By ADAM IHUCHA
-- Poor infrastructures are denying Tanzania opportunity
to exploit its geographical comparative advantage as a regional trade gateway
and logistical hub.
The African Development Bank (AfDB) says in a new
report that greater economic activity; enhanced efficiency and increased
competitiveness are hampered by inadequate transport infrastructures.
Transport systems in Tanzania are mainly ports, roads, rail,
air and pipeline, but the AfDB transport review report says that all are in bad
shape, save for under construction pipeline.
Situation is more critical on seaports, particularly Dar es
Salaam harbor and the entire railway system, the study shows.
AfDB report puts it clear that the investment to breathe
life into these facilities is beyond the country’s economic muscles and it
recommends the public-private-partnership (PPPs) and development partners as
the few options on the table for the country to source finance.
The main seaports, especially Dar es Salaam port, which
provides vital access to world markets for six landlocked countries, is now
constrained by inadequate space to store and process containers.
Again, the demise of rail services has resulted in a
significant loss of traffic to road transport and the latter has benefitted
from substantial investment in the trunk road network.
“The collapse of services has had a dramatic impact on trade
in the central corridor. For businesses that use the railway, it has resulted
in a steep increase in transportation costs” AfDB reads in part.
Both seaport and railway networks serve a large market,
which includes the whole of the country’s hinterland and the landlocked
countries of Burundi, Rwanda, DR Congo, Uganda, Zambia and Malawi.
Recent economic indicators for this region shows that it has
about 168 million people, a combined GDP of $83 billion and an annual volume of
trade exceeding $27 billion.
Seaport
Dar port was designed at a time prior to the introduction of
containerization and was also designed for the direct transfer of small volumes
of cargo direct from ship to rail and road modes.
As a consequence of changing technologies, the available
space in the port footprint is now too small to cater to the volume of trade.
This has been one of the primary reasons for increasing
congestion and added inefficiency and delay.
The World Bank’s third Tanzania
Economic Update report shows, among other things, that container vessels
transporting imported merchandise were on average queuing for 10 days just to
be able to berth at the Dar Port, as well as an additional 10 days to unload
the merchandise, clear it and transport it from the premises.
Drawing comparisons mostly between the
Mombasa port, which is the largest in East Africa trailed by Dar es Salaam as
well as international standards, the report depicts the symptoms of the port’s
inefficiency.
It took less than a day for a ship to berth in
Mombasa in 2012, while dwell time also lasted only about three to four days,
which is close to international standards of two days.
To make the matters worse, Dar charges
fees in proportion to the value of the merchandise, a practice that is prone to
manipulation and corruption, and which could explain why official fees at the
port are on average 74 per cent higher than in Mombasa where they charge simple
flat rates.
WB report indicates that the cost of
these inefficiencies alone translates into a tariff of 22 per cent on container
imports and about five per cent on bulk imports.
“These inefficiencies created financial
losses for shippers and shipping companies, resulting in increases to their
inventory, storage and anchorage costs. These costs are in general passed on to
consumers,” reads the report titled ‘Opening the Gates: How the port of Dar es
Salaam can transform Tanzania,’ and authored by Jacques Morisset, the Lead
Economist for Tanzania, Burundi and Uganda.
By the WB’s estimation, an average household
would save $147 a year or 8.5 per cent of total expenditures – typically with
the toll being harder on the poorest households – if the Dar es Salaam port
were to be as efficient as Mombasa.
More figures served up in the Economic
Update portray the grave costs to both the domestic and international level
stakeholders as a result of the port’s inefficiency:
Nearly 37 per cent – the equivalent
tariff on total energy imports, which constitute 35.5 per cent of total
imports, as a result of long delays.
According to the WB, a total of $252
million losses incurred by shippers and shipping companies in total annual
anchorage costs, as a result of long delay annually.
About $17.4 per tonne is the cost that
an importer of merchandise worth $1,358 is willing to pay in bribes to speed up
processes.
As if that was not enough, roughly $1,759
million is the total welfare loss to the Tanzanian economy as a result of the
port’s inefficiency, whereas landlocked countries lose $830 million per annum.
“TPA and Tanzania Revenue Authority are
also losing about $157 million,” reads the WB report.
Dar
is the country’s largest port with an annual throughput of about 13.5 million
tons a year in 2013, but AfDB report warned that the harbor location’s finite
capacity would reach in 2020.
