Why Sealink holds key to African Renaissance

By Ken Ike

Advanced economies in the world began their industrialisation drive by development strong, reliable and efficient transport systems.

From Europe to America, down to Australia, continents under various agreements developed interconnected sealinks, land, rail, pipeline and air transport systems, with a view to promoting trade and economic ties and development.

Effective transport system opens up economies, ensures that products get to the final consumer without hitches, and makes goods available and affordable.

For some time now, key maritime stakeholders in Africa have been advocating an efficient initiative that can create a West and Central Africa maritime shipping operation to facilitate trade and eliminate bottlenecks encountered via land transportation.

Stakeholders became obsessed with this call, given that moving goods from, say Cameroon to Togo, by land is laden with multiple taxation, harassments, theft and seizures, among others.

Following this situation, the Nigerian Export- Import (NEXIM) Bank drove a scheme called Sealink Project to promote trade across ECOWAS and Central African markets via sea transportation.

Apart from NEXIM Bank, the Federation of West African Chambers of Commerce and Industry (FEWACCI), Sealink Promotional Company Limited, Transimex and FBN Capital Limited (financial adviser) were all involved.

In 2014, NEXIM and its partners began the Sealink placement offer with a view to bringing in investors that will pull $62.3 million to facilitate the project. The private placement took place by way of offer for subscription of 89,036,956 ordinary shares at $0.70 per share.

The purpose of the offer was to raise funds needed to acquire sea-going vessels for conveying people and cargo across the West and Central Africa coast. The project to be undertaken included vessels which would cost $47 million; spares costing $2.35 million; other equipment estimated at $6.37 million; and a three-month working capital of $4.3 million.

The project was to facilitate the realisation of enormous trade-related benefits, such as reduction of non-tariff barriers to trade, elimination of transit corridor issues, reduction of transaction costs to economic operators, as well as enhance fiscal benefits to various governments through formal and documented trade, according to Roberts Orya, Managing Director/CEO, NEXIM Bank.

The first proposed passenger-cargo route to be achieved through this project was expected to interconnect eight cities, from Cape Verde to Abidjan, while the second one will join six cities across the two regions. Route III, which will centre on only freight, will interconnect 10 cities, including Lagos, Nigeria’s economic capital.

According to Wilson Attah Krofah, Sealink’s board chairman,  if West and Central Africa does not exploit Sealink’s opportunities now, foreigners and people from other sub-regions would do so soon. Krofar said Sealink Shipping line increases opportunities for trade, adding that trading by road creates a lot of problems owing to numerous barriers across countries.

“We did a study and found that the easiest way for our people to travel is by sea. Every businessman who wants to expand must look at the bigger market and just like the BRICS countries, we can do it ourselves coming together,” he said.

Today, the long-awaited $60 million Sealink project is about to start operation. Findings show that the project would have been ready by December 2015 but for Ebola epidemic which affected several participating countries and made them channel resources to the disease rather than the scheme. But this is changing as all countries involved have made commitments to this project.

Exporters in West and Central Africa will, therefore,  begin to spend less on transport and logistics, which will translate into better competitiveness in the global market

“NEXIM just saw that we are having a lot of problems especially from the standpoint of Nigeria being the dominant trading partner. In most of the markets in West Africa, the products you find there are Nigerian products. But if you talk to Nigerian exporters, they tell you the kind of things they face moving these goods. That was why we decided that we are not going to buy ship but we are only going to facilitate a shipping line that will be owned and operated by the same traders that are facing these challenges,” said Orya.

Africa, world’s second-most populous continent, is often blighted by high transport/logistics costs. International traders complain that shipping goods from Japan to Abidjan, capital of Cote d’Ivoire, which costs $1,500, could go for as high as $5,000 just from Addis Ababa to Abidjan, owing to issues surrounding land transportation in Africa. In fact, West and Central Africa will make a first strong statement to the world when the project takes off by the third quarter of 2016, say analysts.

“This is like imitating China which is said to be in agreement with 17 countris to build a high-speed rail network to Europe. This is a step in the right direction for our renaissance,” said Aido Maine, a development analyst in Ghana.

Source: Footprint to Africa

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