Ports constitute a major part of the global transportation sector and have been integral to the success story of economies the world over for many centuries, evolving with the rise of ‘container hubs’ acting as a crucial connection between sea and land. DP World is one of the world's largest port operators and continues to invest in our ports, because it benefits its partners, clients and the world.
The African logistics market, which is currently estimated at US$150 billion, is expected to experience rapid growth particularly with the arrival of the Africa Continental Free Trade Area (AfCFTA) agreement. The continent’s potential has attracted the interest of global logistics major DP World. Investments made by the company across the continent not only demonstrate its commitment to Africa but the potential of the continent’s transport and logistics network.
DP World’s African footprint
DP World is not new player in African logistics scene. In fact, it has been around for over 20 years managing port logistics in a number of countries including Senegal, Egypt, and Somaliland.
It also manages about 3.5 million 20-foot equivalent units of capacity in Senegal, Mozambique, Somaliland, Angola, Rwanda, Algeria, and Egypt. These numbers add to 70 million containers that it handles globally, making it one of the largest port operators in the world.
US$1.7B partnership with CDC to modernize Africa’s ports
Modern logistics property is currently scarce across much of the Sub-Saharan region. Most ports are managed by decades old technology which cannot adequately meet logistics needs of modern retailing, distribution and manufacturing practices. To bridge this gap, DP World partnered with UK’s development finance institution and impact investor CDC Group in October 2021 to create a US$1.7 billion investment platform. The platform is aimed at modernization and expansion of ports and inland logistics across Africa, starting in the ports of Dakar in Senegal, Sokhna in Egypt and Berbera in Somaliland.
The platform covers a long-term investment period and DP World is contributing its stakes in three existing ports initially and expects to invest a further US$1 billion through the platform over the next several years while CDC is committing approximately US$320 million initially and expects to invest up to a further US$400 million over the next several years.
“We are excited to announce a partnership with CDC Group that will enable increased investment in ports and logistics infrastructure across Africa, driving efficiency and trade growth. The partnership will create transformational opportunities for tens of millions of people over the next decade,” Sultan Ahmed bin Sulayem, Group Chairman and CEO, DP World, said.
“By combining our in-depth knowledge of ports and logistics and CDC’s expertise in infrastructure investment in Africa, we can drive greater supply chain efficiencies, provide improved trade connectivity and ultimately enhance value for all stakeholders.”
An additional US$2 billion of new investment has also been planned for new capacity in Senegal, the Democratic Republic of Congo, Angola, Somaliland, and Mali.
Trade enabled through the ongoing expansions is expected to create an additional 138,000 employment opportunities in the wider economy and by 2035, and the ports are expected to support stable employment for around 5 million people indirectly.
Acquisitions and port infrastructure expansion
To further expand its Africa footprint, in July 2021, DP World made an audacious US$1.2 billion bid to acquire 100% stake in Imperial Logistics of South Africa. DP world said that the deal will help it to build better and more efficient supply chains for the owners of cargo in Africa
In the same year, DP World and the Government of Somaliland inaugurated a new container terminal at Berbera Port, following completion of the first phase of the port’s expansion aimed at transforming it into a major regional trade hub in the Horn of Africa.
The terminal includes a modern container yard with eight rubber tyre gantry cranes (RTGs). A new port One Stop Service Centre is also currently being built and will be ready in quarter three this year.
A total of US$442 million has been committed by DP to develop and expand Berbera Port whose first phase now complete. Work is already underway to further expand the port to enable it handle up to two million TEUs a year, and multiple large container vessels at the same time.
The Economic Zone which is part of the overall Berbera plan will serve as a center of trade with the aim to attract investment from a range of industries, including warehousing, logistics, traders, manufacturers, and other related sectors.
Still on port expansion, DP World and the government of the Democratic Republic of the Congo (DRC) have signed a collaboration agreement for the development of the deep-sea port at Banana.
“The conclusion of the Collaboration Agreement paves the way for DP World to begin construction within 12 months of the DRC’s first deep-sea port, which will be located at Banana along the country’s 37-kilometer coastline on the Atlantic Ocean,” a statement from DP World indicated.s
Sultan Ahmed bin Sulayem, Group Chairman and CEO of DP World, added: “The port will enhance the country’s export capabilities and give it affordable access to international markets.”
The development of the Banana Port is expected to bring significant cost and time savings for DRC’s trade as it will attract direct calls of larger vessels from Asia and Europe.