Investments
Whereas
inadequate infrastructure could be the biggest threat to Tanzania’s long-term
growth, it also represented a significant opportunity for investors.
The port capacity constraints urgently need to be addressed
and include direct investment, such as additional container berth capacity,
improvement of general cargo berths 1 to 7, dredging needs, and relocation of
Kurasini Oil Jetty.
Tanzania Ports Authority (TPA) says it needs partners to
improve performance of Dar port by increasing annual cargo traffic from 13.5
million tonnes in 2013 to 18 million tonnes come 2015, which is about 30 per
cent growth.
The Dar Port Manager, Mr Awadh Massawe says the target
will only be achieved through modernization of infrastructure and enhancement
of operational efficiency, maximization of spatial efficiency.
In order to be able to deepening berths 1-7 as well as
modernizing bulk cargo handling, Mr Masawe says TPA seeks $213.572 million and
he implores investors to chip in.
“We also need $170 million for access channel and
turning circle dredging; $360 million for entrance channel dredging; $1.5
million for feasibility study for new proposed port at Mbwamaji and $3 million
for feasibility study of the entrance channel and geo-technical survey” he
noted.
To mitigate the congestion, investments should also be made
in off-port inland container depots, improved intermodal interface between the
port, rail, and roads subsectors.
AfDB report underlined the need for better handling capacity
for bulk cargoes and container logistics; and improved connectivity between the
port and its service hinterland by better road and rail networks in the
vicinity of the port.
Furthermore, improvements to the administrative processes
and elimination of bureaucracy need to be identified and implemented.
Overall, this long list of requirements will require a large
investment.
Investment in the direct port requirements within the
existing port footprint will require more than $1 billion, which is beyond the
current capacity of TPA to provide.
“It is therefore necessary to explore outside the-box
solutions as the “usual” channels of investment from government, TPA and
development partners will not be sufficient to meet the large requirements”
reads the AfDB study.
In march 2013; Tanzania and China signed a deal that will
see the latter construct a multi-billion-dollars port at Bagamoyo district in
Coast region, northwest of Dar es Salaam.
Bankrolled by the China state-owned Export-Import Bank
(EXIM) at the tune of $10 billion, the dock is designed to be largest and
ultra-modern in African continent.
Details show that the harbor is anticipated to be ready by 2017 and will be able to
handle 20 times more cargo than Dar es Salaam port, the current major imports
and exports gateway in East African, competing with Mombasa dock.
Dar and China-state-run-firm, Merchants Holdings
(International) also contained the building of a 34km road between Bagamoyo
and Mlandizi, which will link the port to Tanzania's internal rail network and
the Tanzania-Zambia railway.
Railway
The key issue in the subsector concerns is the revival of
Tanzania Railway Ltd (TRL). The demise of rail services has resulted in a
significant loss of traffic to road transport and the latter has benefitted
from substantial investment in the trunk road network.
The collapse of services has had a dramatic impact on trade
in the central corridor. For businesses that use the railway, it has resulted
in a steep increase in transportation costs.
This has had considerable adverse impact on the
international trade routes with the neighbouring countries of Rwanda, Burundi,
DR Congo and Uganda.
Under the new five-year transport sector investment plan
commenced in July 2012, the government has placed considerable emphasis on
addressing railways and, in particular, the revival of the central rail
corridor linking Dar es Salaam with the lake ports of Kigoma and Mwanza.
The proposed allocations under the plan amount to $130
million for railways, which is equivalent to 10.6 percent of the total
allocation for the transport sector in the next five years.
The good news is that plans are underway for TRL to secure a
large chunk of the funds from the state-owned-TIB development bank to support
the infrastructure improvements associated with the revival plan.
The Minister
for Transport, Dr Harrison Mwakyembe,
said that mid February 2014, TIB development bank signed a memorandum of
understanding with the Development Bank of Southern Africa (DBSA) worth $130
million to support infrastructure in Tanzania.
The MoU was signed by DBSA Chief Executive, Mr Patrick
Dlamini and TIB's Managing Director, Mr Patrick Noni and will benefit various
vital projects.
Among the benefits of the financing of projects by the
banks will be that TRL will be able to transport three million tonnes of goods
per year by 2015 and allow Tanzania Airport Authority (TAA) to double its
handling capacity for both Mwanza and Arusha airports.
Other projects include several prospective ports
rehabilitation and expansion including Dar port berth 1 to 7 at the cost of
$600 million after a feasibility study had been conducted and financed by DBSA
and Mtwara port and a number of other projects in the water and energy sectors.
