A new model for accelerated economic development in Africa

The accelerated growth of the Asian economies is due in part to their use of a new development model that does not seek incremental growth as part of a traditional approach.

It recognises that in order to participate effectively in a global environment, one needs to ‘leapfrog’ the competition by reinventing oneself, utilising new concepts and techniques.

These have the objective of creating a competitive environment for the establishment of new enterprises, which serve both international and regional markets.

A principal element of such a strategy involves the ability to participate in the global supply chain via the:

• creation of special or export zones and industrial or satellite cities, creating a unique environment and achieving higher levels of efficiency and productivity;

• development of dedicated transportation corridors and rail land bridges for the efficient movement of goods or freight on a point-to-point basis; and

• creation of an integrated multimodal (sea–air–land) logistics capability, providing a greater number of service levels for the movement of time-sensitive freight.

An integral part of this approach involves the creation of next-generation inland ports that are connected to gateway seaport and/or airport locations.

These differentiate themselves from the traditional inland bonded yard or container depot, as master developments providing a competitive live, work and recreate environment, in addition to incorporating the transportation function.

As part of this approach, the goal is to create synergies between directly related and associated activities, while acting as a catalyst for the raising of standards and the creation of jobs.

This is often achieved by the use of public-private partnerships that enable the government to achieve its strategic goals, while involving the private sector with its capital and expertise in financially driven ventures.

The African solution

An African solution for accelerated economic development capitalises on logistics-driven successes achieved in the Americas, Europe and Asia, as part of a customised approach.

This involves the creation of twinned inland ports as part of an integrated logistics capability, which capitalises on existing transportation infrastructure and rail linkages in addition to serving the principal population catchment areas.

These next-generation inland port locations are further connected to principal seaport and airport gateways, creating an integrated logistics capability.

The importance of this logistics infrastructure in the creation of export-focused enterprises is motivated by the fact that 40% to 45% of the cost of a manufactured product in the hands of an end user is a materials (inventory and transportation) cost.

As a result, lower labour costs alone are not sufficient to compete effectively within a global economy, as labour costs compromise only about 10% to 15% of the value of the finished product.

A competitive logistics infrastructure therefore must be created to provide a greater number of transportation options with improved levels of service, while meeting all the security and regulatory requirements that have evolved as part of a post 9/11 environment.

Such issues as levels of security, proven source of origin, and an environment that does not allow any ‘cross-contamination’, must be addressed as part of the overall solution. This includes the twinned port locations and the dedicated transportation networks that connect them.

The development of the inland ports in Africa must therefore be undertaken in a manner that meets specific operating criteria, such as the secure and bonded movement of freight. This can be achieved by the use of dedicated block or unit trains moving between individual locations, while utilising a real-time track-and-trace capability.

This overarching approach enables the creation of world-class manufacturing, processing and logistics centres, which act as a catalysts for accelerated economic growth.

It further facilitates the attraction of foreign direct investment by creating the environment to motivate multinational corporations to establish new enterprises at these locations, to satisfy both local and international markets as part of the global supply chain.

Development of a next-generation inland port

The creation of a next-generation inland port involves the implementation of a multifunctional solution that incorporates an efficient transportation and logistics capability. This requires the integration of various functions and the involvement of organisations that generally operate in isolation from each other.

To achieve this, use is made of the master developer approach, which builds on the synergies that are achieved from various elements or ventures of the project, as part of the overarching initiative.

This requires operational and business needs to be considered as part of an overall plan, which includes both money-making (financially driven) and economically driven (strategic) ventures.

The inland port must further be located at a site of a size suitable for the master developer approach, in addition to providing the required logistics advantages.

An example of a next-generation inland port being developed in southern Africa is Tambo Springs, located to the southeast of Johannesburg/Ekurhuleni.

This provides a prototype for the development of twinned inland ports in Africa, linked by a sprinter rail network that provides higher levels of service – creating a competitive environment as part of the global supply chain.

Tambo Springs: A world-class environment in Gauteng

The Tambo Springs inland port, a development that is being spearheaded by Inframax Holdings, creates a world-class environment as part of a next-generation African logistics capability.

The site, of approximately 1 200 hectares, is located adjoining major road and rail corridors connecting Gauteng (Ekurhuleni, Johannesburg and Tshwane) with a total population of more than 10 million, with major ports and urban centres in KwaZulu-Natal, the Western Cape and Eastern Cape.

It has direct access to the N3 national highway and the Natcor rail line connected to the Durban Container Terminal – the largest in sub-Saharan Africa.

In addition, there is its twinned logistics capability being developed by means of a sprinter rail land bridge to the recently completed Ngqura deepwater port within the Coega Industrial Development Zone in Port Elizabeth/Nelson Mandela Bay.

The principal operational criteria that differentiate the Tambo Springs development are to:

• create a world-class logistics platform serving the Gauteng catchment area and sub-Equatorial Africa;

• capitalise on the existing infrastructure, including other transportation centres and industrial areas;

• provide more efficient transportation–logistics operations, including:

– The ability to accommodate long block trains;

– Cross-border road and rail transportation;

– An integrated air cargo or express freight function;

– A regional metropolitan distribution function;

• create the environment for the production and processing of manufactured goods and perishable product;

• develop an improved inland transportation distribution network, including the link with Coega; and

• address virtual connectivity issues by means of a next-generation telecommunications community network.

The planning and construction of the physical environment at the Tambo Springs site is a function of the operational needs, with the goal of creating an efficient location in which to locate an enterprise while meeting world standards.

Furthermore, it uses a modular concept in order to satisfy market needs, while minimising initial capital investment.

The layout incorporates the construction of principal transportation and utility corridors as a project backbone, in addition to designation of areas to serve individual functions.

Specific consideration is given to the creation of secure and bonded areas for the production – processing and transportation of international freight.

In addition, regional warehousing and distribution activities can be located optimally so as to serve the adjoining metropolitan areas.

Direct support functions incorporated as part of the master development include:

• Commercial or residential activities;

• Training or incubator ventures for small, medium and micro enterprises; and

• Telecommunications or web-based initiatives.

The initiative further capitalises on the adjoining residential areas, enabling workers to come to work without using vehicular transport.

With regard to job creation, it is expected that by the 15th year of the project, 100 000 full-time jobs (decent work) will have been created in the field of manufacturing. This number excludes full-time jobs created from the “soft” side of the supply chain, as well as duration of contract jobs created from development or construction activities within the inland port area.

This does not, however, include the job creation and economic development benefits generated in other regions that will capitalise on the world-class logistics capability and the ability to participate effectively as part of the global supply chain.

The Tambo Springs development is therefore an essential part of the plan for the creation of a world-class capability for the accelerated economic development of sub-Equatorial Africa.

Franco Eleuteri