Uneven Wealth Distribution Hampers Box Throughput Growth
BMI believes that the fact that Maersk Line's WAFMAX vessel the Maersk Cape Coast has called at the Angolan port of Luanda is testament to both the economic growth in the country and the success of Maersk in developing the vessel class. However, for demand for container shipping to really take off in the country, BMI asserts that a more even distribution of wealth is required.
The Maersk Cape Coast called at the Port of Angola on November 13, having sailed from the Spanish port of Algeciras, and departed again on November 15 according to the Maersk Line sailing schedule. The port's commercial director, Alberto Bengue, said that Luanda was able to accommodate the vessel following a number of infrastructure investments by the port authority. Capable of carrying 4,500 twenty-foot equivalent units (TEUs), the ship is the largest ever to call at the port.
BMI notes that the Maersk vessel is a WAFMAX, or West Africa Max vessel. These ships have been designed by Maersk specifically to cater for the West African market; they are capable of carrying a maximum of 4,500 TEUs with a shallower draught than other ships of that capacity, which enables them to call at ports with shallower channels than other vessels can. Many are also equipped with onboard unloading equipment, which means that they can call at ports where such infrastructure is lacking. The Maersk Cape Coast was the first of these vessels to be launched, in 2011, and will be calling at the Port of Luanda once a week from now on. The ship also serves the West African region.
|Angola's Liner Connectivity Index Score|
Bruno Silva, commercial director of Maersk in Angola, said of the development: 'Ports in West Africa are among the less efficient and jammed ones, but the WAFMAX ships will help to improve business conditions in this area and support the growth of the region's economy. '
The Angolan economy is a rapidly growing one. From 2000 to 2009 economic growth averaged 11.0%, and while we estimate that this slowed in subsequent years as a result of the global downturn, we forecast that growth this year will pick up once again to 9.9%, followed by 8.1% growth in 2013, and to average 7.9% over our medium-term forecast period to 2017. The Port of Luanda handled 444,867 TEUs in 2007, according to USAID, and although further data is not available we believe it will have grown considerably in the intervening years. Angola's score on UNCTAD's Liner Connectivity Index, which measures how connected to container shipping services a country is, has increased steadily over the period. Since the index's inception in 2004, when China set the base rate of 100, Angola has climbed from a score of 9.67 to its 2012 score of 13.95, a gain of 44.3%. We note that for low-scoring countries the addition of just one or two new services can make a major difference to its connectivity ranking, and so we can confidently project that Angola's score will climb further in 2013, aided by the new weekly call by the Cape Coast.
|Growth Fuelled By Oil Sector|
|Angola Real GDP Growth|
However, although we are generally bullish with regards to growth in throughput at the Angolan ports in the coming years, and especially at the Port of Luanda now it is able to accommodate these Maersk Line WAFMAX vessels, we do not believe that the ports' throughput growth will be in tandem with the headline expansion figure.
The Angolan economy continues to be powered by oil exports (oil export revenues account for more than 90% of total exports and around 70% of total government budget revenues), and it is on the back of this and high investment in the energy sector that we believe the African country will remain one of the world's fastest-growing economies, returning to double-digit growth for the first time since the downturn. While this can boost liquid bulk volumes, and dry bulk volumes as construction materials are imported, it does not provide the same scope for growth in container volumes. Manufacturing of containerised goods is insignificant and private consumption, the key driver of containerised imports, is forecast to account for just 36.3% of GDP in 2012.
Further, the inequality in Angolan society does not lend itself to a rapid growth in containerised imports. The country is one of the most unequal in the world in terms of wealth distribution, with the considerable oil wealth amassed over recent decades failing to trickle down past the elite. Wealth continues to be funnelled into Luanda's booming property market by the few, and credit is all but unavailable to the vast majority of Angolans. With a smaller base importing high-end goods rather than a wider spread of the population importing consumables, growth in box throughput at Luanda may lag.