TODAY’S BULLETIN OF MARITIME NEWS
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- First View : MORNING CATHERINE
- Effects of massive Petya cyber-attack still being assessed
- TPT commissions mobile cranes at Richards Bay
- Ritz-Carlton Hotel Group (Marriott) goes to sea
- South Africa’s New Maritime Policy & Ports Development
- TPT’s Pendoring Inland Terminal exceeding expectations
- Road haulage woes – thinking out of the box is required
- HMS Queen Elizabeth goes on sea trials
- PRESS RELEASES: McKinsey’s latest report on Africa-China challenges previous beliefs
- Expected Ship Arrivals and Ships in Port
- Cruise News and Naval Activities
- Pics of the Day : HMS QUEEN ELIZABETH
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Eukor’s Ro-Ro vehicle carrier MORNING CATHERINE catches the weak afternoon sun to produce this pleasing effect on the bow of the ship, berthed at Durban’s Point, now known as the Durban Ro-Ro Terminal. The terminal can make use of between four and five berths that are adjacent to the giant Durban Car Terminal, berths E, F, G, M and R. The advent of moving the car terminal from Pier 1 to Cato Creek and later expanding onto the enlarged and deepened Point docks has transformed this area of the port, which now experiences busy road and rail traffic arising from in excess of 400,000 motor units handled each year. The car carrier Morning Catherine (60,876-gt) is but one of many such ships calling here. She is owned and managed by Japanese owners operating out of Panama (JEK Navigation) and was built in 2008 at the Imabari Shipbuilding Marugame yard in Japan. Her capacity is 6,500 motor cars. This picture is by Ken Malcolm
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EFFECTS OF MASSIVE PETYA CYBER-ATTACK STILL BEING ASSESSED
As reported in yesterday’s Africa PORTS & SHIPS, a massive cyber-attack called Petya continues to take its toll on numerous governmental departments and giant companies, especially across Russia, Ukraine, Spain, the UK and other parts of Europe, and the United States. One of the world’s biggest shipping groups, A.P. Møller-Maersk was among the first to acknowledge that it had been struck by Petya and that several of its units were affected.
The attack, which follows a similar cyber-attack in May this year, took everybody by surprise. Although the…[restrict] source of the virus remains unknown at this stage it would appear to be some form of Ransomware, a malicious virus that shuts down computer systems leaving the firms and government departments or entities crippled.
In its latest statement Maersk said over its Twitter account that the APM Terminal at Maasvlakte II (Rotterdam) was closed on account of the attack but that Maersk Line’s ships remained ‘manoeuvrable and able to communicate.’
Yesterday morning A.P. Møller-Maersk issued a statement saying that Maersk has been hit as part of a global cyber attack named Petya on the 27 June 2017. “We have contained the issue and are working on a technical recovery plan with key IT-partners and global cyber security agencies. We have shut down a number of systems to help contain the issue.”
It is understood that at least 17 of the APM terminals across the world are affected and being held to ransom. This included the Los Angeles terminal in the United States and those at New York and New Jersey, showing that the virus has taken some hold across the Atlantic.
The Maersk statement continued that as of yesterday morning, its subsidiaries Maersk Oil, Maersk Drilling, Maersk Supply Services, Maersk Tankers, Maersk Training, Svitzer and MCI were not operationally affected, although precautionary measures had been taken to ensure continued operations.
“Maersk Line vessels are manoeuvrable, able to communicate and crews are safe,” the company said. “APM Terminals is impacted in a number of ports.”
The Ukraine appears to have been specifically targeted by the perpetrators of the cyber-attack, with the electric power utility, the metro and airport all disrupted or shut down. Germany’s DHL Express said that its systems in the Ukraine and also those on FedEx (TNT) had been impacted, along with a large number of other organisations in that country.
Elsewhere, pharmaceutical giants such as Merck and Mondelez International, the owner of food brands such as Oreo and Nabisco also became victims.
Ironically, Maersk Line has been in the forefront of moving towards universal digitalisation of shipping activity involving IBM and the Blockchain electronic ledger.
