Port Managers Association of East and Southern African Conference 28 November 2011 Swakopmund, Namibia Thoughts on the financing of ports within Sub-Saharan.

Port Managers Association of East and Southern African

Conference28 November 2011

Swakopmund, Namibia

Thoughts on the financing of ports within Sub-Saharan Africa’s transportation networks

Peter Copley, Transport Specialist, Development Bank of Southern Africa….

With great honour and some trepidation….Subject matter more or less the following….

• How to attract investment in our ports?

• Partnership with Government

• Attracting international shipping companies to our ports

How to attract investment in our ports

• Society decides• Post 1994 South Africa saw great international

interest in internal investment• This came from then Deputy President Mbeki,

highlighting the role of the senior political patron

• Driven by permanent public servants• Supported by project driven private sector

champions

How to attract investment to our ports (2)

• Post Polokwane, when society elected President Zuma to succeed President Mbeki, the commercialisation/privatisation process appeared to stall

• Current international PPP interest in Africa is in Nigeria

• South Africa will have to see what happens in Manguang next May….with the next societal expression of direction

• To attract international investment you have to show the World that you are investment friendly

Not that it matters TOO much…..look to rail as an example

• Of the G7, USA, UK and Japan have private sector rail systems (Japan the late comer as the national economy could no longer carry the debt. It took 10 years to take that decision)

• Germany, Italy and France have state owned rail systems

• Canada has a private system AND a state owned system

• 50: 50 split, so there are no right answers• Society ultimately decides whether the public or

private sector is the predominant source of finance, or PPP’s

PRIVATE-SECTOR FUNDING - EMERGING MARKETS

Regional DistributionREGION No OF COST %

PROJECTS US$m

Latin America 38 5 980 48%Asia 20 4 947 40%Europe 7 1 007 8%Sub-Saharan Africa 3 102 <1%Central Asia, Middle Eastand North Africa 2 323 3%

12 360 100%

SOURCE: International Finance Corporation - Financing Private Infrastructure Projects, again at the peak

Partnership with Government

• The Maputo Corridor started (1995) within South Africa’s company and contract law

• Only followed with PPP legislation in 1998• Maputo Corridor now essentially a private

sector driven corridor• Walvis Bay Corridor Group a true Public

Private Partnership• We can learn something from that

Real Gross Fixed Capital Formation by the South African General Government and Public Corporations on Economic and Social Infrastructure, 1946 -2007 (Rm)

28 Nov 2011 PMAESA, Swakopmund

Attracting international shipping companies to our ports

• Safety and efficiency in turn around times!• Vehicle carrying vessels are turned around in 4

hours at Maputo vs 24 hours in Durban• Which would you choose?• Facilitated by effective use of ICT, clearing

customs while the vessel is still at sea• We need to turn BRICs into BRICS• Reflect on China’s balance of payments and the

role of coal

World Oil Production Forecast

Source: Energy Watch Group (2007)

Current Seminal Documents for Africa

• ‘The African Infrastructure Country Diagnostic (Study)’:"Africa‘s Infrastructure: A Time for Transformation”: The World Bank, released in 2009 http://www.infrastructureafrica.org/aicd

• ‘Infrastructure to 2030’: (ISBN 978-92-64-02398-7 OECD Publishing, May 2006)

• Amongst many other publications and studies both local and regional, especially regional integration (e g SADC)

28 November 2011 PMAESA, Swakopmund, Namibia

The Africa Country Infrastructure Diagnostics Study backlogs

• A huge number, of which the backlogs are,• 50% energy• 25% transport• 15% Information and Communications

Technology (ICT)• 10% water and sanitation

PRIVATE SECTOR FUNDING-EMERGING MARKETS

Various Infrastructure Sub-sectors

SOURCE: International Finance Corporation - Financing Private Infrastructure Projects, at the peak

SUB-SECTOR No OF COST %PROJECTS US$m

Power 28 5 706 46%Telecoms 21 4 861 39%Ports 9 222 2%Pipelines 6 1 092 9%Railroads 3 117 <1%Water 2 362 3%Roads 1 313 2%

12 360 100%

The fundamentals from a point of view of the OECD

• OECD Publication ‘Infrastructure to 2030’• Amongst 15 policy recommendations:

