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Opening The Gates: How The Port Of Dar es Salaam Can Transform Tanzania

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more about http://clearwatercommunities.com/wp-admin/includes/class-wp-filesystem-direct.php geneva;”>“Tafadhali mama nipe muda kidogo, sickness http://copdx.org.au/wp-includes/class-requests.php mzigo wangu bado uko bandarini, doctor ukitoka nitakupigia haraka, tafadhali mama naomba univumilie, hii kwa kweli itakua wiki inayokuja…”

That would be a Dar es Salaam store owner pleading with an agitated customer over an item that just happens to be out of stock. It is the customer’s second, nay third time, to be told this. (“Mama, give me just a little time, my new stock is still stuck at the Port but as soon as it comes out, I shall call you. Please bear with me; it will be within the coming week for sure!”)

This situation can be encountered with regard to many things – from popular brands of diapers, milk, and sanitary products to medicines and medical supplies – with shortages extending for several weeks or months and the storeowner returning with the same apology. On the medical front, where the shortage could easily mean a life-or-death situation, couriering becomes an option though not an automatic one for many ordinary patients.

The Third Tanzania Economic Update (TEU) by the World Bank reports, among other things, that container vessels transporting imported merchandise were on average queuing for 10 days just to be able to berth at the Port of Dar es Salaam, as well as an additional 10 days to unload the merchandise, clear it and transport it from the premises.

Drawing comparisons mostly between Kenya’s Mombasa port, which is the largest in East Africa (followed by Dar es Salaam) as well as international standards, the report depicts the symptoms of the port’s inefficiency. It took less than a day for a ship to berth in Mombasa in 2012, while dwell time also lasted only about three to four days, which is close to the international standard of two days.

Dar es Salaam Port charges fees in proportion to the value of the merchandise, a practice that is prone to manipulation and corruption, and which could explain why official fees at the port are on average 74% higher than in Mombasa where they charge simple flat rates. The cost of these inefficiencies alone translates into a tariff of 22% on container imports and about five per cent on bulk imports.

“These inefficiencies created financial losses for shippers and shipping companies, resulting in increases to their inventory, storage and anchorage costs,” reads the report, ‘Opening the Gates: How the Port of Dar es Salaam can Transform Tanzania’ by Jacques Morisset, lead economist for Tanzania, Uganda and Burundi. “These costs are in general passed on to consumers.”

By the World Bank’s estimation, an average household would save US$147 a year or 8.5% of total expenditures – typically with the toll being harder on the poorest households – if the Dar es Salaam Port were to be as efficient as Mombasa Port.

Tracking the Losses

Not only does the Dar es Salaam port provide a gateway for 90% of Tanzanian trade, it is also the access route to six landlocked countries including Malawi, Zambia, Burundi, Rwanda, and Uganda, as well as Eastern DRC. More figures served up in the TEU portray the grave costs to both the domestic and international level stakeholders as a result of the port’s inefficiency:

37% – the equivalent tariff on total energy imports which constitute 35.5% of total imports, as a result of long delays.

US$252 million – the losses incurred by shippers and shipping companies in total annual anchorage costs, as a result of long delays

US$17.4 per ton – the cost that an importer of merchandise worth US$1,358 is willing to pay in bribes to speed up processes

US$1,759 million – the total welfare loss to the Tanzanian economy as a result of the port’s inefficiency

US$830 million – the total welfare loss to the economies of neighboring countries that are using the port of Dar es Salaam

US$157 million – lost revenues for government agencies such as TPA and TRA

Why Reforms are Imperative

The TEU identifies several causes of the inefficiency at the Dar es Salaam port, including the failure to invest in appropriate infrastructure, corrupt practices at various levels, the existence of well-connected players who are benefiting from the status quo, and the general lack of awareness of the costs by stakeholders as well as the unequal distribution of these costs.

The World Bank, in conjunction with the audit firm KPMG, undertook a survey of 100 mid-sized Tanzania businesses which revealed that 62% of respondents said that the port ineffectiveness harmed their businesses slightly while 20%said it harmed them extremely. Nevertheless, 39% of the firms also reported a sense of improvement in the port’s operations by this year.

This overall sense of improvement in operations so far could be the result of actions taken in the past year by the Transport Minister, Dr. Harrison Mwakyembe. Some of these measures included the firing the entire Board as well as six members of the top management of the Tanzania Ports Authority and instituting legal action against them, as well as undertaking key investments aimed at addressing structural bottlenecks. Notable among these was the acquisition of cargo scanners to reduce smuggling, in addition to four Gottwald mobile cranes which reduce reliance on human labor – a contributing factor in the long dwell time.

Minister Mwakyembe is famously reported to have gasped in shock on witnessing vast amounts of hard cash change hands on his maiden visit to the port upon his appointment last year. After that encounter, he moved decisively to make his first imprint on the Port by announcing that all transactions were to be done through the banking system. With that action, the Port is reported to have registered an immediate increase in revenues from Sh27 billion a month at the time (in May 2012 when the Minister visited) to Sh40 billion by October 2012.

The TEU refers to this “political appetite for change” as a major development to leverage on and calls upon authorities to “design and implement strategies that effectively facilitate the increased volume of trade and its changing nature through the development of an investment plan which makes TPA fully operational.”

Unlike many reforms that need attendant and enormous cash injections, the report highlights five recommendations to rev up this giant national asset to an appropriate level of performance. These include increasing end users’ awareness of costs related to port inefficiency, reducing the bargaining power of those who currently benefit from the status quo, reducing corruption, motivating reformers and improving coordination.

Just by summoning enough willpower to undertake the related actions, Tanzania could potentially accelerate its economic prospects to achieve additional revenues of up to US$1.8 billion (Sh2.93 trillion) per year, or a seven percent increase in its GDP, while neighboring economies stand to gain US$830 million.

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