The severity and ease with which this and other cyber attacks have affected and impacted shipping activities must raise both alarm and questions for those that are promoting automated technologies and systems. What appears clear is that IT security is compromised and deficient at present and highly vulnerable to such attacks.[/restrict]
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TPT COMMISSIONS MOBILE CRANES AT RICHARDS BAY
The two 144-ton mobile harbour cranes (MHC) that were moved from Maydon Wharf to Richards Bay’s Dry Bulk Terminal [DBT] have finally been fully commissioned. The move is part of the terminal’s drive to optimise use of its equipment and increase efficiencies in Richards Bay as well as to ensure optimum berth utilisation.
The two cranes have…[restrict] been redeployed to berth 701, which operates as a dual-purpose, import and export berth. Up until now, it had been making use of two MHCs and two Bridge Hoppers for the operation. Although these cranes will primarily be utilised at berth 701, their mobility allows the terminals to use the cranes as back-up for 702, 609 and MPT 6 series berths. The cranes currently run on diesel gensets and will be upgraded to dual shore power electric machines in order to ensure that the bulk operation is cost effective.
The moving of the two cranes from Durban to Richards Bay was not an easy operation as it entailed the lifting of the MHCs weighing 400 tons each via heavy lift cranes. This was followed by a sea voyage from Durban to Richards Bay, off-loading, commissioning and load testing. Stringent measures had to be taken to ensure the MHCs were properly secured and corrosion-protected whilst in transit. For this project to be a success, it required co-operation between a multi-disciplinary internal project team and the OEM commissioning the equipment.[/restrict]
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RITZ-CARLTON HOTEL GROUP (MARRIOTT) GOES TO SEA
The luxury hotel group Ritz-Carlton will be entering the luxury cruise market with the first of three cruise ships to be launched in time for the 2019 (northern) summer season.
The additional two ships are scheduled to follow in 2021 and 2022 respectively.
Providing the cruise ship industry expertise are the…[restrict] former president of German cruise company AIDA, Lars Clasen, and maritime shipbuilder and shipowner Douglas Prothero.
The first ship will cater for 298 passengers with the other two presumably being similar. The 198-metre long, 24,000-gt ship will have 149 suites, each with its own balcony. There will also be two 138m2 duplex penthouse suites with ‘modern craftsmanship and interior finishes jointly designed by The Ritz-Carlton and leading cruise ship design firm, Tillberg Design of Sweden.’
Finance for the operating aspect of the enterprise is coming from Oaktree Capital Management with Ritz-Carlton to provide the luxury hospitality under a long-term agreement.
“The Ritz-Carlton Yacht Collection will have a distinctive personality and the vessels are sure to be true stand outs in some of the most glamorous ports around the world. This unique combination of yachting and cruising will usher in a new way of luxury travel for guests seeking to discover the world in a relaxed, casually elegant and comfortable atmosphere with the highest level of personalized service,” said Herve Humler, Ritz-Carlton Hotel Company’s President and Chief Operating Officer.
The company said that itineraries were being developed “with an intent to combine the lifestyle of The Ritz-Carlton’s luxury resorts and the casual freedom of a yachting vacation.”
Parent company of Ritz-Carlton is Marriott International which once held an interest in Sun Line Cruises.
The name of the shipyard has been revealed as Astillero Hijos de J. Barreras, a Vigo (Galicia) shipyard new to the cruise industry. The cost of the first ship is thought to be in the region of US$210 million. Spain’s export credit agency CESCE and CaixaBank helped secure the contract for the Spanish builder.
The diesel-electric engines are being supplied by MAN and the Azipods by ABB, with the ship to run on diesel fuel.
[/restrict]
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SOUTH AFRICA’S NEW MARITIME POLICY & PORTS DEVELOPMENT
Author: Nicola Nel, Senior Associate, Shipping and Logistics Practice at Bowmans
The Department of Transport has now finalised its Comprehensive Maritime Transport Policy (the CMTP) for South Africa, which was due to be gazetted early this month. The overarching aim of the much anticipated CMTP is to facilitate growth and development of South Africa’s maritime transport system in support of socio-economic development of the country whilst contributing to international trade.
The policy broadly defines “maritime transport” as “an integrated system that involves the design, construction, operation, management, servicing and maintenance of merchant, leisure and other ships in the service of seaborne trade” and also contemplates overland logistics corridors facilitating the movement of people and goods through port connected road and rail infrastructure.
