June 25, 2018
Addis Ababa, Ethiopia–Ethiopia has grown its portfolio of ports with the acquisition of Sudan’s largest sea gateway, Port Sudan.
DP World, who jointly own the port of Berbera and Djibouti with Ethiopia, are bidding for concessions along with French logistics company Bollore, and ICTS from the Philippines.
A concession is a contract in which the government or governments (in this case Ethiopia and Sudan) transfer operating rights to a private enterprise. This contract usually includes construction, development and rehabilitation of a site.
Port Sudan is located in the Red Sea State which has an area of 212,800 km and population of 1.448 million. It is composed of three ports: the Northern Port, which handles petroleum products, containers and bulk grain; the Southern Port, handling edible oils, molasses, cement; and Green Harbour on the east side of Port Sudan, which handles dry bulk cargo, seeds and containers.
The acquisition is seen as a strategic initiative due to Ethiopa’s position as a land-linked country. Ethiopia is currently experiencing high growth (6% to 7% a year) therefore fast access to foreign markets through neighbouring sea-ports and airports is vital. With talks of another agreement in Kenya, Ethiopia may soon be able to hold stakes in four major maritime gateways in East Africa.
“We are committed to providing all the needed facilities to ensure the flow of goods via Port Sudan to Ethiopia,” said President Omar al-Bashir. “Ethiopia already ships large consignments such as fertilizer through our gateways.”
Horticulture (mainly roses transported via air freight), sesame, textiles (including leather goods) and more recently teff are main imports of interest to Asia, the Middle East and Europe. The government of Ethiopia want to make it a centre point of investment for Asian countries, especially in the textile and apparel sector. Buying up ports will improve access to markets. The new Djibouti-Ethiopia railway is also going a long way to making that happen.
Ethiopia is the fastest growing economy in Africa and by 2025 it hopes to become a middle income nation. It is currently implementing a 2nd phase of growth (GTP II) which will run until 2019/20. New ways to finance infrastructure and support private investment can help maintain economic prosperity. Sustainability is the main challenge for Ethiopia now and also improving logistics to maximise value for the country as a whole from import and exports.
Bollore is a French transportation company which employs 28,000 people and is the largest operator in Africa with 17 container terminals in the continent. ICTS have a much smaller presence with sites in Madagascar, Nigeria and Congo. The majority of their work is in Asia-Pacific. DP World own and run two successful gateways on the East African Coast in partnership with Ethiopia.