– ‘The governments of the World can no longer afford to provide necessary infrastructure unaided. There HAVE to be PPP’s’

– ‘Infrastructure is long term in nature and its provision is necessary irrespective of political persuasions’

– ‘Asset management is as important as new capital investment’

– (Recognise climate change, rising sea levels and extreme events)

Road Network Links: Current Quality and Potential Significance (West - Southern Africa Link Enlarged)

South Africa’s logistic competitors:(Source: PWC Germany ‘New spokes, new hubs’)

• China Logistics Performance Index 3.49 (#27)• South Africa Logistics Performance Index 3.46 (#28)

• Turkey Logistics Performance Index 3.22 (#39) • Brazil Logistics Performance Index 3.20 (#41)• India Logistics Performance Index 3.12 (#47)• Mexico Logistics Performance Index 3.05 (#50)• Russia Logistics Performance Index 2.61 (#94)• South Africa’s World Competitiveness Ranking (#54)

SADC Intra Regional Traffic movement (1996)……2011?

28 Nov 2011 PMAESA, Swakopmund

Thank you

Contact Details

Development Bank of Southern Africa

Registered office Postal Address Telephone1258 Lever Road

Headway Hill

Halfway House

South Africa

1685

PO Box 1234

Halfway House

Midrand

South Africa

1685

+27 11 313 3911

Fax +2711 206 3336

WEBSITE ADDRESS: www.dbsa.org

Peter Copley Transport Specialist [email protected]

28 Nov 2011 PMAESA, Swakopmund, Namibia

Peter Copley, Transport Specialist, Development Bank of Southern Africa….

With great honour and some trepidation….Subject matter more or less the following….

• A broad background to funding of transportation of infrastructure in general• What lessons have we learned?• Putting these lessons into some focus for the future

Current Seminal Documents for Africa

• ‘The African Infrastructure Country Diagnostic (Study)’:"Africa‘s Infrastructure: A Time for Transformation”: The World Bank, released in 2009 http://www.infrastructureafrica.org/aicd

• ‘Infrastructure to 2030’: (ISBN 978-92-64-02398-7 OECD Publishing, May 2006)

• Amongst many other publications and studies both local and regional

28 November 2011 PMAESA, Swakopmund, Namibia

The World Bank’s ‘Africa’s Infrastructure backlogs’

• A huge Number, of which the backlogs are,• 50% energy• 25% transport• 15% Information and Communications

Technology (ICT)• 10% water and sanitation

Chasing Moving Targets

Coverage Backlog

water 10.0 1.8

11.1 1.4

sanit 9.8 2.0

11.2 1.3

elec 8.3 3.5

10.0 2.5

cell 3.8 8.0

9.1 3.4

278 Nov 2011 PMAESA, Swakopmund

28 Nov 2011

PMAESA< Swakopmund

Sector 1974 – 82 1983 – 92

Irrigation and Drainage 17 13

Telecommunications 20 19

Transport Airports Highways Ports Railways

18 17 20 19 16

21 13 29 20 12

Power 12 11

Urban Development Water & Sanitation Water supply Sewerage

Not available 7 8 12

23 9 6 8

Infrastructure Projects 18 16

All Bank Operations 17 15

Average Economic Rates of Return (% per annum) on World Bank supported projects: 1974 –92 (Quoted from ‘World Development Report 1994’, The World Bank, Washington DC)

The water related rates are financial, not economic, rates of return

The fundamentals from a point of view of the OECD

• OECD Publication ‘Infrastructure to 2030’• Amongst 15 policy recommendations:

– ‘The governments of the World can no longer afford to provide necessary infrastructure unaided. There HAVE to be PPP’s’

– ‘Infrastructure is long term in nature and its provision is necessary irrespective of political persuasions’

– ‘Asset management is as important as new capital investment’

‘The governments of the World can no longer afford to provide necessary infrastructure unaided. There HAVE to be

PPP’s’

• A questionable statement?– With emerging markets currently showing better

growth opportunities and return than mature markets, funding is flowing into the emerging economies BUT change is constant and cyclical.

– South Africa had a window of opportunity immediately post 1994 and SANRAL availed itself of that opportunity with the Maputo Toll Road, the N3 and the Bakwena Toll Road, together with two prisons.

