Is Lamu Port a white elephant?

A month ago, a journalist looking at the impact of infrastructure investment on the continent asked me if it is beneficial for the East African region to have the Lamu and Bagamoyo ports rivalling each other as transship hubs.

This question came up again last week in a conversation with some friends on whether the port investment race among countries in the Horn of Africa and East Africa is sustainable.

So let us look at the throughput of the main seaports. Throughput is the average quantity of cargo that can pass through a port daily.

The Port of Djibouti, strategically located at the crossroads of Africa, Asia and Arabian Peninsula, has a throughput capacity of 1.6 million twenty-foot equivalent unit (TEU).

Port Said located in Egypt has a 2.7 million TEU throughput capacity and is also designed to be a transshipment hub.

The Port of Sudan has throughput of 487336 TEU. Somaliland has Berbera and Puntland Bosaso, and plan to expand the ports for commercial positioning.

Come to Kenya, which has the Mombasa Port with a throughput capacity of 2.65 million TEU and Lamu Port, which is being designed for transshipment.

In Tanzania’s Dar es salaam Port has a throughput capacity of one million TEU while Bagamoyo is expected to be revived and designed for transshipment.

Clearly, there is an overcapacity of seaport infrastructure investment on the East and Horn of Africa.

But this is not a trend in Eastern side of Africa only. The race to be a regional transshipment hub is also happening on the West side of the continent.

HEAVY COMPETITION

Togo’s Port of Lome is the busiest port in West Africa with a throughput of 1.5 million TEU but is about to face heavy competition as a transshipment hub from Nigeria’s new Lekki Deep Seaport, which is expected to start operations in 2023 with a throughput capacity of up to 2.7 million.

Ghana is designing its Tema Port to be also a transshipment hub with a throughput capacity of 3.5 million TEU whilst Senegal’s newly constructed port by DP World will be having a throughput capacity of 1.5 million TEU. Cote d’Ivoire is also expanding its port’s capacity.

So how many regional transshipment hubs can the continent have? Transshipment hubs are designed to be few and spread out, so that means Africa should most likely have a maximum of four regional transshipment hubs. For example, Singapore serves as the continental hub in Asia-Pacific, Dubai for the Middle East and Rotterdam for Europe.

In Africa, Egypt, Morocco and South Africa together account for 51 percent of volumes transported in Africa and the three rank among the top 50 in terms of efficiency of seaport services.

Apart from the three Djibouti comes as a bigger contender for the transshipment hub.

In addition to its strategic geographical location it’s also stands out as the most efficient port in Africa, according to the latest ranking and its container terminal SGTD is establishing itself as the transshipment hub for the East African region.

So, Tanzania and Kenya, which are building Lamu and Bagamoyo ports as transshipment hubs, need to ask themselves if they have been caught up in a port investment race and may be building white elephants instead.

TRANSPORT CORRIDOR

For, Kenya it plans to establish Lamu Port as a transport corridor for Ethiopia and South Sudan but this doesn’t seem to be a reality that will happen anytime soon.

Djibouti, with a refurbished railway line connecting with Ethiopia, handles 90 percent of inbound and outbound trade from Ethiopia. Apart from that Djibouti, Lamu will also be facing competition from Berbera Port in Somaliland, which is already emerging as a connecting corridor for Ethiopia.

So as Kenya plans to build a total of 23 modern berths on the Lamu Port, is it caught up in a doomed investment race?