22 January 2013

Tanzania: Strategic Development Plans Needed for Tanzanian Ports


DESPITE its strategic geographic location, the Dar es Salaam port is ranked 36th in efficient ports services delivery, according to AFRITRAMP, a leading shipping agency network in Africa and the Indian Ocean.

The 'Business Standard' Writer, ABDUEL ELINAZA, recently interviewed Dr Hildebrand Shayo, a Senior Lecturer (Economics) with the Open University of Tanzania (OUT), on the future of the Tanzania's ports amid competition from neighbouring ports. Excerpts ...

QUESTION: What Tanzania should do to climb ranks after being on the 36th slot in delivery of efficient port services in the region by AFRITRAMP?

ANSWER: It is high time there is a fresh look on one hand, the inter-relationships between operations within seaports and railway lines and the organizations as system and party interests that are involved and on the other hand, the set of institutions and forms of coordination that would regulate the functioning of ports within a dynamic market upbringing while remaining competitive.

I can only imagine that without exhaustive analysis of our own situation, for example, skills and expertise, sound investments and opportunity cost we have and clear picture on issues at hand with or without political influence. There are ports that are now serving 3rd and 4th generation vessels that will not help us much to understand the politics of port development in the era of global economic integration, competitiveness nor the associated structural developments within the sea transport sector.

Q: What are the dynamics in the market and competitive environment are you referring to in this context?

A: To put my judgment in point of view, I have recently looked on a number of market environment and managed to identify few. Based upon developments in Britain, where the government privatized its ports, it allows someone to be able to analyze the role of public and private agents in the operations, ownership, management and regulation of ports.

The form also hint on the wider institutional environment in which seaports and perhaps lake ports are positioned providing yet another issue that could help value better what are port governance issues and challenges our ports are facing. Similarly, issues on diversity of institutional arrangements of ports that exist across the globe are also fundamental.

There is also the sector specialist which provided more dynamic portrait on how things at the port should be. Looking at specialisation it mirror in the way our ports are managed, one quickly notes that the strategic concern of ports for their competitiveness and for the quality of hinterland connections gap. What conclusion one can draw from their experience is that economic integration in which Tanzania is forging ahead is just one part of the equation, though important, individual development that affects the competitive context in which individual ports operate is more imperative.

Q: What are your views on the reorganisation of the marine sector to support the future of Tanzania ports competitively?

A: My recent review on ports and port operation issues explained at the beginning tells me that the consequences for port governance, has been the focus of many recent studies. The impact on port performance and management of the ongoing processes of integration among global operating shipping lines specialised in containers, the rise of global terminal operators and the scale enlargement within containerised shipping in general, has been addressed by several sector specialists.

Of course, issue of efficiency of container terminal operations or bulk handling opportunities, given the fact that many of these operations have been dedicated to the private sector have also been dealt with. In the light of greater private sector involvement, issues on the relationship between port governance structures and economic performance; either from a strategic management perspective or on the basis of theories such as cluster-theory has been tackled.

In fact, without reinventing the wheel, the entire institutional reforms towards a more market-oriented role of port authorities and the privatization of port operations have been advocated by both multilateral state associations such as the World Bank in the effort to improve operational efficiency and reduce public costs. So, with these entire infrastructures if one doesn't perform, then there might be a serious dilemma.

Q: How about the issue that ports are viewed as elements in valuedriven chain systems?

A: It is true that ports are logistical network surrounded within value driven chains. There is what is known as a third-party service provider i.e. ports provide value to shipping lines, stevedores and hinterland transporters. For that reason, as Tanzania moves aggressively to institute systems that would see our ports delivering to the expectation of the users, for imports and export cargoes and make use of its strategic location, the role of Dar es Salaam port and the way in which other ports position themselves in the new business environments in future must be clear within a paradigm of ports as elements in value-driven chain systems, not simply as places with particular, if complex, functions or isolated.

I mean that the role of the authority is to contribute to cost minimization for actors operating in logistical chains and in doing so, provide the conditions to become embedded in global supply chains, while at the same time pursue its own public objectives of maximizing cargo handling, and deal with public duties related to the environment, safety and security.

This implies that ports are, besides value-creating elements for private logistical parties, crucial territorial networks that produce positive and negative social costs for national and local economies and communities. Ports are therefore not only embedded within these networks or chains, but also within a particular territorialized institutional framework.

As Tanzania government through the ministry responsible for this sector exert great effort to institute a functioning system to improve port business, there is a need to take into account the structure of the circumstances, the role of its agencies and its capacity to act within increasingly globally organized and privately controlled supply chains and containerised cargo networks.

Q: What are conventional strategies such as construction, major projects and marketing of terminal space and the increased competition among ports?

A: As I explained earlier, there is a general trend towards privatization of port operations and the decentralization of port operation. There is in that way a tendency towards institutional convergence of ports that is happening not only regionally, but also globally.

Although recognizing that competition between ports provides pressures to remain competitive, it is an opportunity for Tanzania to institute mechanism that would utilize our strategic position advantage to service all landlocked countries to their anticipation. If well managed, I think the port of Dar es Salaam and Mtwara together with cropping out potential for gas and oil.

Q: How should ports in Tanzania be managed?

A: First and foremost there is a need to develop an understanding of the mounting port competition that might make our port redundant, given the dynamics in the maritime transport sector and improvement carried out elsewhere. Therefore there is urgent need to take into account and understand the role and strategic behaviour of agents both public and private and importantly related strategies that affect the materiality and politics of port development in a globally structured segment as main source of revenue to our country.

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