The Privatization of Port Operations in Africa: Opportunity, Risk, or Both?

By Danilo Desiderio

A recent analysis by the Washington-based African Center for Strategic Studies highlights the extensive presence of Chinese firms in African ports. According to the report, Chinese companies are active in 78 out of 231 commercial ports across the continent, with a particularly strong concentration in West Africa (35 ports).

The study, which references a comprehensive mapping of African ports by MaritimAfrica, describes China’s engagement as multifaceted – ranging from financing and constructing port infrastructure to fully operating facilities. In some cases, Chinese firms dominate all aspects of port operations, as seen with Nigeria’s Lekki Deep Sea Port.

Beyond West Africa, China’s footprint is also significant in East Africa (17 ports), Southern Africa (15 ports), and North Africa (11 ports). To put this into perspective, Latin America and the Caribbean host only 10 Chinese-built or operated ports, while Asia has 24.

A Lucrative Investment with Strategic Implications

The article underscores that investing in African ports has proven highly profitable for China. For every US$1 invested, China reportedly gains up to US$13 in trade revenues.

However, it remains unclear how much of this economic benefit stays within Africa, as no estimates are available.

Beyond economic gains, China’s involvement grants it substantial influence over the shipping lanes that serve African ports. The African Center for Strategic Studies notes that companies holding operating leases or concession agreements not only reap financial rewards but also exert control over access to key supply chain nodes.

These operators determine pier allocation, approve or deny port calls, and offer preferential services to vessels flying their national flag – raising significant sovereignty and security concerns for host nations.

Moreover, ports are geopolitically strategic assets. Controlling a port enhances a nation’s ability to project military power and influence, affecting regional security dynamics.

China’s access to African ports provides a foothold for potential strategic maritime and military operations on the continent.

Challenges in African Port Operations

A 2014 study by the African Development Bank found that many African ports suffer from inadequate infrastructure, inefficiency, and high costs. Terminal storage and maintenance capacity remain insufficient, and handling costs are, on average, 50 percent higher than global standards.

In response, there has been a growing trend toward privatization of port operations across Africa.

However, privatization can take different forms. The “private service model,” where private entities own and operate all port infrastructure and services, is rare.

The “public service model,” where government authorities manage both infrastructure and operations, remains common, as seen in Kenya, where the Kenya Ports Authority (KPA) controls port activities.

The prevailing model globally – and increasingly in Africa – is the “landlord system.” Under this model, port authorities own the land and infrastructure while private companies operate the terminals under long-term concession agreements, typically lasting 20 years or more.

Countries like Kenya are transitioning to this system as part of their long-term strategy to enhance efficiency, as outlined in the Port Masterplan 2018-2047.

Balancing Efficiency with National Interests

While the landlord model brings efficiency and attracts private investment, it also raises concerns about losing control over maritime routes. The key risks include:

• Foreign Control of Port Operations: Private operators – often foreign firms—manage critical aspects of port functions, influencing the movement of goods and maritime routes.
• Strategic Dependence: African nations may become reliant on foreign-controlled terminals, making them vulnerable to geopolitical or economic disruptions.
• Data Control Issues: Private firms hold valuable data on cargo movements and logistics, raising national security and economic sovereignty concerns.
• Government Influence Risks: Many foreign operators, especially Chinese firms, have direct or indirect ties to their governments, potentially allowing geopolitical considerations to shape port management decisions.
• Economic Leakage: Profits from port operations may be repatriated abroad, limiting economic benefits for local communities.

Safeguarding Africa’s Maritime Interests

As African nations transition to landlord port management models, they must implement robust measures to protect national interests. This includes:

• Regulatory Oversight: Establishing transparent concession agreements with strong governance mechanisms to prevent undue foreign influence.
• Local Participation: Encouraging domestic stakeholders to engage in port operations to ensure economic benefits remain within the country.
• Employment and Supply Chain Mandates: Including provisions in concession agreements that require the use of local labor, suppliers, and services to maximize economic retention.

By adopting these strategies, African countries can harness the benefits of privatization while maintaining control over their maritime trade and economic sovereignty.

Danilo Desiderio serves as the CEO of Desiderio Consultants Ltd in Nairobi, Kenya, specializing in African customs, trade, and transport policies. He is a customs and trade expert at the World Bank and a senior associate to the Horn Economic and Social Policy Institute (HESPI).