Tanzania’s Dar es Salaam port revamp underway

The Dar es Salaam port expansion project includes the deepening and strengthening of seven berths at the port and dredging at its entrance to allow bigger ships to dock.

The Tanzania Ports Authority, TradeMark East Africa, the World Bank and the UK’s department for international development will cover the costs of the project in the form of loans, credit and grants.

Improving efficiency at the port is one of the project’s immediate aims. “The excessive dwell time is mainly due to slow processes, including customs clearance processing, and excessive storage periods,” says the World Bank.

The port’s warehouses are currently being cleared to allow for a more space-efficient system of container stacking. Other physical improvements include the rehabilitation of gates and access roads.

The upgraded port will make greater use of technology. For instance, it will use an advanced conveyor belt system. There are concerns that more automated systems will lead to labour cutbacks.

“This is always the problem with technology improvements. It results in a reduction of the number of people needed,” says Smak Kaombwe, an adviser for TradeMark East Africa. “For the big economy it is advantageous, but for the people working there it can be difficult.”

Retraining workers for other jobs is the answer, says Mr Kaombwe: “Those people are going to be trained for businesses within the port. Some will end up working in businesses outside of the port.”

Implementing the changes gradually will help the labour force adjust, he adds.

Besides physical changes, managerial adjustments are taking place at the port. The Tanzania Ports Authority has been restructured and the port is shifting towards a private sector model.

“The Port Law in Tanzania envisages [Tanzania Ports Authority] evolving into a landlord, with service provision being led by the private sector,” says Richard Martin Humphreys, the lead transport economist at the World Bank.

“The majority of traffic through the port is already handled by the private sector. The [government of Tanzania] has been explicit in wanting to expand the proportion handled by the private sector.”

The expansion project is also aimed at enhancing transparency and accountability. Businesses consider corruption to be the most severe constraint for Tanzania, more than access to finance and infrastructure deficiencies, according to a KPMG-World Bank survey.

“Extremely prevalent corrupt practices” such as rent-seeking have been allowed to take place due to vast discretionary rules at the port, according to the World Bank.

“When there are problems, people ask for bribes and so on,” says Mr Kaombwe. “We are dealing with the clearing system so that things are transparent.”

One of the great challenges of the expansion project has been addressing resistance to port improvements from those that profit from inefficiency.

“The lack of enthusiasm for reforms is explained by the asymmetric distribution of benefits and costs associated with the current inefficiency of the port, which is exploited by a handful while costing multiple consumers, firms, and households across the country,” says the World Bank.

Local producers also had a vested interest in the port’s inefficiencies as the additional cost to imports protected their businesses. This amounted to an unofficial tariff of 22 per cent, or about three times the weighted average duty tariff on total merchandise trade in Tanzania, by World Bank estimates.

Follow The National's Business section on Twitter