"Our cooperation and co-financing with DBSA are
in line with our collective objectives of supporting economic growth through
development to ensure rapid and sustainable infrastructure development of the
country," said Mr Noni.
Dr. Mwakyembe said that if all goes well, the funds
would be disbursed by TIB to the TRL, TAA and TPA in the next two months.
The key requirements for the Tanzania and Zambia railway (TAZARA)
are for additional capital and a strengthened business plan to underpin
improvements in service delivery and operational effectiveness.
Given the close involvement of China with the railway since
its inception, the future plan for its development will require common
agreement of the three governments.
“It is preferable that the three governments agree to proceed
with a review of the current operations” AfDB report reads.
The AfDB says the review should include the possibility of
bringing in the private sector to strengthen the business and management of the
railway as well as examine if it is possible to introduce open access to offer
competitive services on the line.
Roads
Over the next five years, the country needs $5.141 billions
for roads development alone, which is approximately 64 percent of funds required
for transport sector as a whole.
This is equivalent to an expenditure of about $1 billion a
year over the next plan period.
AfDB report indicates a 68 percent of these funds will carry
overdue projects, mostly that have been contracted, but have yet to commence
construction.
The good news is that the development partners will meet a
portion of this funding requirement.
In real terms, development partners indicate to foot
somewhere around $1.050 billion, which is equivalent to 20 percent of the
overall investment budget.
For local roads, the investment budget is estimated at $493
million equivalent or 6.2 percent of the total transport program, excluding possible
support from development partners.
The proposed budgeted amounts, which increase from $61
million in 2012/2013 to $124 million in 2016/17 is expected to increase the
length of local roads in good condition from about 13,000km at present to
15,000km at the end of the plan period.
The length of local roads in fair condition are projected to
increase from 19,600 km at present to 26,600 km at the end of the plan while
roads in poor condition are projected to decrease from 25,400 km at present to
16,400 km over the 5 year period.
While the total expenditure for local roads is not high, the
developmental impacts is noteworthy at the local level, as accessibility will
significantly improve in those rural areas currently constrained by poor
access.
Despite the relatively small allocations in relation to the
size of the network and its current condition, the proposed investment is a
significant increase over allocations provided during the current plan.
A significant
constraint concerns the lack of finance to support urban transport proposals.
The master plan study indicated that an investment of $4
billion would be required over the period to 2030, which is equivalent to $200
million a year, which is well beyond the currently available resources.
Airport
The country has also secured $164.3 million from the
Netherlands for the expansion of the Julius Nyerere International Airport in
Dar es Salaam to ease pressing capacity constraints.
Director general of the Tanzania
Aviation Authority (TAA) Engineer, Suleiman Suleiman, said the airport’s
original capacity was tailored to handle 1.2 million passengers per year, but
the current use is nearly twice that number at over 2 million passengers.
TAA Chief said the first phase of the
project will grow the airport’s capacity to 3.5 million passengers, and Phase
Two will increase the capacity by a further 2.5 million passengers annually.
Kilimanjaro International Airport (KIA)
will also undergo major rehabilitation that will cost Euro 35 million, $48.1
million (Tsh75billion).
The funds have already sourced from
Orio Grant Facility of The Netherlands with Euro 15million being a grant and
Euro 20million a loan to the government of Tanzania under concessionary terms.
The money would be used to rehabilitate
the runway, apron, taxiways and the passengers’ terminal, according to Bakari
Murusuri, the Director of Finance and corporate Services of the Kilimanjaro
Airports Development Company (KADCO) which manages the airport.
Mr Murusuri says the rehabilitation
programme is expected to commence in June 2014 and will take about three years
to be completed.
AfDB report shows that at present, there are over 3 million
air passengers a year of which approximately 48 percent are international and
52 percent domestic.
The International passengers are concentrated at 4 airports;
Dar, Kilimanjaro, Zanzibar and Arusha, while the bulk of domestic passengers
also use these airports plus Mwanza.
For the sector as a whole, the forecasts indicate that the
number of air passengers is expected to increase year. This growth rate is in
the same range as those predicted by the master plan prefeasibility study.
While the bulk of the passenger traffic uses JNIA in Dar es
Salaam, the global growth takes into account the small traffic volumes of most
airports.
Overall, the country has 368 airports with the TAA
responsible for 58 airports on the mainland.
The majority of the airports are private airfields owned by
mining companies and tour operators.
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