Infrastructure is key to unlocking Africa's economic potential

Photo: DP World

Recently, I inaugurated the Berbera Economic Zone (BEZ) in Somaliland, the newest member of DP World’s global portfolio of parks and economic zones. Close to DP World’s container terminal at Berbera Port, the BEZ is the latest piece in an ecosystem that will provide an integrated maritime, logistics and industrial hub in the Horn of Africa

But this was more than just another ribbon-cutting ceremony. The Berbera port and freezone together represent the potential to unlock economic and trade potential.

The Horn of Africa represents an important case study of the growth potential of Africa. Sitting at the crossroads of Africa, the Middle East and Asia makes it a crucial transit point for international trade through access to vital sea lanes – the Red Sea, Gulf of Aden and Indian Ocean.

The region’s socioeconomic environment, natural resources and vast agricultural lands have the potential to lift millions out of poverty. And with a growing population expected to reach over 300 million by 2050, the region could provide a significant market for goods and services.

Take Ethiopia. Already the largest coffee producer in Africa, the country’s economy is dynamic, growing at more than 9% a year for the past two decades, spurred by industrialisation and increasing foreign investment. Yet, the lack of infrastructure, including transportation, energy and communication networks, poses a significant challenge to further growth.

DP World group chairman and CEO Sultan Ahmed Bin Sulayem

I have long spoken about the challenges of inadequate infrastructure that we must address to realise the region’s economic potential. These have been further exacerbated by the continent’s trade outlook. The economic growth of Africa is estimated to weaken to 3.8% in 2023, from 4.1% in 2022, due to a drop in investments and falling exports, according to the United Nations.

The African Continental Free Trade Area (AfCFTA) can unlock opportunities that can boost intra-African trade, boost economic growth and, in turn, an increase in trade activity. To realise these benefits, investments in infrastructure are critical – to establish robust transportation infrastructure, trade infrastructure, information and communication technology and energy infrastructure to boost operational efficiencies and, ultimately, drive exports and imports.

Enhancing infrastructure and logistics networks will also be vital to enabling the region and the continent to fulfil its trade potential. I understand the need to reconfigure supply chains to reduce risk and increase resilience. Poor road, rail and maritime infrastructure adds as much as 40% to the costs of goods traded among African countries. At the same time, intra-African trade makes up just 13% of its total. The continent clearly needs more investment in its supply chain infrastructure if this picture is to change.

The new economic zone and port at Berbera are precisely the kind of investments that can start unlocking the economic possibilities for the Horn of Africa. According to the Somaliland Ministry of Foreign Affairs and International Cooperation, the port, together with the development of BEZ, could create more than 12,000 direct employment opportunities and over 50,000 indirect jobs in the region. It will also facilitate trade equivalent to approximately 27% of Somaliland’s GDP and 75% of regional trade by 2035 in a region of more than 100 million people.

Beyond the Horn of Africa, we are committed to ensuring infrastructure allows the entire continent to flourish. In Rwanda, we are eliminating barriers along the supply chain, bolstering global trade flows and removing unnecessary bottlenecks. We have overcome Rwanda’s landlocked geography to help transform the nation into a valuable trade hub.

Our logistics hub in Kigali, with efficient access to two ports, has helped increase exports, allowing Rwanda’s agricultural products to reach markets in Europe, the US and the Middle East.

In West Africa, we have invested more than $1bn to develop Port Ndayane, the largest single private investment in the history of Senegal. In Egypt, we are establishing a new 300,000 sq metre logistics service zone at Sokhna on the Red Sea, and in the Democratic Republic of Congo, we recently marked the start of construction of Banana Port, the country’s first deepwater port.

But private investment alone cannot transform the entirety of Africa’s trade infrastructure. Public-private partnerships must be at the heart of developing the continent’s supply chain infrastructure. We have partnered with British International Investment, the UK’s development finance institution, in three African countries since 2021 to address the stark imbalance in global trade, accelerate Africa’s potential as a trading powerhouse and improve the prospects of millions of people.

With the guiding support of entities such as AfCFTA, we can work to build long-term investments and strategic partnerships that will reduce the cost and time of trade. Collectively, we can develop and manage infrastructure that grows local economies, enabling international, regional and intra-African trade. Initiatives like Berbera are just the first steps to unlocking Africa’s potential.