Bagamoyo: Tanzania ups her game in Port business

In what is seen as “upping her game” in the East African coastal port business hitherto skewed towards Kenya’s Mombasa Port, Tanzania has commissioned works for the multi-billion dollar construction of a new and bigger port at Bagamoyo. Once completed the US$11 billion Port is expected to handle 20 million containers annually, 20 times more than the current capacity of the country’s biggest port at Dar es Salaam, 75 Km south of Bagamoyo.

The construction works that will comprise construction of the port, a railway and road leading out of the port and an export free zone town will open up Tanzania- famously called the Southern route to import business to landlocked neighbors like Rwanda, Burundi, the Democratic Republic of Congo, Uganda, Zambia and Malawi, and to some extent, South Sudan.

The project expected to be completed by January 2017 has been handed down to China Merchants Holdings International. According to China Aid Data, an online publication that tracks aid by China, the Bagamoyo works will be funded by China through a soft loan to the Government of Tanzania. The Bagamoyo works are part of the multi-billion dollar kitty that China’s president Xi Jinping laid out to the East African country in March 2013, when he visited. Tanzania was the second country, that Xi visited upon assuming Presidency in Beijing in 2013. Xi came to Dar straight from Moscow, Russia.
In Tanzania, China’s economic relations are documented and remembered in the 1,700 km Tanzam Railway that runs from Tanzania to Zambia built by the Chinese Government in the 1970s.
Once completed the Bagamoyo project will not only become China’s new monument in Tanzania, but will also open up Tanzania to the increasingly attractive east and central African hinterland. In the past few years, export and import business has grown in Uganda, Rwanda, DR Congo, South Sudan as a result of the huge infrastructure projects that are currently under way. Besides, the discovery of oil and gas, and existing mineral deposits in especially the DRC portends huge business opportunities. If Tanzania gets her game right, the Bagamoyo investment could in the coming years sway the port business away from Kenya’s Mombasa- and eventually Lamu, down south.

Currently although the Tanzania’s port of Dar es Salaam has capacity to handle 500,000 containers a year (only 100,000 less than Mobasa’s 600,000), it is reported that the Port’s inefficiencies value at US$2 billion, annually. As a result Tanzania has largely lost the port business to Mombasa in recent years. In fact, although the Tanzania Port Authority has conducted charm offensives to Uganda, Rwanda, among others to persuade their traders to use the southern route (Dar es Salaam) to import their goods, the response from the business community in these countries has been muted- largely because of the bad infrastructure and inefficiency at Dar es Salaam. And that does not mean Mombasa is a star. Until a few months ago when the Government of Kenya decided to remove the clogs in Mombasa, it was itself a bastion of inefficiency causing loses of billions of dollars to traders in Uganda, Rwanda, South Sudan and Kenya itself.

If Tanzania complements the Bagamoyo port with the planned revamping of the Tanzam Railway and revamping of the in-land railway networks to deliver goods out of the Bagamoyo to Uganda, Rwanda, Burundi, DRC Congo, Zambia and Malawi, then Tanzania will shift the tide in East African coastal port business in the coming years.

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