DP World, one of the largest port operators, partnered with UK-based development finance institution and impact investor CDC Group to create a $1.7 billion investment platform for Africa.
The entity will invest in origin and destination ports, inland container depots, economic zones and other logistics across Africa to increase trade, create new job opportunities and broaden access to essential goods, DP World said in a statement.
The platform will initially be seeded with minority stakes in existing DP World assets with significant capacity expansion plans, including Dakar in Senegal, Sokhna in Egypt and Berbera in Somaliland, the statement said.
“We are excited to announce a partnership with CDC Group that will enable increased investment in ports and logistics infrastructure across Africa, driving efficiency and trade growth,” Sultan bin Sulayem, group chairman and chief executive of DP World, said. “The partnership will create transformational opportunities for tens of millions of people over the next decade.”
DP World is committed to Africa for the long term and sees significant opportunity for future growth across the continent, he said.
The Covid-19 pandemic highlighted significant challenges in the global supply chain. Congestion at major container freight ports last month disrupted shipping operations, leading to stagnation in global trade, according to Kiel Trade Indicator data. Bottlenecks in global shipping have increased costs and are threatening to reduce the pace of trade growth, Kiel Institute for the World Economy said.
Supply chain bottlenecks that disrupted global trade during the Covid-19 pandemic will linger until 2023, Mr bin Sulayem said earlier this month.
DP World plans to invest a further $1 billion in the Africa investment platform over the next few years, the statement said.
CDC will initially commit about $320 million to the platform and plans to invest up to a further $400m in the coming years, the statement added.
The transaction will be subject to regulatory approvals.
“By combining our in-depth knowledge of ports and logistics and CDC’s expertise in infrastructure investment in Africa, we can drive greater supply chain efficiencies, provide improved trade connectivity and ultimately enhance value for all stakeholders,” Mr bin Sulayem said.
Trade enabled through the ongoing expansions in Dakar, Sokhna and Berbera is expected to create an additional 138,000 jobs, according to DP World. By 2035, the ports will indirectly support employment for about 5 million people, the ports operator said.
“Africa’s full potential is limited by inadequate ports and trade bottlenecks, putting the brakes on economic growth in some of the world’s fastest-growing economies and undermining social resilience in the least developed parts of the world,” Nick O’Donohoe, chief executive of CDC, said.
“This platform will help entrepreneurs and businesses accelerate growth with access to reliable trade routes and it will help African consumers benefit from the improved reliability and reduced cost of vital goods and food staples.”
CDC, which is owned by the UK government, has more than 70 years' experience supporting the growth of business in Africa and South Asia, the statement said.
