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Namibian transport sector and the African trade area

25 Sep 2019

by Nghinomenwa Erastus

NAMIBIA is considered the gateway to Africa through the Walvis Bay harbour and the connecting routes managed by the Walvis Bay Corridor Group.

With the incoming African continental free trade area (AfCFTA), more could be achieved through the transport and logistics sector.

According to the Namibian Statistics Agency 2018 preliminary national accounts, the transport sector recorded two consecutive negative growth periods from 2017 to 2018 of 14% and 9%, respectively.

The 2018 negative growth in the sector was caused by freight transport by road, which posted negative growths in real value additin of 15,1% last year.

The decline in road fieight is attributed to the reduction of cargo transported during the period under review.

However, port services, post and courier and air transport are estimated to have recorded strong growths of 11,7%, 11,7% and 2,6% in real value added during 2018, accordingly.

Port services registered a strong growth of 11,7% in real value added during 2018, compared to a decline of 12,8% recorded in 2017.

The performance of the subsector is attributed to the increase of the cargo handled during the period under review.

Post, courier and air transport also posted growths of 11,7% and 2,6% in real value added in 2018, compared to 4,3% and a decline of 1,2% recorded in the preceding year, respectively.

The AfCFTA will be one of the largest free trade areas since the formation of the World Trade Organisation, given Africa's current population of 1,2 billion people, which is expected to grow to 2,5 billion by 2050.

The AfCFTA is expected to be fully operational in June next year.

The free trade area will bring many entrepreneurial opportunities and enhance intra-trading among African countries, however, the potential presented will be up to the standard of the transport network within the continent.

The Namibian spoke to various players in the transport and logistics sector to provide an update on how ready the country is for the trade agreement.

Namibia Airport Company (NAC)

NAC is tasked to develop, manage and operate safe and secure airports in the country.

The NAC operates eight airports: Hosea Kutako International Airport (HKIA), Eros Airport, Walvis Bay International Airport, Aandimba Toivo yaToivo Airport, Katima Mulilo Airport, Keetmanshoop Airport, Lüderitz Airport and Rundu Airport.

The chairperson of the NAC board, Leake Hangala, talked to The Namibian last week on the preparedness of the company as the main player in the air transport subsector.

Hangala indicated that a modernised and upgraded HKIA will contribute to the movement of goods and services to and from Namibia and thereby make Namibia an efficient and reliable transport and logistics hub.

He stated that given the geographical area of Namibia with its population spread out, air transport offers the fastest, safest and most reliable mode of transport and it should be the first choice mode of transport.

“Our intention at NAC is to contribute to making air transport in Namibia affordable, accessible, safe and reliable,” he said.

However, to achieve their mandate, they require the cooperation of all stakeholders involved in the country's aviation industry, Hangala explained.

He assured clients that once the upgrades at HKIA are done, the airport will have dedicated terminals for international and domestic passengers in line with international aviation security standards.

“In addition to modernising physical infrastructure, it is also our intention to introduce fast and reliable services, including the processing of passengers at immigration points,'' he explained.

Hangala believes that with the current country transport hubs and those that are being built, the country is ready for enhanced trade with the rest of the continent. However, he believed that the country can do more.

“It is my considered opinion that Namibia is ready for AfCFTA, but we must do more to prepare for it,'' he said.

NAC chief executive officer Bisey /­Uirab said the HKIA upgrades had come at the right time given the expected increase in air traffic as the takes off.

/Uirab said apart from the decongestion, the project will also enable the airport to comply with the safety and security requirements in line with the Namibia Civil Aviation Act, Namibia Civil Aviation Regulations (NAMCARs) and the International Civil Aviation Organisation (ICAO) regulations and standards.

The airport has been rocked by threats of a shutdown and downgrade from both local and international aviation regulators as it falls short in security and safety issues. The airport structure was constructed in 1985 to accommodate about 250 000 passengers, but it currently caters for about one million passengers and with the expansion, double that capacity can be handled.

ICAO embarrassed the government in 2014 when it downgraded the Hosea Kutako International Airport after its inspection found that there were safety concerns, such as the lack of firefighting equipment. /Uirab said the project is envisaged to be completed by the end of September 2020, assuring that it will be done with minimal effect on the current airport operations and that business will continue as usual.

