Rail and transit trade bolstering blue economy

  • April 18, 2017

Ongoing expansion works at the Tema and Takoradi ports; a well embraced single window regime and auxiliary innovations from the landlord Ghana Ports and Harbours Authority (GPHA) and other private sector actors are plausible investments to maximise the gains from sea trade activities in the country. However, the new government’s promise of industry specific tax cuts on the back of a robust rail transport system have primed the sector for greater times ahead, writes Patrick PAINTSIL.

The country’s sea trade business sector has seen some landmark interventions over the recent few years during the reins of the immediate-past National Democratic Congress (NDC) government; notably among them being the US$1.5 billion five-phased expansion works at the Tema Port with similar works at the Takoradi Port and the gradual push towards seamless documentation and transactions process leveraging the National Single Window regime.

Operator of the country’s two seaports, Ghana Ports and Harbours Authority (GPHA), has also embarked on an aggressive port automation drive as it moves closer to an e-port status. The port operator has currently installed electronic gates at the entry and exit points of the Tema Port as part of efforts to improve security within the port community. The electronic port management system will protect the ports’ stakeholders from the issues of corruption, extortion, petty thievery as well as other unethical practices that dent the image of the port industry in the public eye. Sister industry associations including the Ghana Shippers’ Authority (GSA), the Ship-owners and Agents Association of Ghana (SOAAG), the Importers and Exporters Association of Ghana, and the Ghana Institute of Freight Forwarders (GIFF) are all actively engaged in one form of activity that seeks to shore up the economic gains from sector.

The strong cooperation that exists among the various private sector stakeholders is commendable as it will go a long way to bolster productivity and business growth. This is the kind of bond that the maritime guru and board chair of Meridian Port Services (MPS), Alhaji Asuma Banda, has tasked the various stakeholders in the maritime industry to hold on as they collectively work towards seamless and conducive transactions at the country’s ports.

He said at a recently held New Year cocktail event organised by the Shipowners and Agents Association of Ghana (SOAAG) of which he is the president: “My advice to shipping lines, clearing agents and other industry actors is for them to work as a team; there should be no need for competition between the port operators and shipping lines. Every one engaged in the port business must be part of that team, and there should be no segregations in the sector. By doing the right thing, we can position the port industry for higher gains to drive national and socio-economic growth.” It is all bright for the blue economy and it is without a doubt that the change of government to the ruling New Patriotic Party (NPP) has come with its own breeze of hope and growth for the dominant sea trade sector. The promise of tax cuts and the abolishment of industry-specific duties such as the Special Import Levy, import duties on raw materials and machinery and spare parts have kept industry actors upbeat about the industry.

The icing on the cake that has got the various maritime stakeholders highly optimistic is the creation of a dedicated ministry for railway development headed by the astute lawyer and former Attorney- General, Joe Ghartey. The fact remains that the economic potency of a robust rail transport system are enormous; from saving cost to shippers and opening up the rural economy to enticing more business through our ports. Significantly also, the cargo haulage business has entered into the multimodal era, where you do not need only one mode of transport handling the carriage of goods while rail is cheaper and could haul large volumes at a go. Deputy Chief Executive Officer of the Ghana Shippers’ Authority (GSA), Sylvia Asana Owu, told the B&FT in an interview: “An efficient rail system will open up our corridors for effective transit business; this will attract other countries to do business through our ports and that will create jobs for the people and open up the economy.

When transit cargo is moved through our ports, people will be engaged to work on the cargo, truckers will be involved to cart the goods along the transit routes; they will buy fuel and sleep in hotels. All these activities will generate incomes to the service providers and open up the economy as money will come into the system.” Figures from the Ghana Shippers’ Authority (GSA) indicate that total transit and transshipment figures, as at the third quarter of 2016, stood at 772,744 metric tonnes, which is a 12.23 percent rise over the 2015 figure of 688,565 metric tonnes, within the same period. These figures give a fair reflection of renewed confidence in Ghana’s economy by its landlocked neighbours of Burkina Faso, Mali and Niger, coupled with improved security along trade corridors, has steadily pushed up transit trade figures over the last few years after a long period of decline.

Currently, the haulage sector provides an average of 97,000 trucking jobs — drivers and mates — per year for the northbound transportation of transit cargo destined for the Sahelian countries, generating a yearly income in the range of US$81 million for local haulage companies. With this huge prospect, it is less surprising that importers and exporters are exceedingly jubilant over government’s decision to rebuild and operate a robust rail transport network that will link the southern and northern parts of the country. Captains of the industry opine that an efficient rail transport network, similar to that of Cote d’Ivoire and Benin, will reduce cost for businesses in the landlocked countries of Niger, Burkina Faso and Mali.

To her, a properly linked rail network to the Boankra Inland Port will boost trade on our corridor, making rail a laudable initiative that government is right to focus on. The GSA deputy boss added: “We have always believed that the Boankra Inland Port is a very good project that is why we have not given up on it; and it is equally significant that the Transport Ministry has not given up on it.” The Boankra Inland Port operating on running rail connectivity could fast track the gains from transit trade as the chunk of cargo throughput to the Tema and Takoradi ports are moved to the Ashanti Region for onward carting to the hinterlands and transit destinations. It is heartwarming that government has hit the ground running with developing the rail sector, going by the words of the Finance Minister, Ken Ofori-Atta, when he presented the maiden budget in Parliament. He said: “This government believes that rail will be a major catalyst to drive the growth that we envisage in the coming years as rail transportation provides safer, cheaper and faster way of moving goods and people to facilitate trade and support economic activity. Our vision is to open up the country and provide new opportunities to our people to do business and trade among themselves.” Approximately 133.6 kilometres (km) representing 14.1% of the entire rail network of 947 kilometres that is currently operational is faced with an obsolete network and poor track infrastructure, resulting in the closure of greater part of the Western and Eastern lines and the entire Central line — leading to a high incidence of derailments that lead to loss of operational hours and damage to rolling stock.

Available data show that the rail sector commanded an over-70% market share of freight and passenger transport in the country during colonial days until the 1970s, and carried over 2 million tonnes of freight and 8 million passengers annually in the 1960s and 1970s. However, due to inadequate funding for maintenance, the rail network started to deteriorate; leading to the diversion of freight traffic onto roads, exacerbating deterioration of the roads. The Eastern Railway Line which covers a distance of 330km and starts from Accra to Kumasi with a branch line from Achimota to Tema; the Western Line which starts from Takoradi and terminates at Kumasi having two branch lines namely, Dunkwa to Awaso and Kojokrom to Sekondi, covering a distance of 340km; and the Central Spine which stretches from Kumasi to Paga covering a distance of 700km to be developed in sections: from Kumasi to Buipe and Buipe to Paga; have all been captured in the 2017 budget.

Government will also complete the Sekondi to Takoradi via Kojokrom section and continue with the section from Kojokrom to Tarkwa through Nsuta. This, according to the finance minister, will help improve the operational performance and revenue of the Ghana Railway Company Limited (GRCL) to better position the company to wean itself from government support. Railway Development Minister Joe Ghartey has indicated that investors are already trooping in to partner government in the expansion of the country’s rail network from the south to Paga in the Upper East. The project is estimated to cost about US$5 billion and according to him, government will consider a cocktail of Build Operate and Transfer (BOT) and other several examples. He told the Appointments Committee of Parliament: “Due to the government’s pro-business policies, investors have shown interest to partner government. It is estimated that the cost of road haulage is 50 percent more than the alternative of using railway lines. This affects the bottom line businesses that rely solely on road transport to cart their goods.

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