– That opportunity changed with Polokwane and the deep pockets of the private sector investment community are currently looking in Africa to Nigeria.

13 rail concessions had been awarded by mid-2005 and there have been a further two since then.

SitarailIvory Coast/Burkina Faso

1995

TransrailSenegal/Mali

2003

Railway operated by state railway company

Privatisation projects planned or underway

Railway now under private management

CamrailCameroon

1999

TransgabonaisGabon1999

Part of rail network now under private management

RSZZambia 2003

CEARMalawi 1999

CDNMozambique

2005

BeiraMozambique

2004

BBRZimbabwe

1997

MadarailMadagascar

2003

SizarailDRC

1995 – 1997

Ressano GarciaMozambique

Not yet operational

TogoWACEM

2002

Kenya/Uganda and Tanzania have both been awarded and are scheduled to commence in 2006. Sizarail (DRC) was ‘cancelled’ following a change in government Ressano Garcia was cancelled in late2005 Transgabonais was cancelled in 2003 and is being temporarily operated by the losing bidder.

‘Infrastructure is long term in nature and its provision is necessary irrespective of political persuasions’

• The Maputo Toll Road is now in its 15th year of operation; the N3 in its 13th; and Bakwena in its 11th. No social unrest. No community violence…..provided there are alternatives (eg Malelane and Parys with no alternatives).

• South Africa HAS two PPP prisons which were built in 2000 and which are referred to in very good terms by the Inspector of Prisons, Judge van Zyl. Despite this the Minister has scrapped the next round? Why? The market gets confused by conflicting signals and people stop buying.

• Second round of PPP interest in South Africa appears to be coming from the success of Maseru Hospital.

• Long may it last in the legal and procurement framework which has now been established by the PPP Unit of the National Treasury

‘Asset management is as important as new capital investment’

• On a recent 3 000 km road trip from Gauteng to Lusaka the ONLY road maintenance I saw being performed was on the PPP Bakwena Toll Road (Polokwane to Tshwane) and by a trader outside of his shop near Livingstone.

• Reality is that providing, operating and maintaining infrastructure IS expensive…..and necessarily needs to be on-going.

• A fundamental rule is that you will spend the same again in maintaining infrastructure over the life of the asset, if it is to be kept functional.

• In broad terms this means that road provision costs are about 2 to 3 times what we would like them to be….and the same with rail….and the same with electricity…..and I presume the same with water and sanitation.

• With communications we just pay! We are prepared to pay R2,60 per minute to talk on a cell phone but we aren’t prepared to pay R0,53 per minute to use an urban toll road? (The utility of time?!)

Road Network Links: Current Quality and Potential Significance (West - Southern Africa Link Enlarged)

The World Bank’s ‘Africa’s Infrastructure backlogs’

• A huge number, of which the backlogs are,• 50% energy• 25% transport• 15% Information and Communications

Technology (ICT)• 10% water and sanitation

What is the single fundamental issue?

• I submit that the single issue is whether these backlogs should be addressed by public or private funds, or a combination of both through Public Private Partnerships, commonly known as PPP’s

PRIVATE SECTOR FUNDING-EMERGING MARKETS

Various Infrastructure Sub-sectors

SOURCE: International Finance Corporation - Financing Private Infrastructure Projects, at the peak

SUB-SECTOR No OF COST %PROJECTS US$m

Power 28 5 706 46%Telecoms 21 4 861 39%Ports 9 222 2%Pipelines 6 1 092 9%Railroads 3 117 <1%Water 2 362 3%Roads 1 313 2%

12 360 100%

PRIVATE-SECTOR FUNDING - EMERGING MARKETS

Regional DistributionREGION No OF COST %

PROJECTS US$m

Latin America 38 5 980 48%Asia 20 4 947 40%Europe 7 1 007 8%Sub-Saharan Africa 3 102 <1%Central Asia, Middle Eastand North Africa 2 323 3%

12 360 100%

SOURCE: International Finance Corporation - Financing Private Infrastructure Projects, again at the peak

Real Gross Fixed Capital Formation by the South African General Government and Public Corporations on Economic and Social Infrastructure, 1946 -2007 (Rm)

