The draft master plan for a Namibia-based international hub for Southern African Development Community (SADC) countries has been released.

The report has been commissioned by the Namibian government and the Japan International Cooperation Agency (JICA). It was prepared by the Southern African Institute for Environmental Assessment.

The report said good infrastructure and Namibia’s geographical position gives the country huge potential to become an international logistics and distribution centre in Southern Africa.

Master Plan

The government, through the National Planning Commission and the Ministry of Works and Transport, with assistance from the Japan International Cooperation Agency, is preparing a master plan for the development of the hub.

The plan aims to raise Namibia’s profile as a logistics nation.

“Implementation of the project is likely to cause both positive and negative impacts on the natural and socioeconomic environments of Namibia. This strategic Environmental Assessment is being conducted to identify such impacts and to incorporate possible measures to mitigate negative impacts of the Master Plan,” the report says.

Unknown risk

The report notes that Namibia is a newcomer in terms of the international logistics sector, with a relatively small domestic cargo demand base.

“Even though there are problems associated with the main gateways used at present – Durban and Dar es Salaam – Namibia’s logistics sector is still an unknown risk for international business people.

It was recommended that Namibia must present strong selling points that makes it favourable in comparison with the other well established gateways. It said Namibia needs to create strong ‘pull-factors’.

The first and most important way to do this is to set land costs strategically low for logistics industries, the report says.

Pull factors

“The prices must not be higher than one-third of the price in Cape Town or Durban. This is the single-most important factor for attracting logistics business; relatively high land prices will undermine any of the other ‘pull-factors’.”

The report says if large logistics companies like DHL establish large-scale operational bases in Namibia’s ports and gateways, they will quickly generate the volumes of products for large-scale transit business.

It recommended that funds raised for road maintenance must be used for that explicit purpose.

“Cross-subsidisation of other socially or politically driven projects must be stopped. For example, Road Fund fees must be used to fund road maintenance, not to construct new roads for political gain. If infrastructure is not adequately maintained, then Namibia will lose competitiveness in the logistics sector.”

The new container terminal in Walvis Bay Port is expected to be fully operational by early 2018 which will expand its handling capacity from 350 000 twenty-feet equivalent units (TEU) to 800 000 TEU per year.

Cargo generation, which is the sum of cargo production and the attraction of Windhoek, in 2025 is estimated to be 1,8 times higher than in 2011 (38 000 tons per day), and in 2045 will be 5,1 times higher than in 2011 (106 000 tons per day).

Cargo volume

The Master Plan sets targets for 2025 with given projected potential demand and supply capacity and the resultant impacts on the economy.

Cargo volume to the landlocked areas of SADC is expected to increase from 12% in 2013 to 20% in 2025. This represents an increase from 0,8 million tonnes to 3,6 million tonnes in 2025.

By the year 2045, the target is set for 22%, equivalent to 14,5 million tonnes.

If the expected growth in cargo happens, the proportion of transport and storage to GDP will increase from 2,5% to 4.6% in 2025, making logistics one of the major industries in Namibia. Employment in this sector will more than double, going from about 26 000 at present to about 58 000 in 2025.

The projected increase in cargo volumes will be facilitated by a shift in the mode of transport, to more cargo travelling by rail. If such a shift happens, the share of rail will increase from 12,1% to 14,7%. The mode switch depends on TransNamib successfully achieving target cargo volumes and reliability, which is being initiated now through its turnaround strategy and business development plans.

Cargo flow

Projections by TransNamib and JICA show that future cargo volume transported by railway could be 4,8 million tonnes by 2020 compared to 4,9 million tons in 2025 based on forecasting of future cargo flow and the current modal split ratio. In the rail orientation scenario, railway cargo would increase to 6 million tonnes in 2025, increasing the railway share of cargo from 12,1% to 14,7%.