Victoria Falls
Bulawayo
500
Tazara Railway system 1067mm
Lilongwe
Harare
Trans-Kgalagadi / Walvis Bay Transport &
Development Corridor
Position of North-South Corridor
Kidatu trans-shipment facility.
Changeover from 1067mm
gauge to 1000mm gauge (TARC)
Lake Malawi
Tenke
Kariba
Main Road Routes
Dar es Salaam
Dar es Salaam
Kidatu
Kasama
Kolwezi
Lake tranport by ferry on Lake
Tanganyika – ports to be
upgraded
Mombasa
Mombasa
Lake Tanganyika
Alternative road route from
Botswana to Zambia – new railway
under consideration
Trans-Caprivi Corridor
Final surfaced road section
now completed
Kikwit
Nairobi
Mwanza
Bujumbura
Kinshasa
Lake transport operated by
AMI/TARC, functioning well
Lake
Victoria
Kigali
Pointe-Noire
0
Kisumu
East London
Port Elizabeth
New Beitbridge to Bulawayo
railway (BBR)
Maputo Development Corridor
Alternative railway routes from Gauteng to
Bulawayo: Botswana and BBR routes
Africonsult / Giersing Rose Mar 2001
A closing word on China
• From Dr Lucy Kaukin’s doctoral thesis on trade
between Angola and China
• Africa accounts for 4% of China’s trade
• Trade balance heavily in favour of Angola
• And in fact SADC trade balance with China is
still in SADC’s favour
• Hence China is working to bring about balance
but it is not the only solution as most Chinese
money stays in China
World Oil Production Forecast
Source: Energy Watch Group (2007)
Transport Energy Efficiency
Source: http://openlearn.open.ac.uk/file.php/1697/t206b1c01f49.jpg
57
Comparative modal energy efficiencies
• Rail is 3 to 5 times more fuel efficient than
road
• Water is 100 times more fuel efficient than rail
• Where is our coastal shipping?
Thank you!
Contact Details
Development Bank of Southern Africa
Registered office
Postal Address
Telephone
1258 Lever Road
PO Box 1234
+27 11 313 3911
Headway Hill
Halfway House
Fax +2711 206 3336
Halfway House
Midrand
South Africa
South Africa
1685
1685
WEBSITE ADDRESS:
www.dbsa.org
Peter Copley
Transport Specialist
7 Dec 2009
ESASTAP/CSIR/COST/Dept Science and
Technology Conversation, CSIR
peterc@dbsa.org
South Africa’s logistic competitors
• China Logistics Performance Index 3.49 (#27)
• South Africa Logistics Performance Index 3.46 (#28)
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Turkey Logistics Performance Index 3.22 (#39)
Brazil Logistics Performance Index 3.20 (#41)
India Logistics Performance Index 3.12 (#47)
Mexico Logistics Performance Index 3.05 (#50)
Russia Logistics Performance Index 2.61 (#94)
• South Africa’s World Competitiveness Ranking (#54)
8 000
6 000
4 000
Port
2 000 of Maputo – Traffic Handled
(‘000tons)
0
2001
2002
2003
2004
2005
2006
Traffic (Total)
4 001
4 424
5 036
5 540
6 366
6 672
Traffic (conc)
2 586
2 013
2 851
3 127
3 875
4 024
Traffic (CFM)
1 415
2 411
2 185
2 414
2 491
2 648
Traffic (Total)
Traffic (conc)
Traffic (CFM)
10^3 Ton. Métricas
CFM PORT TRAFFIC
12 000.00
10 000.00
8 000.00
6 000.00
4 000.00
2 000.00
0.00
Maputo
Beira
Nacala
Quelimane
Pemba
Total
2001
4 001.50
2 356.10
743.30
132.90
78.00
7 311.90
2002
4 423.60
2 761.90
779.70
164.20
71.30
8 200.70
2003
5 035.90
2 322.60
807.90
177.40
66.70
8 410.50
2004
5 540.30
2 273.60
908.90
217.40
78.30
9 018.50
2005
6 366.90
2 419.00
875.50
243.40
77.60
9 982.40
2006
6672.2
2652.5
950.1
218.5
105
10 598.20
Recent History of Maputo Port
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Pre 1975 handled approx 14 million tonnes per annum
Post 1975 dropped to 3 million tonnes per annum (Limpopo and Goba Rail lines)
Post Nkomati Accord increased to 8 million tonnes per annum
One year later dropped back to 3 million tonnes due to inadequate security
British aid accordingly financed a fence!