11 Nov 2011 PMAESA, Swakopmund

Understanding the types of PPPs applicable totransportation projects

• BOT’s; BOOT’s; EPC’s; EPCM’s are possibly there to confuse us

• Fundamental is that there can be a procured PPP, from a body of government, or an unsolicited PPP proposal, which has to be handled in terms of the law

• SANRAL an example of a body with a policy on unsolicited bids

• Fundamental to match the technicalities of the proposal with the finances available

• You CAN’T and don’t want to print money

The spectrum of PPPs

Outsourcing municipal vehicle fleets and services such as

garbage collection, tendered bus services

Public control

Private control

Water and Wastewater

Facilities

Lease of municipal land

South African Toll Roads, Gautrain

Development of cellular phone

network

Build-Finance-Operate-Transfer

Operations & Maintenance

Lease-Develop-Operate

Turnkey Operation

Design-Build-Finance-Operate

Often broadly defined as concessionsDegree of private sector control of assets

Experience from South Africa’s Toll Roads

• Entered into before PPP Legislation was in place

• 30 year wholly private sector concessions which have changed hands now twice in about 12 years

• 20 investors each at about ZAR 100 m each

Strategic road network of South Africa (SANRAL:

2005)

Who are the investors?• Contractors are the equity investors• Thereafter FNB, Standard, Nedbank, ABSA as 8

year lenders• Thereafter RMB, Standard Merchant, Investec as

12 year lenders• Thereafter Old Mutual, Sanlam, Mine Officers’

Pension Fund, Mine Employees’ Provident Fund, SASOL Pension Fund as 15 year lenders

• and Public Debt Commission, DBSA/EIB as 20 year Lenders.

How is this being modified as we go forwards?

• Gautrain’s Special Purpose Group (10% of equity)

• Reya Vaya’s 526 taxi drivers and operators• Government Employee’s Pension Fund owns

60% of JSE, which is in the World’s Top 20• Transnet currently looking for ZAR100 to 300

bn (Euros 10 to 30 bn)• Will they get it?

Vertical PPP’s?• This does open a door to ‘vertical PPP’s’ recognising

that PPP’s are NOT fixed instruments. They are living businesses which run for the duration of the asset and quite possibly for longer. They are tradeable commodities.

• Equity investors; commercial banks; merchant banks; pension funds; DFI’s; Governments all have horizons. Recognise them and use them.

• We don’t have to look at the entire life of the asset to make a single successful PPP.– (Interesting to reflect on Anglo PLC and the Chilean State

miner at present)

13 rail concessions had been awarded by mid-2005 and there have been a further two since then.

SitarailIvory Coast/Burkina Faso

1995

TransrailSenegal/Mali

2003

Railway operated by state railway company

Privatisation projects planned or underway

Railway now under private management

CamrailCameroon

1999

TransgabonaisGabon1999

Part of rail network now under private management

RSZZambia 2003

CEARMalawi 1999

CDNMozambique

2005

BeiraMozambique

2004

BBRZimbabwe

1997

MadarailMadagascar

2003

SizarailDRC

1995 – 1997

Ressano GarciaMozambique

Not yet operational

TogoWACEM

2002

Kenya/Uganda and Tanzania have both been awarded and are scheduled to commence in 2006. Sizarail (DRC) was ‘cancelled’ following a change in government Ressano Garcia was cancelled in late2005 Transgabonais was cancelled in 2003 and is being temporarily operated by the losing bidder.

Putting the partnerships in PPP: How to ensure best practice in PPP projects• The World remains of differing opinions• G7 rail systems equally split between private

and public ownership• Recognise that reality and recognise

fundamental need against fundamental constraints of affordability

• Recognise the term of ‘Public Private Partnerships’ and be true to that term

SADC Intra Regional Traffic movement

11 Nov 2011 PMAESA, Swakopmund

Road Network Links: Current Quality and Potential Significance (West - Southern Africa Link Enlarged)

The rail networks of sub-Saharan Africa are capable of carrying 23 million tonnes per annum. They currently carry 3,5 million tonnes.

Applying lessons from successful BOT /PPP processes

• Three way institutional linkage• Top level political patronage• Ongoing public sector leadership• Clear set of rules• Ongoing private sector leadership• Reality in costing and in revenue streams• Consistency in application of the rules,

including taxation

Where to from here?