The CMTP has been a long time in the making following release of the government’s White Paper on National Transport Policy in 1996. It aims to address issues such as transport costs efficiencies, the lack of an established South African merchant fleet and South Africa’s relatively weak import / export trade and how to grow employment opportunities in the sector.
One of the areas which the policy focusses on is port infrastructure, planning and management, where the current policy regarding the regulation of the South African Ports system is the Commercial Ports Policy of 2002. The new policy recognises that, given their strategic nature in boosting the economy, ports require “massive investment in infrastructure, innovative technology, proper management and a clear understanding of their evolving role in a globalising world economy.”
The following actions are contemplated by key statements regarding ports development as contained in the draft policy:
- 1. A review of the 2002 Commercial Ports Policy;
- 2. The introduction of a port land use spatial planning framework;
- 3. The introduction of instruments for monitoring and evaluating private sector participation in commercial ports;
- 4. Monitoring the competitiveness of South African ports.
Although broadly framed (as is the case with much of the CMTP), these ambitions are relevant and encouraging and are to a large extent already reflected in the current Durban port upgrade and expansion project, as well as the possible phased development of the intended dig-out port at the old airport site in the future.
As far as the former developments are concerned, Transnet is in the process of increasing container capacity in the Port of Durban at the Durban Container Terminal, Maydon Wharf and the Ro Ro terminal. Berths 13 and 14 at Maydon Wharf have recently been reconstructed and deepened so as to allow safe berthing of larger ships with greater container capacity.
This is part of a R1.5 billion project to deepen 6 berths at Maydon Wharf. This reconstruction is to be welcomed as a positive development given that the youngest berth in this area of the port is 42 years old. Transnet further aims to deepen berths 203 to 205 at the DCT so as to allow for increased capacity.
Should the deepening (and lengthening) of these berths go according to plan, it will be possible for the DCT to handle three 350m vessels at once. With the dig-out project on hold, the combined port expansion project for Durban aims to increase the DCT’s container capacity by 1.7 million TEU’s.
Proactive and continuous development of port infrastructure ties in with one of the most important goals of the CMTP, namely the importance of transport costs efficiencies and economies of scale. The policy recognises that the operation and costs associated with larger ships will always be cheaper than smaller ships and that this creates a financial incentive to invest in the necessary infrastructure to handle megaships.
One also needs to take into account the global economic outlook for shipping in the future: while the industry has certainly seen better days in terms of freight rates and a drop off in shipping demand, one can expect there to be a significant upswing in the cycle in the years to come. The fact that commodity prices are on the increase is also good news in this regard.
While the dig-out project has been placed on hold due to the massive capital investment involved (as well as concerns as to whether such an amount of capacity will in fact be required in the near future) the expansion of facilities shows that Transnet is taking a proactive stance in increasing the existing capacity of the Port of Durban.
The fact that the CMTP recognises and addresses the issue of port development and the need for investment in this area is positive and promising for the future.
That said, much of the ambitions are broadly stated and the local industry would benefit from a more targeted and action–driven document providing further clarity particular aspects such as project finance, management and the participation of the private sector.
About Bowmans
Bowmans is a leading Pan-African law firm. Its track record of providing domestic and cross-border legal services in the fields of corporate law, banking and finance law and dispute resolution, spans over a century.
With 400 specialised lawyers, Bowmans is differentiated by its geographical reach, independence and the quality of legal services it provides. The firm delivers integrated legal services to clients throughout Africa from six offices (Cape Town, Dar es Salaam, Durban, Johannesburg, Kampala and Nairobi) in four countries (Kenya, South Africa, Tanzania and Uganda).
Bowmans works closely with leading Nigerian firm, Udo Udoma & Belo-Osagie, which has offices in Abuja, Lagos and Port Harcourt, and has strong relationships with other leading law firms across the rest of Africa. It is a representative of Lex Mundi, a global association with more than 160 independent law firms in all the major centres across the globe.