He explained that to reduce time spent at airports and boost efficiency, terminals will separate domestic and international passenger movements. The new arrivals extension will have more immigration officers, from the current eight to 17.

/Uirab said air transport is the alternative to the current congestion on the country and for utilisation of the country's eight airports.

He said the country's eight airports are adequate for air travel inside the countrys and called for more investments from the private sector to make the airports more viable.

“These airports are adequate and we call upon role players to take up air travel to increase the frequencies at these airports and make them more viable as they require a lot of capital investments to keep them running, which is something that NAC and the government cannot adequately do without support,” /Uirab pointed out.

/Uirab said the aviation sector is ready for enhanced Africa intra-trade and ready to facilitate the implementation of the free trade area. “The NAC, and indeed the Namibian aviation sector, is ready to significantly contribute to the success of AfCFTA,” /Uirab said.

He said the sector's readiness is headed by the significant investments in projects such as the HKIA expansion and other improvements to the airports, which are geared to contributing towards economic development and to position Namibia as preferred tourist destination and a logistics hub.

Walvis Bay Corridor Group (WBCG)

The development of the corridor over the past 19 years has placed Namibia among the few countries that serve a large region of close to 300 million consumers through the Walvis Bay Corridor Group with the port of Walvis Bay as entry and exit point.

The transit routes and services into the region is ranked as one of the best on the continent and the Walvis Bay Corridor Group is regularly benchmarked as a model corridor.

Clive Smith, the acting chief executive officer of the WBCG emphasised the importance of ports as part of a nation's economy serving as gateways for domestic, regional and international trade.

“In addition, seaports are significant sources of local employment, both direct employment and in related sectors such as trucking and logistics services,” Smith said.

He said it is essential for developing countries to constantly improve the quality of port infrastructure as it contributes to better logistics performance, leading to higher sea-borne trade, that results in bigger economic growth.

Smith said the new container terminal at Walvis Bay greatly enhanced Namibia's standing in the regional maritime sector, specifically as it provides additional handling capacity that has huge potential to attract more volumes to and via Namibia into the region.

He explained that more output of goods and passengers by the port year-on-year would provide varying degrees of benefits to the Namibian economy.

Smith explained that with the state-of the-art equipment installed during the expansion, it would lead to greater efficiencies at the Walvis Bay port, increasing the country's competitiveness.

“The Namibia transport and logistics sector can now stand equal to larger trade routes in the region and with our latent advantages such as high safety and security, a good road network, a robust logistics sector, we are confident that we will attract more business,” Smith stated.

He gave assurances that with efficient services inside the port, the transport sector could now expand and offer even more services on the back of seamless port solutions.

With an increased capacity to 750 000 the twenty-foot equivalent unit (TEUs) per annum and with the robust promotion and marketing of the transport sector, the revenue generation potential has equally increased to three times the current values.

In terms of readiness, Smith believes Namibia has made great strides in the transport and logistics sector over the past 10 years. He said the key element for the success of the AfCFTA is that of regional integration supported through the efficient movement of goods, people and services on the continent.

“In terms of air transport, there is huge potential as a regional hub, provided we fast-track upgrades at Hosea Kutako International Airport and pursue agreements with some of the larger airlines that can use Namibia as a springboard into the region.”

Smith explained that transport and logistics is a core component and backbone of economic activity for any country as it serves as a catalyst for other sectors.

“It is important to ensure a robust sector through prioritised infrastructure investment as well as focusing on legislation and policies that support business growth,” Smith emphasised.

TransNamib

TransNamib commenced the implementation of their five-year Integrated Strategic Business Plan (ISBP) earlier this year. The ISBP is a transformation blueprint for the railway sector and shall be done in phases looking at the key strategic objectives.

The parastatal's commercial and marketing executive, Hippy Tjivikua, explained that the ISBP is enormous and requires the re-manufacturing of the current defunct locomotives, and acquisition of new rolling stock (locomotives and wagons).

He said replacement and acquiring new locomotives will align with the parastatal's vision to become the preferred bulk transporter in Namibia.

