Why African Products May Not Be Promoted In The Maritime Silk Road Initiative

Credit: BBC

The maritime silk road is a sea route part of the Belt and Road Initiative. It is a Chinese strategic initiative to increase investment and foster collaboration. It seeks to connect Beijing with trading hubs around the world.

The maritime silk road establishment in Africa is in East Africa, including Kenya, Ethiopia, and Djibouti. It has its merit and demerit for both parties. The overall take is for Africa to sell their goods freely, that was the main reason behind the establishment of AfCFTA. If its interest is not in order with maritime initiative, what is in for Africa?

Establishment of infrastructure

African ports are critical to China’s $40 billion “Maritime Silk Road” investment. 41 of the 46 sub-Saharan African ports identified by the Centre for Strategic & International Studies (CSIS) report had their construction or expansion overseen by Chinese entities. Some of these ports include Kenya’s deep-water Lamu port, Bagamoyo port in Tanzania, and the deep-water Tamatave port project near Toamasina in Madagascar. These projects ultimately enable China to collect intelligence on port infrastructure and establish a dependency on Chinese technology and expertise, which will cement Africa’s relationship with China in future port operations.

In 2017, China announced a government-backed development project in Tanzania. Construction included a $460 million seaport with a capacity of 20 million TEUs. There are other instances of investments by the Chinese where they opt to gain control of existing infrastructure. China Merchant Holdings purchased a 50 percent stake in the Lome Container Terminal in Togo. Expansion on the terminal, which is under construction, will expand the LCT to four berths, with a terminal capacity of 2.2 million TEUs.

Chinese investments lack strategy and are overwhelmingly focused on helping Chinese interests, rather than guiding sustainable African economic growth. It also has not engaged in political risk assessment associated with African investment on comprehensive commercial strategy, which could lead to a mismatch of infrastructure expansion projects and volume growth.

It’s no secret that African countries lack capital and are lagging behind in industrial infrastructure. The building of the seaports is centered on China’s trade interest, with Africa lacking the industrial capacity to make use of it efficiently. 

Matter arising

The establishment of the maritime project was for a good cause, but there are challenges attached to it. This includes insufficient usage, as stated earlier. The lack of industrial establishment in Africa has rendered the port inefficient. It can only be used by the Chinese.

High debts are also included. The building of the port requires a lot of funds, although the Chinese have taken up the project, Africa still has a role to play which requires funding on their part. Competition with other projects, there are many angles which the Africa-China relationship have taken, from economic, sport, security and many others. This can also lead to poor coordination for the Maritime project to yield more impressive connectivity results.

Africa’s position

Africa relies heavily on ships and ports to service its intercontinental trade. While it accounts for approximately 2.7% of global trade by value, the continent contributes higher shares to global seaborne trade – 7% and 5% of maritime exports and imports by volume, respectively. 1/3 of African countries are landlocked, maritime transport remains the main gateway to the global marketplace. 

Credit: UNCTAD

Maritime trade in Africa is shaped by the continent’s trade concentration and limited diversification. Accordingly, 40% of goods exported by sea in 2017 comprised of crude oil, while over two-thirds of imports were accounted for by dry cargoes (dry bulks and containerized goods), and close to 20% of imports were made up of petroleum products and gas. 

By diversifying their economies and enabling greater integration into regional and global value chains, Africa can improve its containerized trade and port traffic volumes and emerge as an exporter of containerized goods. For this to happen, however, trade policy and regional integration initiatives, such as the African Continental Free Trade Agreement (AfCFTA), will not be enough. 

Africa’s container ports and hinterland transport networks need to support these efforts by upgrading infrastructure and services, and improving performance, to match international standards. This entails, among other things, enhancing productivity levels, robust economic growth, a demographic dividend, resources, growing investment, and financing commitments relating to transport infrastructure.

Shipping connectivity, which significantly influences transport cost levels, is below the global average in Africa. African countries shipping connectivity is strongly influenced by their geography. The best-connected countries are those at the continent’s corners, where international shipping routes connect to hub ports, notably in Morocco, Egypt and South Africa. They are followed by sub-regional load centers, notably Djibouti, Togo, and Mauritius.

Credit: Africa Line

Moving Forward these measures should be embraced:

  • Preparing African ports to accommodate larger vessels.
  • Improving access to the hinterland and landlocked countries by multimodal transport and transport corridor approaches and building inland transport infrastructure.
  • Making use of relevant technologies and digital solutions to facilitate transport and trade, cutting inefficiencies, improving processes and enhancing transparency, and promoting security and resilience of transport systems. 
  • Enhancing transport connectivity either on the sea or landside to reduce transport costs and improve African countries’ position in the global shipping networks. Also, enabling soft infrastructure in support of transit transport and trade facilitation by harmonizing transport regulation, including road and rail transport. 

With the growing interconnectivity around the world, trade is one of the connecting factors. The maritime project is of the same aim, but Africa is not fully equipped to accommodate it. Why will African products not be fully promoted in the maritime project? Industries in Africa are still developing and China is overwhelmed with its own growth interest.

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