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TPT’S PENDORING INLAND TERMINAL EXCEEDING EXPECTATIONS
The Pendoring Multi-Purpose Terminal (MPT), Transnet Port Terminals’ first inland terminal situated on the west of Pretoria in Brits, has posted volumes and revenue numbers that have far exceeded targets for the financial year that recently ended in March.
In its first year of operation, the terminal handled almost three times the volumes budgeted for the financial year while revenue figures climbed to almost twice…[restrict] what was budgeted. Savings were also made on a number of cost centres with labour expenses making a 60% saving.
Having budgeted for 282,000 tons in various commodity volumes, a total of 678,000 tons was handled, 395,000 tons more than envisaged. As part of Transnet’s strategy of moving cargo from road to rail, this totals more than 25,000 trucks taken off the roads at an average of 27 tons per truck. From inception, volumes ramped up from 20 tons at one train per week to 100 tons at 5 trains per week.
Most of the employees on-site are sourced locally in Britz. Out of the 16 personnel onsite, 12 are locally based and the remainder are interns. The terminal works on a 2 shift system on a 12-hour basis.
General Manager for New Business Brenda Magqwaka said that the numbers that were generated during the first year of operation are a good yardstick of things to come going forward as they give a good sense of future forecasts.
“When you budget for numbers that seem distant from the beginning and you overshoot that target by hundreds of thousands of tons, you know you are doing something right and doing it well. To add to this, this has added much to the reduction of the carbon footprint as scores of trucks have been taken off the road by moving more commodities to rail from road,” she said.
Magqwaka added that what this illustrates is that the operational efficiencies implemented are yielding desired results that there is a huge appetite for the services they are providing for customers through the inland terminal, which means that more capacity may have to be provided in order to accommodate the increase in anticipated demand.
The Pendoring Inland Terminal is a collaborative initiative between a Transnet facility operated by Transnet Port Terminals. This is part of the road-to-rail project and it transports cargo from Brits to Richards Bay for export purposes.[/restrict]
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ROAD HAULAGE WOES – THINKING OUT OF THE BOX IS REQUIRED
“The best way to predict the future is to create it”
Peter Drucker
One of the most vexing of issues that continues to thwart the efficient workings of the port of Durban and in particular, its container traffic, remains the ‘back of port’ in particular the difficulties surrounding road and rail transport into and out of the port terminals.
This was one of the topics under discussion at the latest KZN Freight Task Group, which has begun meeting again.
The KZN Freight Task Group is an initiative of the Freight Directorate of KZN Department of Transport to provide a forum for discussion between the transport sector and the authorities.
The presentations included at the recent meeting included:
[restrict]
- an outline of the Road Freight Transport Strategy newly approved by Cabinet
- an incisive overview of the present South African economic situation
- a very informative description of current national road planning on the N3 and N2 corridors in KZN
- and Mrs Sue Moodley, Chairperson of the Durban Harbour Carrier’s Association who described the recurring and unresolved problems with the back of port road freight logistics in Durban
She raised a number of points that includes overall port congestion that is worsening over time, exacerbated by the size of container vessels visiting the port which are increasing rapidly. Largely as a result of this the average container discharge batch size has increased by 22% in 3 years, Moodley said.
However, the underlying back of port congestion problem is that facilities, space and equipment which are not adequate to match road vehicle arrival rates. No amount of staging, parking, scheduling will alter the fact that more arrivals than departures means queues, she pointed out.
Disturbingly, truck delay hours have increased in over the past five years. The wasted time, costed at R300 per truck hour, makes road transport at the port of Durban exorbitantly expensive while the railway services do not serve the Durban logistics areas at all.
Moodley noted from the ETA logistics study that Bayhead Road currently carries about 8000 trucks per day [at zero GDP growth] and is projected to carry 22,000 trucks per day by 2030 if economic activity increase. This is impossible, given the present set-up.
According to Moodley the only significant future industrial areas in the port hinterland lie in the areas of Cato Ridge and Hammarsdale to Eston; to the east of the homeland and residential belt that extends across the entire eThekwini Metro and is unavailable for industrial growth.
There are 90 hectares of container depots, on crowded properties, scattered within 20kms of the port whilst at the Bayhead itself there is 300ha of ideally located logistics land space, lying unused, covered with rail tracks and al it requires is re-planning to relieve the port congestion.
