Business News of 2013-12-17

Sub-regional shipping line to relieve businesses

Barring any last minute hitches, West Africa will, by June, next year, have a shipping line that will be dedicated solely to the transportation of cargo within the sub-region.

The shipping line is to be owned by the private sector in the sub-region in a manner that will reflect the share of the value of goods and services produced in the area; the GDP of the various countries within the ECOWAS area.

The President of the Ghana Chamber of Commerce and Industry (GCCI), Mr Seth Adjei-Baah, who disclosed this in an interview, added that about three of the shipping line's maiden vessels and other logistics needed to get it running will be procured next year.

Those vessels, the logistics and the starting of the line are estimated to cost some US$68 million, according to Mr Adjei-Baah.

“But if we want to buy more vessels, then we are looking at a maximum of US$100 million,” he said, adding that such an amount was to be contributed by members of the private sector.

“What we are trying to do is that each country within the sub-region - the 15 countries - are all to participate (in the project) and we are going to look at the national GDP of the countries and other things so that the proportion of a country's GDP will be converted into its shares in the project.

"Once that is done, the share of the individual countries will then be owned by the private sector in that country. We want the private sector to own this thing," the GCCI President explained.

He said that Ghana was expected to have some 13 per cent stake in the project; an amount Mr Adjei-Baah said would be distributed among private sector players in the country, including the chamber.

Although the shipping route of the line is planned to cover the West Coast of the Gulf of Guinea, he hinted that it would later be extended to cover the coast of Central and Southern Africa as part of efforts aimed at reducing the transport-related challenges facing the private sector in the continent.

ECOWAS Support

At an investor forum on the project in Accra on December 10, the Economic Community of West Africa States (ECOWAS), which championed the establishment of one of the continent's financial powerhouses, the Ecobank, pledged its unflinching support for the project but observed that the private sector, instead of the public, should lead the process towards its establishment.

“We at ECOWAS fully endorse this project and to demonstrate our support for it, the President (of ECOWAS) has authorised his Vice President to engage the ECOWAS Bank for Investment and Development (EBID) to take not only interest but also to provide financial support for this project from start to finish," the Director of Private Sector at the ECOWAS, Mr Alfred Braimah, said at the forum.

“What is important to us is who leads and manages this initiative and that has to be the private sector. That is why we are saying (to the private sector) put your money into this business because it’s not only going to help your business to go into the sub-region but it’s going to increase the size of your bank account," he added.

Currently, cargo moving from Ghana to Nigeria by sea, which is a 45-minute journey by air, will have to first go to Europe before it can be shipped back to Nigeria.

This challenge, which is mainly due to the fragmented nature of maritime trade in the sub-region, adds to the various road blocks, custom barriers and other difficulties that act to lower intra-trade within the ECOWAS area.

The establishment of the line is, therefore, expected to help boost trade within the region as well as enhance intra-African trade, which is currently estimated at around 12 per cent of world trade.

The shipping line will do that by opening the economies of the 53 countries in the continent to one another while helping to reduce the continent's growing appetite for imports from Europe, China, America and other western markets.

The process towards the establishment of the shipping line, referred to as the Sealink Project, started over two years ago but was yet to be concluded as disagreements over which country should host it continued to deepen.

"There are some countries that one president said if we would just make his country the hub, he would write up the cheque (to fund the establishment of the project), but we don't want it that way. We want the private sector to own this thing," Dr Adjei-Baah said, admitting that the establishment of the line was long overdue.

Businesses welcome initiative

The Association of Ghana Industries (AGI), which is the umbrella body of manufacturing companies and related business concerns in the country, and the Ghana Shippers' Authority (GSA) welcomed the initiative.

Both admitted that the project could serve as a relief to businesses as far as transport-related challenges within the sub-region was concerned.

That notwithstanding, the CEO of the Shippers' Authority, Dr Kofi Mbiah, and the outgoing President of AGI, Nana Owusu Afari, said care needed to be taken in the establishment of the line so as to ensure that it stands the test of time once it takes off.