PUBLICATION

Namibia’s ability to be a logistics hub challenged

Date

01 Apr 2019

NAMIBIA’S vision of becoming a logistics hub is too ambitious, desultory and costly, and should be reassessed, says Rainer Ritter of the Economic Association of Namibia (EAN).

Ritter made the above remarks at the launch of EANs public enterprises review, titled Namport Within the Context of a Logistics Hub in Windhoek this week. The review looked at whether Namport’s operational and financial figures are indicative of logistic hub vision becoming a reality.

Ritter, who did the analysis, said looking at the number of vessels as the main indicator of the viability of a hub, the numbers of the ships that visited Walvis Bay and Luderitz has been decreasing over the years, and puts question marks on whether Namibian ports are preferred in the region.

“There is a declining trend in vessel visits to Namibia’s two commercial ports. Port visits peaked in 2002, recording an annual 3 560 vessels while in 2017, just 2 080 ships visited both harbours, a decline of 1 480vessels per year, or 4 per day,” Ritter said.

He explained a decrease in vessel visits means low tariffs would be collected, leading to low revenue and little profit to Namport. And the country pressed with the worsening current economic climate and the repayment of the African Development Bank loan could even make matters worse. He also observed that, with the decrease in the number of vessels, handling fees and container fees have upped, compared to regional ports such as Durban making Namibian ports expensive.

“Walvis Bay container and cargo tariffs are much higher than Durban which renders the harbour uncompetitive to become a logistics hub. To improve competitiveness, the port authority should drop tariffs, and to stimulate exports it should consider lower tariffs,” he said.

The EAN series is an analysis of the performance of public enterprises on how they utilise public funds and explore reforms to eliminate wastage and harness self-sufficiency.

Ritter also said, apart from high fees, the geographic location of the Namibian ports are not strategic, as they are not close to important trade lines linking Namibia to big traders such as China, and there are such long distances between the ports and intended markets.

“With heavy investments in Angola’s Lobito port, which is much closer to many landlocked countries with export-driven economic activities such as Zambia’s copper belt, Namibia would not be able to compete,” he said.

Other challenges that Ritter named were that Namibia has a small domestic market that highly depends on investments and policies and taxation are not favourable either to attract the needed investments.

He called on the reassessment of the preferred hub policy, to ensure that it makes sense to economic times the country is facing and the future. He called for experts to be appointed to Namport’s board, for Namport to put infrastructure development to a standstill and regular comparisons and assessments are made concerning the reality of a viable logistics hub.

Projects that Ritter has called to be halted include the refurbishment of the Kransberg rail line that is expected to cost N$5,5 billion and called the N$4 billion that Namport invested in extending the container terminal as a wrong decision, suggesting it should have been done in stages. Responding to Ritter’s, Namport’s chief financial officer, Kavin Harry said, the vessel decrease is something that the shipping industry has been experiencing over the years and not only attributable to Namport. “Global shipping lines have been making losses, recording about US$5 billion dollars last year. Instead of getting many vessels as in the past, they are deploying bigger vessels and uniting cargo to cut costs, hence the decrease in the vessels,” Harry said. He went on to say ports activity is also the barometer of what is happening in the economy. “If the economy is suffering as ours is, then you should partly expect the numbers to be down, but it has no direct reflection on the tariffs inflow,” he said. The CFO added that, Namibian ports are efficient in the way the vessels are handled. “Also, Namibia is a very safe and peaceful country, and those are some of the factors that Namport is capitalising on and makes us the desired logistics hub,” he said. Harry went on to say it would therefore not be correct to say Namport is making misplaced investments because the volumes have gone down because all these factors are taken into account before investments are made. Some studies are made by international agencies and local ones, and they have indicated that Namport figures would go up. In 2012, we reached 330 000 containers, and that motivated our investments.

“Comparing Namibia and South Africa does not make sense. The local markets vary way too much. Incorporating the economies of scale, we should expect the numbers to vary, and that alone cannot be used to say Namport is not competitive,” Harry argued. Harry went on to say to the economists, “it is you that give us the projections that we use then you come here to say we have not invested properly, what is this?” he asked. Walvis Bay Corridor Group’s acting chief executive officer, Clive Smith, who was also present at the launch dismissed Ritter’s conclusion that no thought was put in the logistics hub vision. “There were consultations between the government and the private sector before all policies with regards to the hub were made, and regular assessments always made, and talks with the government have been made too,” Smith said.

The Corridor group, has offices in SouthAfrica, Brazil and South Africa, aimed to promotingNamibian ports and ensuring that Namibia is the connector of southern Africa to the rest of the world.

Smith also explained that the tariffs charged by Namport are competitive with peers in the region and they only seem high because Namport charges a single tariff as opposed to counterparts that have split fees. The publication on Namport’s review is available on the EANs website for downloads.

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