DP World, CDC Pledge $1.7 Billion Infrastructure Spending in Africa Ports Deal

Uusmiir · October 12, 2021, 7:56am

https://www.bloomberg.com/news/articles/2021-10-12/dp-world-cdc-form-africa-ports-partnership-pledge-1-7-billion

DP World Ltd. and CDC Group Plc have formed a partnership to develop ports in Africa and committed to spending $1.72 billion on infrastructure over the next few years.

DP World, which is based in Dubai and is one of the world’s biggest port operators, will invest $1 billion in facilities including in Dakar in Senegal, Ain Sokhna in Egypt, and Berbera in Somaliland. CDC, a U.K.-based development finance group, will initially contribute $320 million and has committed an additional $400 million over the next few years.

The partnership, along with the modernization and expansions at the ports, is expected to boost trade in the three territories, as well as further inland in Mali in West Africa and Ethiopia in the Horn of Africa, the companies said in a statement on Tuesday. They intend spending about $1 billion on the port in Dakar alone.

“In the short term, it’s about enhancing the capacity of these three countries,” Nick O’Donohoe, CDC’s chief executive officer, said in an interview. “In the longer term, it is about building out further ports infrastructure in other countries, other regions.”

Trade, Exports

The harbor in Dakar is exclusively a container port that can process 900,000 twenty-foot equivalent units, or TEU, a year. Sokhna, Egypt’s main Red Sea port and its gateway to the rest of Africa, and Berbera are primarily used to ship containers but have some bulk-goods facilities, and have an annual capacity of 950,000 TEU and 150,000 TEU respectively. By comparison, the continent’s biggest container port in the eastern South African city of Durban, can process 3.6 million TEU a year.

In addition to building a new facility at Ndayane, near Dakar, to expand the port’s capacity, the companies plan to improve logistics at Berbera and significantly increase capacity at Sokhna, which is undergoing a $520 million expansion, O’Donohoe said. They are also considering investing in inland ports in landlocked countries.

Trade facilitated by the ports will support 5 million jobs across the affected economies, create 138,000 jobs in the expansion phase, and improve access to goods for 35 million people, the companies said in the statement.

CDC will own a minority stake in the operating structure of the three ports, O’Donohoe said, declining to be more specific on the partnership.

The development finance institution invests about $2.5 billion a year, of which 60% goes to Africa, he said. Other investments include power and telecommunications infrastructure.

Uusmiir · October 12, 2021, 8:00am

Partnership will help address stark imbalance in global trade, accelerate Africa’s potential as a global trading powerhouse, and improve the economic prospects of millions of people
Initial focus on modernising and expanding three ports in Dakar, Sokhna and Berbera, with further ports and logistics investments across Africa to follow
Trade enabled through the three initial ports will improve access to vital goods for 35 million people, support 5 million jobs (138,000 created), and add $51 billion to total trade by 2035

DP World, a world leader in global supply chain solutions, and CDC Group, the UK’s development finance institution and impact investor, are entering into a long-term partnership to accelerate Africa’s long-term trade potential and transform the prospects of millions of people.

Africa has a sixth of the world’s population, but accounts for just 4 per cent of global containerised shipping volumes[i]. Ports are vital to the long-term prosperity and wellbeing of people. But many ports and logistics facilities in Africa remain constrained, lacking in capacity to meet the needs of local economies.

This partnership, which has been worked towards for four years, will help change that. It will help address the stark imbalance in global trade through supporting the modernisation and expansion of ports and inland logistics across Africa, starting in the ports of Dakar (Senegal), Sokhna (Egypt) and Berbera (Somaliland). The platform covers a long-term investment period. DP World is contributing its stakes in the three existing ports initially and expects to invest a further $1 billion through the platform over the next several years. CDC is committing approximately $320 million initially and expects to invest up to a further $400 million over the next several years. The transaction is subject to certain final regulatory approvals.

Better performing trade infrastructure allows businesses to expand and to create jobs. It can improve the quality of life for millions of people by reducing the cost of living for many who currently overpay for vital imported goods. Trade enabled by the three initial ports will support 5 million jobs in the wider economy (of which 138,000 are expected to be created by the ongoing port expansions and modernisations), and will improve access to critical goods and staples including food; this will benefit over 35 million people across the three geographies, including further afield to the wider Horn of Africa and parts of the Sahel.

By 2035, an estimated $51 billion in additional trade is forecast to pass through the ports, equivalent to 3 per cent of Senegal’s GDP, 3 per cent of Egypt’s GDP and 6 per cent of Somaliland’s GDP.

The ports will also provide a gateway to international markets for countless African businesses and entrepreneurs, as well as supporting the growth of nascent export industries currently stymied by logistics inefficiency.

Sultan Ahmed Bin Sulayem, Group Chairman and CEO, DP World, said: “DP World views Africa as a long-term growth market and the opportunity landscape remains significant. This partnership with CDC offers us greater flexibility to accelerate and capitalise on these opportunities, and will enable us to increase our investment in ports and logistics infrastructure across Africa. The partnership will create transformational opportunities for millions of people over the next decade.”

Nick O’Donohoe, Chief Executive Officer, CDC Group, said: “Stable and flourishing economies are built on reliable access to global and intra-continental trade. Africa’s full potential is limited by inadequate ports and trade bottlenecks, putting the brakes on economic growth in some of the world’s fastest growing economies and undermining social resilience in the least developed parts of the world. This platform will help entrepreneurs and businesses accelerate growth with access to reliable trade routes and it will help African consumers benefit from the improved reliability and reduced cost of vital goods and food staples.

“We are proud to support DP World to do even more in Africa, charting a stronger course for African trade around the world.”

UK Foreign Secretary, Liz Truss, said: “We are working with allies and partners to finance clean and reliable infrastructure in developing countries. This new partnership with CDC and DP World will boost jobs and drive economic growth in these countries, helping improve millions of lives across Africa.”

Uusmiir · October 12, 2021, 8:43am

Uusmiir · October 12, 2021, 9:30am

Suldaanka · October 12, 2021, 9:59am

A game changer indeed.

Suldaanka · October 12, 2021, 10:06am

We’re partnering with DP World to chart a stronger course for African trade around the world

Partnership will help address stark imbalance in global trade, accelerate Africa’s potential as a global trading powerhouse, and improve the economic prospects of millions of people
Initial focus on modernising and expanding three ports in Dakar, Sokhna and Berbera, with further ports and logistics investments across Africa to follow
Trade enabled through the three initial ports will improve access to vital goods for 35 million people, support 5 million jobs (138,000 created), and add $51 billion to total trade by 2035