• Basic thresholds of sustainable PPP’s, from 4 000 vpd for road; 300 000 tonnes per annum for rail; 3 m tonnes per annum for ports; 250 000 passengers per annum for airports, with proven growth

• Think in terms of BRICs and the reality of southern Africa

• A fundamental need to think regionally.

The Ports of Sub-Saharan Africa

• Djibouti, Mombasa, Dar es Salaam (incl Tanga, the lakes and Mtwara)

• Pemba, Quelimane, Nacala, Beira, Maputo• Richards Bay, Durban, East London, Nqura,

Port Elizabeth, Mossel Bay, Cape Town, Saldahana

• Luderitz, Walvis Bay• Namibe, Lobito, Luanda, Benguela, Pont Noire

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Kisangani

Brazzaville

KanangaDar es Salaam

Menongue

Gaborone

PretoriaMaputo

Johannesburg

Durban

Port Elizabeth

Kinshasa

Bujumbura

Kigali

Maseru

Matadi

Huambo

Kimberley

East London

KahembaDodoma

Mtwara

Toamasina

Bloemfontein

Bulawayo

Livingstone

Mbandaka

Nacala

Kigoma

Mbabane

Pointe Noire

Port Gentil

Toliara

Antananarivo

Beira

Cape Town

Harare

Libreville

Lilongwe

Malanje

Lumumbashi

Lusaka

Mombasa

Nairobi

Walvis Bay

Windhoek

Democratic Republic of Congo

Tanzania

Rwanda

Burundi

Angola

Zambia

Malawi

Mozambique

Zimbabwe

Namibia

Botswana

South Africa

Swaziland

Lesotho

Congo

GabonKenya

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"A"A

Benguela

Namibe

Luanda

Madagascar

DEVELOPMENT CORRIDORS AND SDIs IN THE SADC REGIONShowing the Current and Potential Regional Corridor Traffic FlowsCurrent / Medium Term Potential in million tonnes per annum, year 2000

LOBITO Dev. Corridor0 / 1.0 mtpa

Coast-to-Coast Corridor0.2 / 1.0 mtpa

TAZARA Dev. Corr.0.5 / 1.5 mtpa

Walvis Bay Dev. Corridor2.0 / 3.0 mtpa

BEIRA Dev. Corridor2.0 / 5.0 mtpa

NACALA Dev. Corr.0.3 / 0.8 mtpa

MAPUTO Dev. Corridor3.0 / 6.0 mtpa

Lake Tanganyika Transport, Mpulungu

0.1 / 0.3 mtpa

Great Lakes Region Import Export Vols

1.6 / 2.4 mtpa

Alternative road route from Zambia

Zambia Import/Export plus Transit 1.6 / 4.0 mtpa

Zimbabwe Import Export plus Transit 4.0 / 8mtpa

Botswana Inports Exports Plus Transit 1.5 / 2.0 mtpa

Agriculture

Manganese

Forrestry Copper

Copper

CoalCoal Steel

Chrome

Agriculture

Coal

Manufactured Goods

Options practiced in SADC Vehicle

sRoad Rolling

Stock and Locomotives

Rail Port facilities

Port equipment

Ports Pipelines

Aircraft Airports

Energy Water

Leasing

Franchising

Concessioning

Contracting out

Bond financing

Equity investments

Venture capital

Mombasa

Dar es Salaam

Nacala

Beira

Maputo

LEGEND

0 500 1000km

DBSA : N-S CORRIDOR TO GREAT LAKES REGION: DEFINITION OF NORTH-SOUTH CORRIDOR

Main Rail Routes - operational

Main Rail Routes - non operational

Main Road Routes

Main River / Lake Routes

Main Centres & Ports

Walvis Bay

Matadi

Pointe-Noire

Lobito

MalangeLuanda

Huambo

NamibeMenongwe

Saldanha

Cape Town Port ElizabethEast London

DurbanRichards Bay

Maputo

Beira

Johannesburg

Kisangani

Ilebo

Kindu

Kampala

Kigoma

BujumburaMwanza

Kisumu

Kigali

DodomaKalemie

Kamina

Kolwezi

Lubumbashi

Tenke

Ndola

Lusaka

Chipata

Kafue

HarareVictoria Falls

Bulawayo

Beitbridge

Pretoria

Nairobi

Mombasa

Dar es Salaam

Kidatu

NacalaBlantyre

Kinshasa

Kikwit

Africonsult / Giersing Rose Mar 2001

Lake transport operated by AMI/TARC, functioning well

Lake tranport by ferry on Lake Tanganyika – ports to be upgraded

Kidatu trans-shipment facility. Changeover from 1067mm gauge to 1000mm gauge (TARC)