The initial plan by DP World is to develop a 600-meter quay with an 18m draft capable of handling the largest vessels in operation and will have a container handling capacity of about 450,000 TEUs annually, and a 30-hectare yard to store containers.
Not to be left behind, the government of Angola also entered a 20-year concession agreement with DP World to operate the multi-purpose terminal at the Port of Luanda, Angola’s largest port
The agreement followed an international process during which an evaluation committee selected DP World as the preferred bidder for the concession.
“Our entry into Angola and planned investment in the terminal, as outlined in the agreement, reflects our belief in the potential for further economic growth in the country” said Sultan Ahmed bin Sulayem of Group Chairman & CEO, DP World
The Multipurpose Terminal will be DP World’s first operational seaport terminal on the western coast of southern Africa.
DP World said it will invest US$190 million over the 20-year period of the agreement and is already planning to refurbish the existing infrastructure and acquire new equipment to modernize operations and improve efficiency. The goal is to increase the terminal’s annual throughput to around 700,000 TEUs.
In Senegal, the Port operator DP World has begun work on a US$1.1 billion deep-water port at Ndayane. The scheme, which is located 50 kilometer south of Dakar, will be developed in two phases. The first will include an 840-meter quay and a 5-kilometer marine channel while the second phase will add 410 meter of container quay and further dredging.
In Namibia, DP World signed an agreement with Namibia’s !Nara Namib Free Economic Industrial Zone to develop an industrial park at Walvis Bay.
According to Suhail Al Banna, CEO for Middle East and Africa at DP World, the development will help Namibia grow as a centre for industrial operations and logistics, creating opportunities and jobs across multiple sectors, including agriculture, fishing, automotive and mining.
Development of the first 50 hectares phase of the zone has the potential to create 3,000 jobs and help attract investment to Namibia of US$230m while the expansion to 1,500 hectares is expected to increase the potential investment to US$1.68 billion with 20,000 job opportunities.
As part of the agreement DP World plans to bring to the project its extensive expertise and track record in establishing and operating some of the world’s leading ports, logistical parks and free zones integrated with railways and trucking.
Venturing into Africa’s e-commerce space
Over the last decade, a growing middle class and rapid progress in mobile and internet penetration have supported the view that African countries are ripe for e-commerce success. The covid-19 pandemic however accelerated the growth of e-commerce as it became a key driver of trade as people minimized social interactions. According to Statista, the revenue generated by online shopping in Africa was estimated to be around 27.97 billion U.S dollars, an increase of over 6 billion since 2019. According to estimates made by Statista, the e-commerce revenue in Africa will keep increasing between 2021 and 2025 and might reach a value of over 46.1 billion U.S. dollars at the end of the forecast period.
The immense potential of e-commerce in the continent attracted DP World which in November 2021 announced the launch of its global wholesale e-commerce platform DUBUY.com in Kenya, bringing a new digital trade corridor for Kenya and the East African region.
This expansion follows DUBUY.com’s successful launch in Rwanda earlier this year, where the platform has become a major gateway for trade in the East African region.
The entrance to Kenya, according to the company, is aimed at fostering a secure and reliable way for organizations to develop, expand and crucially, improve supply chain connectivity and resilience as the country recovers from the COVID-19 pandemic.
Mahmood Al Bastaki, Chief Operating Officer of Dubai Trade World said the online marketplace will also solve some of the key challenges facing the growth of e-commerce in Africa, including reliable fulfillment, secure financial transactions, and the movement of goods.
“African businesses are increasingly using digital channels and technologies to engage with suppliers and distributors to create agile supply chains, and digital platforms like DUBUY.com will be key to this shift,” Mahmood said.
“Our technology allows homegrown businesses to transform into international enterprises by providing access to new markets in Africa, the Middle East, and the rest of the world.”
This launch marks the six-month milestone since DUBUY.com first began trading operations in Rwanda during Spring 2021.
In that timeframe, DUBUY.com received more than 500,000 website visits from sellers and buyers in Africa, built a community of more than 4,000 active merchants on the platform, and saw particular success in the sale of automotive supplies and kitchen appliances.
Becoming an Advanced logistics company
DP world has established itself as a leading provider of worldwide smart end-to-end supply chain logistics, enabling the flow of trade across the globe. Its robust investment in the continent will not only enhance trade in the region but also enhance DP World profile in Africa, building on its extensive infrastructure of ports, terminals and economic zones. The investments will also significantly accelerate DP World’s transformation into an advanced logistics company offering end to end supply chain services to the owners of cargo.
This feature appeared in the March 2022 edition of CEO Business Africa magazine. You can access the full digital magazine HERE