“As per the end of the last financial year, we are proud to share with you that our volumes have grown by 8% and revenue by 7%,'' Tjivikua said.

Given that the Port of Walvis Bay and the railways are inextricably link and interdependent, the container throughput capacity at the port will double from around 350 000 to 750 000 TEUs.

However, the railway infrastructure was designed decades ago to move limited volumes and it is in a dilapidated state, especially on the stretch between Walvis Bay and Kranzberg.

Tjivikua indicated this in reference to the road haulage trucks which normally carry 30 metric tonnes compared to 44 metric tonnes per rail wagon.

One train normally moves 25 wagons. That would be around 33 road trucks.

“Railways are inherently built to move bulk freight over longer distances. Rail transport is much cheaper and safer than road transport,” he indicated.

To modernise and accommodate the required freight commensurate with the volumes, the African Development Bank has extended a loan to Namibia to upgrade the rail infrastructure to the required Southern Africa Development Community standards.

“This project has commenced, and the procurement of the rails was done and delivery is in process.

The actual rehabilitation and upgrade will commence next year and this project is being spearheaded by the Ministry of Works and Transport,” explained Tjivikua.

Tjivikua said at the moment, the passenger rail transport is not a profitable business to TransNamib and is merely done as part of corporate social responsibility.

“For the passenger rail transport to be profitable, large numbers of people is required,” he said.

Another limiting factor has been the conditions of the country's railway lines on some of the sections. It currently takes longer to move the trains on some of the sections.

However, once the railway has been rehabilitated and upgraded, we are able to move at commercial speeds, Tjivikua said. He said commuter rail transport is receiving great attention, especially in the Windhoek and the surrounding areas.

Tjivikua explained that AfCFTA is a gradual process to accelerate intra-Africa trade and boosting Africa's trading position in the global market.

However, the Namibian railway network only goes as far as South Africa.

“In the north, our railway line goes up to Oshikango, but the Angolan rail network has not been extended to connect to Oshikango,'' he stated.

He said to fully realise the AfCFTA, the country needs to connect to Zambia (via Rundu and Katima Mulilo) as well as Botswana from Gobabis.

“As railway is capital intensive, we are in the interim offering our stations at Grootfontein and Gobabis as transshipment hubs,” he explained.

Tjivikua said railways should be the main and primary conduit between these important stations and the port of Walvis Bay.

Therefore, Grootfontein is a critical hub for Zambia, DRC and Zimbabwe while Gobabis serves the same purpose for Botswana.

The southern railway line between Ariamsvlei and Lüderitz has become an active artery for the conveyance of manganese from the northern Cape in South Africa.

Tjivikua challenged the status quo where Africa has largely been a consumer of end products whilst exporting materials in raw formats.

The second quarter GDP figures show that the transport and communication sector is estimated to have recorded a negative growth in real value added of 0,9% in the second quarter of 2019, compared to a decline of 6,7% recorded in the same quarter of 2018.

According to NSA, this is an improvement when compared to the same quarter of 2018.

The performance of the sector is mainly attributed to railway transport and telecommunications that recorded positive growths of 24,4% and 0,9% in real value added, respectively.

The railway transport subsector is estimated to have registered a strong growth of 24,4% in real value added, compared to a decline of 9,1% registered in the same quarter of 2018.

The performance of the sub-sector is attributed to the volume of freight transported that has increased in the period under review, compared to the corresponding quarter of 2018.

Subsectors such as post and couriers and passengers transport are estimated to have recorded slow growths of 2,4% and 0,3% in real value added compared to 11,1% and 1,6% recorded in the corresponding quarter of 2018, respectively.

However, subsectors such as air transport, airport services, freight transport and port services are estimated to have recorded negative growths of 6,2%; 7,6%, 2,9% and 5,5% in real value added, respectively.

The poor performance in port services is attributed to the decline in cargo handled at the ports, the 2019 second quarter data shows.

The 2018 Labour Force Survey indicates that the transport sector, together with storage, employed 24 710 people.

SOURCE: The Namibian

https://www.namibian.com.na/83527/read/Namibian-transport-sector-and-the-African-trade-area

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