Despite this golden opportunity right next to the port container terminals, the focus remains on Cato Ridge. Why, she asked?
In addition to this another 500ha of land at the old airport site is also available for the foreseeable future.
The Port of Durban is urgently in need of a new freight corridor from the interior via the future industrial areas to the port. Earlier during the Task Group meeting the SANRAL presentation mentioned the N3 Pietermaritzburg bypass from Cedara to Umlaas Road.
From Umlaas Road, she said, the obvious route to the South Durban Basin is via the R603 to Prospecton and then to Bayhead via the vacant land at the old airport, past the refinery with a road tunnel under the Bluff to the head of Bayhead road. This will completely relieve the N3-M7-Bayhead congestion that is crippling efficiency at the port.
To conclude her presentation Mrs Moodley showed slides of the inland terminals at Sydney, Melbourne and Singapore which use dedicated rail shuttles to clear import boxes from the ports and provide adequate space and equipment to rail and road transport efficiently.
She pointed out that these private sector investments in container handling and rail shuttles provide highly competitive services integrated with the ports systems and the transport industry.
Moodley called for a 20 year integrated solution for Durban to optimise the use of all available resources. An independent, holistic logistic study is urgently needed to provide a framework for dismantling the current institutional obstructions to long term solutions and to secure the servitudes and spatial areas for the future logistics centres.
This article by Terry Hutson appeared first in The Mercury Network of 28 June 2017[/restrict]
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HMS QUEEN ELIZABETH GOES ON SEA TRIALS
Two Royal Navy frigates have joined HMS Queen Elizabeth to secure the seas around the giant aircraft carrier as she embarks on her maiden sea trials.
HMS Sutherland and HMS Iron Duke escorted the Royal Navy’s largest ever warship as she conducted vital system tests off the coast of Scotland on 28 June.
HMS Queen Elizabeth left Rosyth on 26 June where she has been under construction since 2014. It is understood that 700 sailors and 200 industry contractors are on board.
Type 23 frigates Sutherland and Iron Duke have…[restrict] now joined the 65,000-tonne aircraft carrier, along with Merlin Mk2 helicopters of the Fleet Air Arm, to guard the seas as the trials get under way.
“It is a huge honour for us all in HMS Sutherland to be the first ship to escort HMS Queen Elizabeth on her maiden sea voyage,” said Commander Andrew Canale, CO of Sutherland. “This is a new chapter in the history of the Royal Navy in which our aircraft carriers will have the ability to project power globally for the next 50 years.
“Everyone in HMS Sutherland is proud to be involved in this historic occasion. For me and all my ship’s company, seeing her on the ocean waves for the first time is a sight we will never forget.”
Sea trials currently under way off the coast of Scotland are designed to test the carrier’s engines and propulsion systems, plus her ability to produce fresh water, cope with sewage, feed the ship’s company, and supply those on board with electricity.
Lieutenant Dominic Rotherham, the flight observer of HMS Sutherland’s embarked Merlin Mk2 flight crew, added: “Today we were tasked with securing the seas around HMS Queen Elizabeth to make sure she is safe to conduct her sea trials. As an observer in the Fleet Air Arm, seeing her from the air for the first time brought home to me the scale of the future flagship and the power she will represent overseas.
“It is a privilege to fly from HMS Sutherland’s flight deck, but I am also excited to one day operate from HMS Queen Elizabeth.”
HMS Queen Elizabeth leaves the yard at Rosyth. Picture: MoD Crown Copyright 2017 ©.
The carrier’s departure from Rosyth on 26 June is one highlight of a national effort which has involved more than 10,000 people across the land – not least in six shipyards – clocking up 51,000,000 man hours, it is has been calculated.
According to a statement from the Ministry of Defence (MoD) there were 35cm either side of the carrier’s hull as she came through the lock at Rosyth, and a mere 50cm between the keel and the lock bottom as eleven tugs assisted Queen Elizabeth into the Forth before she began her maiden voyage.
At the time of the aircraft carrier’s departure on sea trials, UK Defence Secretary Sir Michael Fallon said that it was a historic moment for the UK as Britain’s new aircraft carrier takes to sea for the very first time.
