Efforts to promote intra-regional trade and job creation in Africa have been given a major boost. On October 12, the UK’s development arm CDC Group announced a new long-term partnership with Dubai-based ports operator DP World (DPW), which will see at least $1.7bn invested into ports and logistics over the next several years.

“In CDC, we have found a partner with whom we share the common goal to invest in the long term and help build responsible and sustainable infrastructure in Africa,” Sultan Ahmed bin Sulayem, the chairman and CEO of DPW, said in a statement.


The partnership will initially focus on modernising and expanding three existing ports operated by DPW in the Senegalese capital Dakar, Ain Sokhna on Egypt’s Red Sea coast and Berbera in Somaliland.

DPW will contribute its stakes in the three existing ports and invest a further $1bn in the coming years, with plans to develop special economic zones, inland container depots and other logistics across Africa. CDC Group has committed an initial investment of $320m, with up to $400m to follow. This marks the single largest investment in its 73-year history. 

Holger Rothenbusch, a managing director at CDC who leads the group’s investment programme into infrastructure and climate finance, tells fDi that these three existing ports “were very logical entry points” for CDC’s engagement with DPW.

“All [three] show significant opportunities for further growth,” he says. “They reflect [geographical] areas where we see both economic growth potential and the need for impact investments.”

Experts have welcomed the long-term CDC–DPW partnership, given its potential to facilitate trade and foreign direct investment (FDI) across both seaboard and inland countries. However, the projects face challenges ahead amid regional geopolitical tensions.

Transformation potential

CDC estimates that the expansion of the three ports will create nearly 140,000 direct jobs across Senegal, Egypt and Somaliland, and add more than $50bn to total trade by 2035.

“There is huge potential for these investments to be transformative,” says Dirk Willem te Velde, the head of the international economic development group at think tank ODI. 

In Dakar, the new port of Ndayane will be built in what will be Senegal’s largest ever onshore FDI project at nearly $1bn. It aims to support trade nationally and in neighbouring Mali.

The Sokhna port, meanwhile, located around the southern end of the Suez Canal and New Cairo, aims to bolster Egypt’s trade with the Middle East and Asia. CDC expects labour-intensive and heavy industries, including construction, automotive and consumer goods manufacturing to be the main beneficiaries.

“I really want [these projects] to be a signal to the investment community that Africa is open for business,” says Mr Rothenbusch, who notes CDC can provide support to investors wanting to leverage the new port capacity.

Burgeoning Berbera

In Berbera, the port expansion aims to create a regional trading hub, serving fast-growing neighbouring countries such as Ethiopia and development across the broader Horn of Africa region. 

Mr Rothenbusch says that projects already under construction next to Berbera port, such as a special economic zone and oil plant, will benefit from the expected increased trade flows.

Since DPW first began expanding its  Berbera port investment in 2018, a few foreign companies have already invested in the area. These include Raysut Cement, Oman’s largest cement manufacturer, which in 2019 set up a grinding plant in Berbera as part of a joint venture with local conglomerate MSG Group.

But Mr Willem te Vilde notes that “it is not a foregone conclusion” that the development impacts and spillover effects from the port investments will come to fruition.

“It is a long process to build up local linkages and supply chains around port investments. They are dependent on complementary policies taking place and well-operating travel corridors.”

Horn of Africa tensions

Analysts say the recent instability in the Horn of Africa, as well as the internationally unrecognised status of Somaliland, could also present challenges to the Berbera port project.

“The increasingly complex recalibration of diplomatic and security relations in the Horn of Africa is certainly an issue that will have to be priced into this investment,” says Ed Hobey-Hamsher, a senior Africa analyst at political risk consultancy Verisk Maplecroft.

Mr Rothenbusch admits that the recent coup in Sudan and “upheaval” in Ethiopia, referring to the ongoing conflict in Tigray, will not help the project. “But when you look at these things in the long term [the port improvements are] going to be absolutely needed,” he says.

DPW has faced challenges with concessions on other port projects it has in the region too. In February 2018, the Djibouti government illegally seized control of the Doraleh Container Terminal from DPW. 

While the case has gone to several arbitration tribunals, with rulings already given in favour of DPW along with awarded damages, the Djibouti government remains in breach of its international obligations.

There could be kickback from other ports in the region too, such as Mogadishu in Somalia, notes Mr Hobey-Hamsher, given the potential for diversion of trade through the Berbera port. However, Mr Rothenbusch does not believe competition between ports is really an issue. 

“There is a massive need for further capacity of trade,” he says. “It is more about building port capacity of quality, with regards to efficiency and operations from a business integrity and climate perspective.”

AfCFTA boost

The African Continental Free Trade Area (AfCFTA) agreement, which began operating in January 2021, is set to increase the need for port infrastructure. 

If AfCFTA and the removal of tariffs is successfully implemented, cargo transported into Africa is expected to more than double from 58 million tonnes to 132 million tonnes by 2030, according to Unctad.

“There’s an expectation that [AfCFTA] will lead to more trade in manufacturing and will help industrialisation. These port investments could lead to further integration,” says Mr Willem te Vilde.

Mr Rothenbush notes that, given a low manufacturing base in many African countries, a key need is for equipment to be imported into Africa on more favourable terms. Inefficiencies at many African ports mean the cost of imports are between 25% and 50% higher than other countries, he says. Given that the African Development Bank expects the continent’s infrastructure gap to be as much as $170bn per year, the CDC–DPW partnership is hoped to stimulate much needed FDI.

“There is always going to be some short-term disruption, but if you take a long term view, Africa is full of potential that’s waiting to be unlocked,” says Mr Rothenbush.

This article was first published in the December 2021/January 2022 edition of fDi Intelligence magazine. Read the online edition here.