Business News of 2014-05-29

West Africa shipping line to cost US$60 million

The Ghana Chamber of Commerce and Industry (GCCI) and its sister organisations in West Africa are to raise some US$60 million from private investors and individuals to set up a common shipping line for the sub-region.

The money is to be raised through the capital market and direct investments by indigenes and interested institutional investors within the sub-region.

The Vice-President of the GCCI, Mr Prosper Adabla, told the GRAPHIC BUSINESS on May 20 that a feasibility study of the establishment of the line had been recently completed, paving the way for the chamber to start hunting for the seed capital.

"An investment memo has come out, feasibility studies have been completed and we are now trying to raise some funds from the capital market," he said, noting that estimates showed that the initial cost of the line stood at US$60 million.

The line is to be owned by the private sector in the sub-region in an ownership structure that would reflect the amount of funds invested, Mr Adabla added.

The establishment of the line is expected to help ease the various transport-related challenges bedeviling traders within the sub-region.

Although the distance between Ghana and Nigeria and other West African countries is about 60 minutes by air, cargo going to such countries from any of Ghana's ports is often forced to go through Europe before landing there.

This inconvenience, together with similar challenges with road transportation, has reduced intra-trade within the sub-region to 12 per cent, according to the World Bank.

The shipping line, which has been dubbed Sealink Project, is, therefore, expected to help increase intra-trade within the sub-region and the continent at large.

The vice-president of the GCCI said interest in the establishment of the line and the shared offer had been high and was confident it would see the light of day soon to help reduce the challenges facing traders in the sub-region.

"We at the chamber, for instance, have applied to buy some shares and we encourage other investors and individuals to also buy," he said, but declined to mention how much the GCCI was willing to invest into the project.

Opportunity for banks

Meanwhile, the intention of industry players in the sub-region provides a fine opportunity for banks in the sub-region to explore.

This they could do by syndication to help support the chambers in the sub-region to realise their dream of owning a shipping line which is intended to make the shipment of their goods across the region easier and less expensive.