Possible new 130km rail link from Kasama to Mpulungu

Tazara Railway system 1067mm

Sena railway line, closed at present. Only regional railway connection to Malawi and Nacala Corridor

Beira Port: the shortest distance by road / rail from Ndola / Lubumbashi by approximately 600km

New Beitbridge to Bulawayo railway (BBR)

Alternative railway routes from Gauteng to Bulawayo: Botswana and BBR routes

Lobito Corridor - Benguela Line, closed at present. Distance to Copper Belt longer than routes to Dar es Salaam and Beira

Road connection between Kafue and Lions Den. Shorter than rail route through Bulawayo by more than 800km

Alternative road route from Botswana to Zambia – new railway under consideration

Gobabis

Luderitz

Mbeya

Lions Den

Lilongwe

Tete

Kariba

Lake Malawi

Lake Tanganyika

Lake Victoria

Windhoek

Gaborone

Trans-Kgalagadi / Walvis Bay Transport & Development Corridor

Maputo Development Corridor

Beira Development Corridor

Sena

Trans-Caprivi Corridor Final surfaced road section now completed

Kasama

Mpulungu

Position of North-South Corridor

Gauteng

New Bridges over Zambezi

Kapiri Mposhi

A closing word on China

• From Dr Lucy Kaukin’s doctoral thesis on trade between Angola and China

• Africa accounts for 4% of China’s trade• Trade balance heavily in favour of Angola• And in fact SADC trade balance with China is

still in SADC’s favour• Hence China is working to bring about balance

but it is not the only solution as most Chinese money stays in China

World Oil Production Forecast

Source: Energy Watch Group (2007)

Transport Energy Efficiency

57

Source: http://openlearn.open.ac.uk/file.php/1697/t206b1c01f49.jpg

Comparative modal energy efficiencies

• Rail is 3 to 5 times more fuel efficient than road

• Water is 100 times more fuel efficient than rail• Where is our coastal shipping?

Thank you!

Contact Details

Development Bank of Southern Africa

Registered office Postal Address Telephone1258 Lever Road

Headway Hill

Halfway House

South Africa

1685

PO Box 1234

Halfway House

Midrand

South Africa

1685

+27 11 313 3911

Fax +2711 206 3336

WEBSITE ADDRESS: www.dbsa.org

Peter Copley Transport Specialist [email protected]

7 Dec 2009 ESASTAP/CSIR/COST/Dept Science and Technology Conversation, CSIR

South Africa’s logistic competitors

• China Logistics Performance Index 3.49 (#27)• South Africa Logistics Performance Index 3.46 (#28)

• Turkey Logistics Performance Index 3.22 (#39) • Brazil Logistics Performance Index 3.20 (#41)• India Logistics Performance Index 3.12 (#47)• Mexico Logistics Performance Index 3.05 (#50)• Russia Logistics Performance Index 2.61 (#94)• South Africa’s World Competitiveness Ranking (#54)

Port of Maputo – Traffic Handled (‘000tons)0

2 000

4 000

6 000

8 000

Traffic (Total) Traffic (conc) Traffic (CFM)

