Plans to construct a new container terminal at the Port of Djibouti will provide impetus for the East African port’s ambitions to position itself as a trade and logistics hub for the continent.
According to a report by Reuters, Djibouti is in talks with French shipping company CMA CGM to develop a new container terminal at an initial cost of $660 million. Construction could start as early as September and is expected to last 24 months.
Duncan Bonnett, director at consultants Africa House, believes the developments in Djibouti could affect regional manufacturers in key African industrial hubs – like Egypt, Kenya and South Africa – as competition intensifies and less accessible markets are opened up.
“They will also impact ports and logistics chains in the immediate East African region,” says Bonnett. “Kenya and Tanzania and, to a lesser extent, Eritrea and Sudan, will struggle to compete with these developments unless they up their game substantially.”
And as freight access between the East African coast and the heart of Africa improves, the industry will capitalise on the opportunity to use ports outside of SA’s infrastructure, he adds.
But China, in his view, will be one of the main beneficiaries of the port upgrade.
“The new developments will give exporters, such as the Chinese, improved access to a fast-growing regional market of 390 million people at present and over 500 million by 2030 – including Ethiopia, Sudan, South Sudan, Kenya, EAC and the DRC.”
In addition, China’s revived ‘Silk Road’ (linking Asia and Europe) has developed a maritime dimension, which includes the key waterways around Djibouti, adding to the drive for improved infrastructure.
Chinese companies will also benefit from alternative logistics for the export of raw materials, Bonnett says.
“Many of the current ports and rail links in East Africa are either congested, or lack capacity, or both, meaning that the developments in Djibouti offer a good alternative in the longer run.”