Transportation Vital to Trade

Globally, the United Nations Conference on Trade and Development (UNCTAD) estimates that international transportation costs average 9 percent of the value of exports, but in Africa, such costs average 11.4 percent, as compared to only 6.8 percent for developed countries.  Given such obstacles as the many landlocked African countries; smaller, older vessels on African routes; the disconnect between African shipping options and the major East-West shipping routes; lower value and quantity of many African exports, and impediments such as bottlenecks at African ports, caused by corruption and port mismanagement, it has been difficult for developed country governments to help resolve such transportation issues.

            When I worked on AGOA early on, the prevailing idea was that business-to-business traders must seek their own transportation – that it isn’t government’s place to identify and facilitate commercial transportation options.  Yet governments continuing to ignore this is a recipe for long-term failure.  Large companies, such as the oil companies and Chiquita Bananas have their own vessels to carry their products and don’t have to convince private shipping companies to carry their goods.  Small companies certainly could use government support (verbal, not necessarily monetary) to encourage sea and air shipping companies to take advantage of our efforts to increase two-way trade.

            It was a big accomplishment more than a year ago when Maersk Line, the largest sea shipping company by far, dedicated regular shipping between Abidjan and Philadelphia.  Unfortunately, Commerce Department sources confirmed reports out of Philadelphia that those ships were not full going and coming between the two points. This may indeed be a business-to-business issue, but if Prosper Africa is to do things differently than the USG did under AGOA, some federal effort in helping to encourage increases in shipping at both ends is required to maintain this line and any future such transportation links.  No shipper will want to or could afford to pay for empty space for very long.

            Maersk U.S. ports of call include Baltimore, Miami, Newark, Savannah, Charleston, Houston and New Orleans in the eastern United States alone.  At some point, attention should be paid to existing or potential African trade through those ports as well.

Transportation has long been problematic for African international trade.  Despite the forbidding sands of the Sahara Desert, trade was developed between Africa, Europe, and Asia as early as 300 A.D., but did not fully blossom until the 7^th century. In the South were cities such as Timbuktu and Gao; in the North, cities such as Ghadames (in present-day Libya). From there goods eventually traveled onto Europe, Arabia, India, and China.  Traders from North Africa shipped goods across the Sahara using large camel caravans – on average around a thousand camels, although there's a record which mentions caravans travelling between Egypt and Sudan that had 12,000 camels.

They brought in mainly luxury goods such as textiles, silks, beads, ceramics, ornamental weapons, and utensils. These were traded for gold, ivory, woods such as ebony and agricultural products such as kola nuts (which act as a stimulant as they contain caffeine).  Until the discovery of the Americas, Mali was the world’s principal producer of gold. African ivory was also much sought after because it's softer than that from Indian elephants and therefore is easier to carve.

West African products today include gold, petroleum, natural gas, cobalt, iron ore, bauxite, manganese, timber, cotton and numerous other minerals and agricultural products.

Large-scale trans-Saharan caravans were vulnerable to desert logistical issues, such as lack of water and harsh conditions, as well as banditry. Consequently, in the late 1400s, Portugal succeeded in finding a way around the African continent by sea. Portuguese explorer Vasco da Gama rounded the southern tip of Africa, called the Cape of Good Hope, and trade continued on to India. Traders increasingly traveled and did so by ship. But even though travel across the desert did slow down considerably, it never completely stopped.

During the 19^th century period of colonial expansion in Africa, the Cape to Cairo Railroad was a project to cross Africa from south to north by rail and is as-yet uncompleted. Largely under the vision of British mining magnate Cecil Rhodes, the rail line was an attempt to connect adjacent African possessions of the British Empire through a continuous line from Cape Town, South Africa, to Cairo, Egypt. While most sections of the envisioned Cape to Cairo railroad are in operation today, a major part is missing between northern Sudan and Uganda.

Colonial rival France had a somewhat rival strategy in the late 1890s to link its western and eastern African colonies, namely Senegal to Djibouti. Southern Sudan and Ethiopia were in the way, but France sent expeditions in 1897 to establish a protectorate in southern Sudan and to find a route across Ethiopia. The scheme foundered when a British flotilla on the Nile River confronted the French expedition at the point of intersection between the French and British routes. Inter-European rivalries have played a major role in Africa’s transportation dysfunction to this day.

