Africa’s new hope

Thanks to technology and the information revolution, the world is evolving. In that respect, two important new developments have not received the attention they deserve.

The first is the opening of a second container terminal in the port of Tanger, in northern Morocco, at the African side of the strait of Gibraltar, good for 20 per cent of global maritime traffic.

Tanger has raised a lot of interest for investment. Last year, it was connected with Casablanca, the economic capital of Morocco, via the first high speed railway in Africa. There are also plans to develop a new part of the city, called “Tanger Tech Mohammed VI”, co-financed by Chinese firms, whereby it’s hoped to raise 10 billion euro in investment in order to become a true “high tech city“. 

Tanger also counts four so-called “free trade areas”, where companies enjoy light customs bureaucracy and lower taxes. Half of companies that are active there are European. Among others, French car manufacturer Renault has taken advantage of this, locating Africa’s biggest car plant there.

This all benefits the port of Tanger, even if the effective import and export from and to Morocco only accounts for 10 per cent of its traffic. This because the port is developing into the leading so-called “transshipment hub” of the Mediterranean and Africa, which means it is being used to load goods from very big cargo ships over to smaller ships. In the case of Tanger, 90 per cent of all traffic is “transshipment”. Ships no longer need to enter the Mediterranean, which benefits Tanger when competing with other ports, like Valencia or Marseille. 

The opening of the first container terminal in Tanger, in 2016, caused the number of days needed to reach the U.S. market from Morroco to drop from 20 to 10. Thanks to the opening of the second terminal, Tanger is expected to enter the global top 20 of ports in terms of capacity, up from the 43th spot in 2016. The reduction in global trade since the global financial crisis isn’t necessarily a problem, because the greater use of big container ships increases the importance of ports fit for transshipment. 

The port of Tanger has around 40 connections with ports in 21 countries in Western Africa. This is an enormous growth market: if Western African countries would continue to grow at a pace of 5 percent per year, 1 million containers are expected to be shipped over there annually. That’s quite something, given that the port of Tanger currently ships around 3.5 million containers every year, as 600 million containers are shipped across the world annually.

The access to the Western-African market, which is the strongest growing destination for Moroccan companies, is important in the light of that second important new development: the entering into force of the “African Continental Free Trade Agreement (AfCFTA)”, a free trade agreement among the member states of the African Union, which creates an African free trade zone. This provides great prospects, certainly after last week’ssignature of the deal by the President of Nigeria, where a lot of doubts existed about it. As a consequence of the arrangement, trade between African countries is expected to increase with 52% by 2022, thanks to the reduction of 90% of all internal tariffs.

A major obstacle for Africa’s economic development is the fragmentation of the African market. It is even more difficult to do business acccross national barriers than it is within some countries. For a company from Nigeria, it is easier to do business with the U.S. than with neighbouring Benin. The new trade agreement should improve that, but challenges remain, as implementation is dependent on the willingness of governments and therefore uncertain, while it will take time in any event.

As much as Africa has been often presented as the “new frontier” and the “new Asia“, great obstacles remain and these often are of a bureaucratic nature. Patrick Dupoux, who heads the African department of leading consultancy firm Boston Consulting Group in Casablanca, comments in the Financial Times that “Africa will be big in 20 years, not now.” He’s more positive about Morocco, as “Morocco is doing for Europe what Mexico did for the US [in the automotive industry]”. 

Improved port infrastructure is of great importance for the economic development of African countries. In combination with the new pan-African trade arrangement, the new container terminal in Tanger therefore offers more economic hope than ever for the African continent. 

Written by Pieter Cleppe

Pieter Cleppe represents the independent think tank Open Europe in Brussels.
%d bloggers like this: