Inefficiency at Dar port swallows up $2.6bn of GDP
Port of Dar es Salaam. Port inefficiencies and corruption are hold back economic development. Photo/FILE
What you need to know:
Tanzania and its six landlocked neighbours are losing millions of dollars every year, as port inefficiencies and corruption hold back economic development.
Tanzania and its landlocked neighbours could boost their annual gross domestic product (GDP) by up to $1.8 billion and $830 million respectively by taking measures to improve the efficiency of the port of Dar es Salaam.
According to a World Bank report titled “Opening the Gates: How the Port of Dar es Salaam Can Transform Tanzania,” the country and its six landlocked neighbours are losing millions of dollars every year, as port inefficiencies and corruption hold back economic development.
Jacques Morisset, the bank’s lead economist for Tanzania, Uganda and Burundi says that with its strategic location, the Dar es Salaam port is the gateway for 90 per cent of Tanzania’s trade, clearing $15 billion in merchandise annually. This sum is equivalent to 60 per cent of Tanzania’s GDP in 2012.
“In addition, the port provides vital access to Tanzania’s six landlocked neighbours: Malawi, Zambia, DR Congo, Burundi, Rwanda, and Uganda,” said Mr Morisset.
According to the economist, in 2012 the total loss resulting from inefficiencies at the port was estimated to reach $1.8 billion for the Tanzanian economy and $830 million for the neighbouring countries.
Mr Morisset said these losses were equivalent to approximately seven per cent of Tanzania’s annual GDP, and affected a wide range of local consumers, businesses and government agencies.
High charges at the port are also reducing its competitiveness in the region, with the report pointing out that the official port fees in Dar are on average 74 per cent higher than in Mombasa, principally as a result of higher wharfage charges.
But all is not rosy across the border either. The port of Mombasa, too, is struggling to clear bottlenecks as the volume of goods moving in and out of Kenya increases.
Building a second port has been the solution of choice for the governments of Tanzania and Kenya. Tanzania has been looking to build a second port at Bagamoyo, north of Dar es Salaam, and in Kenya, the new Lamu port is expected to open up the arid north, riding on the discovery of oil in Turkana and increased trade with South Sudan and Ethiopia.
But the World Bank says that inefficiency, and not capacity, is the major problem in regional ports.
“Much has been said about Singapore handling 50 times as much cargo as Mombasa. But the port of Singapore isn’t 50 times bigger than the port of Mombasa. It’s an issue of efficiency,” said Wolfgang Fengler, the World Bank lead economist for Kenya, in an interview with The EastAfrican.
The latest report states that inefficiencies at the Dar port cost Tanzanians and other East Africans dearly, as they must pay more for imported goods, including basic products such as crude oil, cement, fertilisers and medicines.
These losses are attributed to several factors, not least the long delays affecting ships that arrive in Dar es Salaam.
“In mid 2012, ships were waiting up to 10 days on average just to berth and an additional 10 days to to unload and move their merchandise,” said Mr Morisset. By comparison, its takes about 3-4 days in Mombasa, and in many East Asian ports, it takes just 48 hours to unload a vessel.
The excessive delays in anchorage alone translated into an additional cost of 22 per cent for container imports and about 5 per cent for bulk imports.
The report identifies corruption as another key factor contributing to the poor performance of the port, as “both a source of inefficiency and a direct result of inefficiency.”
According to the World Bank country director for Tanzania, Uganda and Burundi, Philippe Dongier, “The port of Dar es Salaam has enormous potential to contribute to the transformation of the country as its impact cuts across all aspects of life in Tanzania.”
He added, “For example, medicines are imported through the port as well as some of the food consumed in Tanzania. This underscores why efficient operation of the port should be a concern for everybody.”
But the drive for reforms at the port is kicking up steam. In January, the government fired five members of the Tanzania Ports Authority board on corruption charges.
Minister for Transport Dr Harrison Mwakyembe told The EastAfrican that the measures he had taken at the port, “are just the beginning of a long process aimed at making the port envied by our neighbours. If people want political will, I am the political will,” he said.