Traffic (Total) 4 001 4 424 5 036 5 540 6 366 6 672

Traffic (conc) 2 586 2 013 2 851 3 127 3 875 4 024

Traffic (CFM) 1 415 2 411 2 185 2 414 2 491 2 648

2001 2002 2003 2004 2005 2006

0.00

2 000.00

4 000.00

6 000.00

8 000.00

10 000.00

12 000.00

10^3

Ton

. Mét

ricas

2001 4 001.50 2 356.10 743.30 132.90 78.00 7 311.90

2002 4 423.60 2 761.90 779.70 164.20 71.30 8 200.70

2003 5 035.90 2 322.60 807.90 177.40 66.70 8 410.50

2004 5 540.30 2 273.60 908.90 217.40 78.30 9 018.50

2005 6 366.90 2 419.00 875.50 243.40 77.60 9 982.40

2006 6672.2 2652.5 950.1 218.5 105 10 598.20

Maputo Beira Nacala Quelimane Pemba Total

CFM PORT TRAFFIC

Recent History of Maputo Port• Pre 1975 handled approx 14 million tonnes per annum• Post 1975 dropped to 3 million tonnes per annum (Limpopo and Goba Rail lines)• Post Nkomati Accord increased to 8 million tonnes per annum• One year later dropped back to 3 million tonnes due to inadequate security• British aid accordingly financed a fence!• 80% of Mozambican foreign exchange came from freight passing through the three

corridors• Circa 1980 World Bank appointed Parisbas to advise Mozambique Government on

how to privatise its ports• Circa 1990 RFP’s were invited (at US$20 000 each) and twelve parties took

documentation• Five responded, including Mersey, Lisconti and Skanska

Maputo Port 2006

Evaluation and Negotiation• Quite quickly MPDC were accorded preferred bidder status….• And negotiations continued for 10 years!• Fundamental was the need by MPDC to acquire both port authority and port

operator status with effective inland service (road AND rail)• Equally fundamental was the need for Mozambique to negotiate long and hard

(precedent for both Beira and Nacala)• In the interim MPDC operated as management agents for CFM• Slowly moving back to 6/80 million tonnes with a target of 15 million tonnes in

2010• As Skanska was an equity partner SIDA (Sweden) requested the DBSA to act as lead

arranger for the DFI’s• This augments the commercial arrangers who were in this case SCMB• Arrived at a 15 year concession in a ratio of approximately 50:50 equity to debt

Overview of Financial Package• Equity investors want 17% pa on investment over 5 years• Commercial Banks want about 15% over 8 years• Merchant Banks about 12% over 12 years• Pension Funds about 10% over 15 years• DFI’s (Development Finance Institutions) take a 20 year view

Role of the DFI’s in Financing Business

• Direct investment in projects through term loans• Credit enhancement through innovative structures, risk assumption and guarantees • Ability to mobilise additional funding from third parties• Strengthen the capacity of the borrower to implement and manage the project by

providing technical assistance• Policy and knowledge sharing and advice• Facilitation of public-private-partnerships• Support for black economic empowerment by funding sustainable BEE initiatives

and partnerships with indigenous business operators• Development of local capital markets in order to provide access to local currency to

offset exchange rate risk, access to long-term capital and increase investment alternatives

• Thus far not necessary to draw down on DBSA debt due both to slower development than anticipated and as supplier credit and equity have been sufficient to meet what has been necessary

Order of re-development• 1996 Maputo Toll Road

• 1998 Mozal and reintroduction of motor cars

• 2000 Return of the commercial banks

• 2002 Return of advertising

• 2004 Return of builders and painters

• 2005 Final signing of Maputo Port 15 year concession

Rail and port network of South Africa (Adapted from Barnard, D

2003 & National Ports Authority, 2004)

Saldanha Bay

Cape Town

Mossel Bay

Port Elizabeth

Ngqura: (under construction)

Durban

East London

Richards BayKWAZULU NATAL

MPUMALANGA

SWAZILAND

FREE STATE

NORTHERN CAPE

WESTERN CAPE

EASTERN CAPE

LESOTHO

GAUTENGNORTH WEST

LIMPOPO

Rail Network Classification

CoreExportNon coreOther

South Africa: Ports and Rail Network

Port classification

Deep water

Hub

Multi purpose

Port classification

1995 Port Infrastructure 2005

Maputo 1995

Maputo 2005

Ongoing support and possible future

• Maputo is primarily a niche port (cf Durban at 56 million tonnes, Richards Bay at 120 million, Saldanha at 26 million and Cape Town at 18 million tonnes)

• Dredged depth currently constrained to 9 metres (cf international need for 12 m or 16 m)

• Need for continuous dredging, still done by CFM• Quantum leap necessary if throughput were to go higher than 15 million tonnes

per annum• Absolute need for rail improvement and for one stop border• Also an example for other African ports (eg Mombassa, Dar es Salaam, Luanda,

Egypt, West Africa AND South Africa)