“This floating fortress is by far the most powerful ship ever built in Britain that will enable us to tackle multiple and changing threats across the globe. HMS Queen Elizabeth is an enduring example of British imagination, ingenuity, invention that will help keep us safe for decades to come. She is built by the best, crewed by the best and will deliver for Britain. For the next fifty years she will deploy around the world, demonstrating British power and our commitment to confronting the emerging challenges from a dangerous world. The whole country can be proud of this national achievement.”
Three years after she was officially named by Her Majesty the Queen, the nation’s future flagship will spend an initial period of around six weeks at sea to test the fundamentals of the ship. The sea trials will monitor speed, manoeuvrability, power and propulsion as well as undertaking weapons trials and additional tests on her levels of readiness.
Following this initial period, HMS Queen Elizabeth will return to Rosyth for further testing and maintenance before heading back to sea for a second stage which aims to test her Mission Systems. She will transit to her home port of Portsmouth Naval Base to be handed over to the Royal Navy later this year.
Admiral Sir Philip Jones First Sea Lord and Chief of Naval Staff described the scene as a “hugely significant moment for the Royal Navy, for all our Armed Forces and for our island nation.
“Once in service HMS Queen Elizabeth will be the largest aircraft carrier in the world outside the United States, and the first designed from the outset to operate a fifth generation aircraft. Already this ship represents the best of the UK’s industrial and engineering expertise, and once in service she will symbolise our military power and authority in the world for decades to come. There is still much work to do between now and then, but be in no doubt: a new era of British maritime power is about to begin.”
HMS Queen Elizabeth’s sister ship, HMS Prince of Wales is structurally complete and is currently in the outfitting phase of her programme. Both of the Class are being delivered by the Aircraft Carrier Alliance, a unique partnering relationship between BAE Systems, Thales UK, Babcock and the Ministry of Defence.
The Queen Elizabeth Class will be the centrepiece of Britain’s maritime capability. Each aircraft carrier, coupled with the F-35B Lightning aircraft, will form an integral part of the UK’s Carrier Strike capability.
These warships will transform the UK’s ability to project power around the World, whether independently or working closely with the UK’s allies, on operations ranging from high intensity warfighting to providing humanitarian aid and disaster relief.
A national endeavour, at its peak the programme directly employed 10,000 people across six build yards. While manufacturing and commissioning is now solely focused in Rosyth, the skilled and diverse workforce is sourced from across the country.[/restrict]
Edited by Paul Ridgway
London
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McKINSEY’S REPORT ON AFRICA-CHINA ECONOMIC PARTNERSHIP CHALLENGES PREVIOUS BELIEFS
Through a study conducted across eight countries that together make up about two-thirds of Sub-Saharan Africa’s GDP, the report finds that there are already over 10,000 Chinese firms operating in Africa—four times the previous estimate
DALIAN, The People’s Republic of China, 28 June 2017: China is Africa’s largest economic partner. Yet it has been a challenge to understand the full extent of the partnership due to a dearth of data. A new report by McKinsey Africa ( www.McKinsey.com) finds that its involvement is bigger and more multifaceted than previous studies suggest.
Through a study conducted across eight countries that together make up about two-thirds of Sub-Saharan Africa’s GDP, the report finds that there are already over 10,000 Chinese firms operating in Africa—four times the previous estimate. About 90 percent of these are private firms, of all sizes and operating in diverse sectors, with about a third in manufacturing. These firms are bringing capital investment, management know-how and entrepreneurial energy to the continent, and in so doing, are helping to accelerate the progress of Africa’s economies.
Across trade, investment, infrastructure, financing and aid, China is a top five partner to Africa — no other country matches this level of engagement. The China-Africa relationship has ramped up over the past decade with trade growing at around 20 percent per annum. FDI has grown even faster—at an annual growth rate of 40 percent. China’s financial flows to Africa are 15 percent larger than official figures suggest when non-traditional flows are included. China is also a large and fast-growing source of aid and the largest source of infrastructure financing, supporting many of Africa’s most ambitious infrastructure developments in recent years.
Chinese firms are market-driven and investing for the long-term
Operating across many sectors of the African economy, in addition to manufacturing, a quarter is in services and a fifth in trade and in construction and real estate. Chinese firms already handle 12% of Africa’s industrial production—valued at $500 billion a year in total.