There have been African regional rail projects proposed or undertaken in recent years, including a West Africa rail project that would use rail to replace truck-borne cargo on a currently insufficient road system, linking not only Morocco with nations to the immediate south such as Mauritania and Senegal, but also further down the West African coast to include Gambia, Guinea-Bissau, Guinea, Sierra Leone, Liberia, Cote d’Ivoire, Ghana, Togo, Benin, Nigeria, Cameroon, Equatorial Guinea, Gabon, Brazzaville, the Republic of the Congo, the Democratic Republic of the Congo and Angola. The rail system would go through the port cities in these countries, opening up international trade.  The U.S. proposal was considered by the Government of Morocco, but no decision was ever made to implement it.

Contrary to popular belief, U.S.-Africa trade began during colonial times, as described by the National Geographic Society, when gold and pepper (in addition to enslaved persons) came from Africa, and U.S. producers sent rum, iron, gunpowder, cloth (mostly calico) and tools to Africa.  That is direct trade.  Indirectly through Europe, the colonies bought manufactured goods, textiles and furniture, as well as luxury items from Europe largely made with raw materials from Africa.

After the European colonialization of Africa in the late 1800s, U.S. economic relations with Africa went through the colonial powers.  It wasn’t until colonial rule was dismantled beginning in the 1950s that the United States began to have direct economic and political contacts with the new African governments.  Still, it took the African Growth and Opportunity Act (AGOA) to genuinely establish ongoing U.S. economic ties with Africa.

However, Africa’s colonial period distorted commercial and transportation options on the continent.  As mentioned previously, France and England configured transportation infrastructure to suit their needs without regard to creating a cohesive regional transportation network for African benefit.  Moreover, geographic obstacles, such as mountains and vast gorges, as well as diseases such as malaria, confined most transportation infrastructure to coastal areas to take out exports to build modern societies in the developed world. 

Africa’s transportation dilemma was confirmed in a 2009 study by the World Bank, which stated that sub-Saharan Africa suffered from three drawbacks: low densities, long distances and deep divisions.  Extractive colonial policies had left African countries insufficiently industrialized and highly dependent on export-oriented resources.  The Journal of Transport Geography reported several years ago that limited port capacity; the predominance of unskilled, low-wage professionals, and deficient inland transport conditions continue to hamper trade transport in Africa.

Nigeria is a prime example of how dysfunction has impeded smooth commercial operations at the country’s ports.  The Nigeria Ports Authority conceded several years ago that, of the country’s six ports, only the Lagos ports (Apapa and Tin Can) were operating at anything approaching full capacity. At one point recently, as many as two million containers of cargo, worth 5 trillion naira (approximately $13.8 billion at that time), were stranded at the Lagos port, incurring demurrage charges that continued to accumulate.  This level of congestion began in October 2018 and has not abated appreciably. 

            These added costs for ocean carriers have generated severe service disruptions since late 2018.  Maersk and two other major carriers, CMA and MSC, subsequently announced peak season surcharges due to port congestions, and seek solutions to the problems.  For import-dependent businesses in Nigeria, enduring congestion has resulted in millions of dollars in costs, also affecting exporters to the Nigeria market.  According to Export.Gov, Nigeria has the largest market in Africa with a population of approximately 200 million people. The U.S. is Nigeria’s 6th largest export destination, sending mostly oil, cocoa, rubber and antiques to this country. U.S. exports to Nigeria include wheat, vehicles, spare parts and machinery, refined petroleum products and military hardware. But how would the port congestion affect commercial decisions to do business through Nigerian ports despite that country being Africa’s largest market and a major supplier of materials to the U.S.?

Transportation issues must become a leading public-private concern with joint action taken.  Continuing to depend on the private sector to find their way to solutions without government intervention is likely to reap the same results as it has thus far.  For the most part, the cost of such federal intervention (as well as state and local government involvement) need not be overly costly.  This is not only warranted by the current situation, but also is in keeping with Prosper Africa’s mission to support business transactions.