80% of Mozambican foreign exchange came from freight passing through the three
corridors
Circa 1980 World Bank appointed Parisbas to advise Mozambique Government on
how to privatise its ports
Circa 1990 RFP’s were invited (at US$20 000 each) and twelve parties took
documentation
Five responded, including Mersey, Lisconti and Skanska
Maputo Port 2006
Evaluation and Negotiation
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Quite quickly MPDC were accorded preferred bidder status….
And negotiations continued for 10 years!
Fundamental was the need by MPDC to acquire both port authority and port
operator status with effective inland service (road AND rail)
Equally fundamental was the need for Mozambique to negotiate long and hard
(precedent for both Beira and Nacala)
In the interim MPDC operated as management agents for CFM
Slowly moving back to 6/80 million tonnes with a target of 15 million tonnes in
2010
As Skanska was an equity partner SIDA (Sweden) requested the DBSA to act as lead
arranger for the DFI’s
This augments the commercial arrangers who were in this case SCMB
Arrived at a 15 year concession in a ratio of approximately 50:50 equity to debt
Overview of Financial Package
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Equity investors want 17% pa on investment over 5 years
Commercial Banks want about 15% over 8 years
Merchant Banks about 12% over 12 years
Pension Funds about 10% over 15 years
DFI’s (Development Finance Institutions) take a 20 year view
Role of the DFI’s in Financing Business
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Direct investment in projects through term loans
Credit enhancement through innovative structures, risk assumption and guarantees
Ability to mobilise additional funding from third parties
Strengthen the capacity of the borrower to implement and manage the project by
providing technical assistance
Policy and knowledge sharing and advice
Facilitation of public-private-partnerships
Support for black economic empowerment by funding sustainable BEE initiatives
and partnerships with indigenous business operators
Development of local capital markets in order to provide access to local currency to
offset exchange rate risk, access to long-term capital and increase investment
alternatives
Thus far not necessary to draw down on DBSA debt due both to slower
development than anticipated and as supplier credit and equity have been sufficient
to meet what has been necessary
Order of re-development
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1996 Maputo Toll Road
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1998 Mozal and reintroduction of motor cars
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2000 Return of the commercial banks
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2002 Return of advertising
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2004 Return of builders and painters
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2005 Final signing of Maputo Port 15 year concession
Rail and port network of South Africa (Adapted from Barnard, D
2003 & National Ports Authority, 2004)
South Africa: Ports and Rail Network
LIMPOPO
MPUMALANGA
GAUTENG
NORTH WEST
SWAZILAND
FREE STATE
KWAZULU NATAL
Richards Bay
NORTHERN CAPE
LESOTHO
EASTERN CAPE
Saldanha Bay
WESTERN CAPE
Durban
East London
Ngqura: (under construction)
Cape Tow n
Port Elizabeth
Mossel Bay
Rail Network Classification
PortPort
classification
classification
Deep water
Hub
Multi purpose
Core
Export
Non core
Other
1995
Port Infrastructure
2005
Maputo 1995
Maputo 2005
Ongoing support and possible future
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Maputo is primarily a niche port (cf Durban at 56 million tonnes, Richards Bay at
120 million, Saldanha at 26 million and Cape Town at 18 million tonnes)
Dredged depth currently constrained to 9 metres (cf international need for 12 m or
16 m)
Need for continuous dredging, still done by CFM
Quantum leap necessary if throughput were to go higher than 15 million tonnes
per annum
Absolute need for rail improvement and for one stop border
Also an example for other African ports (eg Mombassa, Dar es Salaam, Luanda,
Egypt, West Africa AND South Africa)