Africa’s port assets are irresistible for the UAE

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The UAE ports operators AD Ports Group and DP World are showing an unquenchable thirst for acquiring new assets in Africa.

Just last month, AD Ports Group signed a memorandum of understanding with Somalia’s fisheries ministry to explore joint investments to upgrade and expand that nation’s port and fisheries infrastructure.

It came after AD Ports Group’s signing of major concession agreements over the past 18 months to develop and operate port terminals in Egypt, the Republic of Congo, Angola and Tanzania.

Between them, the two UAE companies are operating or developing more than 15 port assets in Africa.

DP World’s extensive list of ports and terminals in Africa comprises Djen Djen and Djazair in Algeria; Ain Sokhna in Egypt; Berbera in Somaliland; Bosaso in Somalia; Dar Es Salaam in Tanzania; Maputo in Mozambique; Luanda in Angola; Dakar and Ndayane in Senegal; Banana in Democratic Republic of Congo (DRC); and inland container terminals at Kigali in Rwanda and Komatipport in South Africa.

DP World is expected to invest about $3 billion in new port infrastructure in Africa over the next five years through the ongoing construction of the port of Ndayane (said to be the largest private sector investment in Senegal’s history), the development of a greenfield container port at Banana, which will be the DRC’s first deepwater container facility, and upgrades to four berths at Dar Es Salaam port in Tanzania, where investments in cold storage and rail-linked logistics and special economic zone are also planned. 

Africa accounts for just 4 percent of global containerised shipping volumes, but has 17 percent of the world’s population

The African continent is in chronic need of investment to develop and modernise its logistics sector. The Africa Union says transportation costs in Africa are 50 to 175 percent higher than in other parts of the world, because of the lack of infrastructure.

Port infrastructure, where it does exist, is often operated inefficiently, with limited technology and days-long queues for loading and unloading.

A World Bank-funded study of 39 ports across the continent, published in March this year, found the ports had an average digital maturity score of 2.76 on a scale of 0-5, ranging from 0.12 at Bissau port in Guinea-Bissau to 4.4 at the Port of Tema in Ghana.

Only 28 percent of the ports had implemented a maritime single window – a centralised digital platform overseen by the International Maritime Organisation – where data about a cargo can be reported just once, to be distributed to the relevant national authorities.

For the UAE’s AD Ports Group and DP World, the case for investing in Africa’s ports sector is clear. The continent currently accounts for just 4 percent of global containerised shipping volumes, but has 17 percent of the world’s population.

The African Continental Free Trade Area (AfCFTA), which came into being in 2021, is expected to boost intra-Africa trade by 40 percent by 2045, driving a 50 percent increase in demand for transport services. The continent is also rich in mineral resources that are highly sought after worldwide.

Modernising ports infrastructure will facilitate the expansion of trade within Africa and globally, while also fuelling job creation and economic growth across the continent.

In partnering with ADPG, which is 75 percent owned by the Abu Dhabi sovereign wealth fund ADQ, and DP World, the world’s fifth largest ports operator, African governments are not only gaining access to investment capital. They are also tapping into those companies’ extensive expertise in port and free zone development, customs modernisation and trade facilitation.

Untapped potential

Sultan Ahmed bin Sulayem, group chairman and CEO of DP World, described Africa as “a continent bursting with potential yet facing inherent challenges”, in a blog post published in January 2024.

He listed inefficient infrastructure, exorbitant logistics costs and “the ever-present spectre of political instability” as key challenges.

DP World is only too aware of the issues that come with doing business in Africa. In 2018, the government of Djibouti seized the Doraleh container terminal, built and operated by DP World, claiming the 30-year concession agreement signed in 2006 unfairly favoured the company.

It has been in a legal battle ever since. The company also ran into difficulties with its investments in Somalia, and its ambitions in Kenya were thwarted by a change in the country’s leadership.

With ports considered strategic national assets, the privatisation of maritime infrastructure is often controversial in Africa, especially when competitive tendering is not used in nations with a history of corruption. 

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Last year, there were widespread protests in Tanzania when it was revealed that talks were under way with DP World on how best to manage the country’s ports. Critics said concession agreements posed a threat to Tanzanian sovereignty and security, while the government argued that private sector operators improve efficiency, cut costs and increase revenues and competitiveness. 

Earlier this month, the government of Sudan cancelled a memorandum of understanding signed in 2022 with ADPG to build and operate the Abu Amama port and economic zone on the Red Sea, citing national security interests. 

Ignoring any wider geopolitical motivations, what is clear is that the continent needs many billions of dollars of investment to develop integrated transport networks with special economic zones for value-added manufacturing that will enable economies to flourish and lift people out of poverty.

The two Emirati ports operators are showing themselves as willing partners that are more than up for the challenge.

The government of Mozambique has been so impressed with the performance of the port of Maputo under the DP World/Grindrod operator consortium that in January it approved a 25-year extension of the concession agreement, a decade early.

The concession will now expire in 2058. The certainty of the tenure is intended to encourage further investment and development at the port. This is what Africa needs.

Liz Bains is a projects-focused business journalist covering Africa and the Middle East