In infrastructure, Chinese firms’ dominance is even more pronounced, having cornered nearly 50 percent market share of Africa’s international EPC (engineering, procurement and construction) market. Chinese firms are making healthy profits. Nearly a quarter of the 1000 firms surveyed said they covered their initial investment within a year or less. A third recorded profit margins of over 20 percent. These firms are agile and quick to respond to new opportunities. They are primarily focused on serving the needs of Africa’s fast-growing markets rather than on exports. Chinese firms have made investments that represent a long-term commitment to Africa. Of the Chinese firms surveyed, 74 percent said that they are optimistic about their future in Africa.
Clear benefits, but challenges must be addressed
The report points to three main economic benefits to Africa from Chinese investment and business activity:
Job creation and skills development: Of the 1,000 firms surveyed, 89 percent of the employees are local. The research suggests that Chinese firms employ several million Africans. Nearly two-thirds of Chinese firms provide skills training to their workers.
Transfer of knowledge and new technology:
Chinese firms are modernizing African markets by introducing new products and technologies. Some 48 percent introduced a new product or service and 36 percent have introduced a new technology in the last three years.
Financing and development of infrastructure:
When asked what they value most from their Chinese partners, for some 50 African public-sector leaders, low-cost financing and improved infrastructure topped the list. They cited Chinese firms’ efficient cost-structures and speedy delivery as major value-adds.
While on balance, China’s burgeoning partnership with Africa is a positive for Africa’s economies, governments and workers, there are areas that need significant improvement:
Local sourcing: By value, only 47 percent of Chinese firms’ sourcing was from local African firms, which is lost opportunity for these firms to benefit from Chinese investment.
Local managers: Too few locals are in managerial positions—only 44 percent today.
Pain points for both sides: Chinese firms cite personal safety and corruption in some countries as their top concerns. For African leaders, language and cultural barriers are pain points. There have been instances of labour and environmental violations by Chinese firms.
Maximising the impact of the partnership
Kartik Jayaram, a senior partner and co-author of the report said, “Chinese engagement with Africa is set to accelerate—by 2025 Chinese firms could be earning revenues worth $440 billion, from $180 billion today. Additional industries could be in play for Chinese investment, including technology, housing, agriculture, financial services and transport and logistics. However, to unlock the full potential of the China-Africa partnership, we have identified 10 recommendations for Chinese and African governments as well as the private sector. To highlight two key ones—African governments should have a China strategy and the Chinese government should open financing and provide guidance to Chinese firms.”
Few African countries have a clear strategy and engagement plan for China. Governments should develop such strategies, linked to national plans and priorities. They should also cultivate capabilities in their bureaucracies to support these strategies.
Opening Chinese government financing and providing guidance on responsible business practices to Chinese private sector firms in Africa would accelerate sustainable investment.
For more information, contact:
Bonita Dordel: Bonita_Dordel@McKinsey.com
Tel: +27 (0) 11 506-8193
About McKinsey & Company Africa
With a presence in Africa of over 20 years, McKinsey & Company has offices in Ethiopia, Kenya, Morocco, Nigeria, South Africa and Angola. “We shape strategy and strengthen operations for players in major industries, and help deliver better outcomes in education and health care, in over 40 African countries. McKinsey has delivered over 1400 projects across the African continent.”
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QM2 in Cape Town. Picture by Ian Shiffman
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PIC OF THE DAY : HMS QUEEN ELIZABETH
Two Royal Navy frigates are escorting the Royal Navy’s HMS Queen Elizabeth to secure the seas around the giant aircraft carrier as she embarks this week on her maiden sea trials. HMS Sutherland and HMS Iron Duke will be escorting the Royal Navy’s largest ever warship as she conducts vital system tests off the coast of Scotland. Pictures: MoD Crown Copyright 2017 ©.
THOUGHT FOR THE WEEK
“Avoid loud and aggressive persons; they are vexatious to the spirit. If you compare yourself with others, you may become vain or bitter, for always there will be greater and lesser persons than yourself.”
– Max Ehrmann ‘Desiderata’
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