Port Privatisation In Africa Is Misunderstood – Luguje

Port Privatisation In Africa Is Misunderstood - Luguje
Mr. Michael Luguje

Mr. Michael Luguje is the Secretary General of the Port Management Association of West and Central Africa (PMAWCA), he was elected in 2012 for tenure of four years. The association covers twenty three ports across twenty countries in the West and Central Africa. In this interview with Segun Oladipupo, he analysis the strength of some leading ports in the region as well as makes comparison between ports in terms of infrastructure. He states the objectives of the association, what it has been able to achieve as well as the plans ahead. Enjoy the piece.

What are the basic objectives of PMAWCA?

The association from its name is an association of all the ports authorities in West and Central Africa from Mauritania down to Angola so, we are talking of about twenty Coastal states, and twenty three ports authorities representing the twenty Coastal states. Basically, the essence of the association is to bring the ports together to create a forum for the ports to be able to cooperate and learn from one another and as far as quality is concerned, involving regional consensus, to discuss the policy and make sure that everybody’s input is given before it is adopted. So, PMAWCA is also having relationship with organisations outside the port that are of interest to the maritime industry. So, preferentially, if I can just draw analogy, PMAWCA is just like the ECOWAS of the port.

How has PMAWCA been trying to be able to achieve these objectives?

The association was first created in 1972 so, it is more than forty years old now and at that time, all the ports were service ports, there was no private sector participation. The port Authority was the landlord and also the operator of the port but as time went on, issues about efficiency came in, issues about handling, the need to expand infrastructure to meet the needs of the growing traffic came up and we needed to look into how the private sector came up. At that time, it was the association that took leadership to look at what is happening to what, where they have done very bad; the association first organized a workshop and got those ports in Europe that had over the years passed through those hurdles to come and share their experience and you know generally, our ports were mainly government-owned, there was that phobia that if you bring private participation, it’s going to take hundred percent ownership and we won’t have the ownership anymore so.

I think that programme that the Secretariat gave to port authorities in our region was to be able to tap into the practical experience of western ports. That made us to understand that apart from just port authorities bringing money, we could ask the private operators to bring capital to help expand the infrastructure, to help improve the process; I can say this is just one of the examples.

Now, since that each year, the port authorities come together to look at different areas of concerns along the line, they also have some inter-port exchange programmes where this port will look at the other port and see what they are doing. In fact, along the line, ports have begun to do what is called port accounting to know if you are making profit out of it or not, this will help to tell whether certain operation is profit-making or loss. That was also piloted by the association.

Coming forward, being that different ports started operations at different times, so, as that was happening, the association was able to bring them together to tell each other that this is how far we have gone, look at the advantages we are looking at, the mistakes we are making so that other members can watch if they are going to do anything because that is where you probably can be short-changed and that the benefits are on this side. I think today, as we are talking, we have about 90 percent of the ports in our region who have introduced the private sector and I think it is just about 2 or 3 that are still fully controlled by the port authorities and where they also provide cargo handling and the rest. So, that is also a very good platform for another project each, at least we need a platform. If every port was operating in isolation, they wouldn’t be able to know what is happening in ports outside our region to know the best examples that they can leverage and be able to improve their processes.

Recently, we have also been able to use the platform of the association to attract support from the International Maritime Organisation (IMO), International Association of Ports and Harbours, we have attracted support from European Union where there have been a very good number of port services to be able to help improve different bodies of port operations. Look at port security, port safety and environment management; all these projects are being done through the Secretariat as an association because they are not dealing with industrial port.

Currently, there are ongoing projects that we are doing, what we are compiling now is what we call a guide on port concession management at the region.

Can you compare the state of port infrastructure among the West African ports?

Well, if you say I should compare the state, what I will say first and foremost is that port infrastructure in each country or region is developed based on trade flow, and the projections we need and then the port has no master plan to say looking at traffic, this is how much infrastructure we need to be able to cope with goods as the years come by. So, it is very difficult for you to properly compare because you can’t compare Lagos port with Cotonou because the size of the economy are not the same.

Secondly, every country today has either undergone significant infrastructure expansion or is currently undergoing expansion or has planned to start undergoing expansion because if you look at the economy projections apart from this year where we have some drops in the crude oil prices, the economy didn’t get too well in the last quarter of last year till this year. Though growth projection has been positive for West and Central Africa, there is a lot of investment coming in and then the cost of such projections, middle class is also growing so, there is a lot of demand for consumer goods and since in Africa, we are predominantly import region, so when you look at traffic, there is traffic in import. You will see that every port is doing everything to expand within its own capacities. So, infrastructure is growing along in the region. If you are growing up, you might grow that you are expecting bigger ships but you should also be growing by making sure that you are able to recover your investment.

So, if you are just comparing the ports, of course Lagos is the biggest port followed by Abidjan. Dakar and Tema are of the same level but when Tema completes the second container terminal they are trying to build, they would have overtaken Dakar in terms of size but in terms of traffic, Dakar and Tema are almost of the same level.

Today, if you talk to some people, they will tell you that in terms of efficiency, in container handling, I think if you compare critically, you will notice that the port in Nigeria are around the same level in terms of productivity with Tema, Dakar and Abidjan.

These ports I have mentioned: Dakar, Abidjan, Tema, all have ship to shore gantry cranes but Lagos ports are using harbour cranes. So, with the report we are getting in terms of container handling productivity, the Lagos ports are doing highly well.

The ports in Nigeria were leased in 2006 with the intention of boosting trade, making more profits and above all to reduce the cost of doing business in the port but all these factor seem not found in Nigerian ports. On this premise, can you compare the cost of doing business in Nigerian ports and Ghana?

I want to say that the problems are not unique about Nigeria. In fact, Nigeria has some special advantage because anytime the port authority or government is taking a position on privatization, we tend to have that erroneous impression that privatization is going to reduce cost but that is not correct from all the experiences we have had. Privatization hasn’t reduced costs directly and what I mean is that we should always expect that paying 200 dollars to remove a container from the port when the port authority was in charge, now that there is a private operator operating that terminal, we expect to pay 150 dollars, it is then that I will see that cost has gone down but that has not been the experience of any port in Africa but I don’t know of the Western countries.

Usually, the private sector comes with investment and the investment they put in is expected to be able to recoup their investments even with a margin of profit otherwise, the shareholders will not be interested in investing or bring in the capital.

So, usually the benefit of privatization or any other business is to improve on quality to improve service. If you were giving 200 dollars for a service to bring out a container from the port and if it took you ten days to go through that process and the private man comes, he increases the cost to over 200 dollars and you are able to take your cargo out in five days, it is expected that the quality and the time reduction is part of the benefits you are getting and not directly the amount you pay.

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