Can Africa profit from Red Sea crisis?
Global shipping companies are diverting valuable cargo around the African continent to avoid Houthi strikes in the Red Sea. But can coastal African nations seize the opportunity presented by the extra merchant traffic?
Transcript
00:00 (plane engine roaring)
00:02 Instability in the Middle East
00:04 has closed the Red Sea to merchant shipping.
00:06 It accounts for around 30% of global container traffic
00:10 and diversions have cost Egypt,
00:12 which manages the Suez Canal,
00:14 around $400 million in January alone.
00:18 So where is this money going?
00:20 And can Sub-Saharan African nations benefit from this?
00:23 Welcome to the flip side.
00:26 Most ships have been diverted around South Africa.
00:29 This adds 12 to 24 days to the journey
00:32 and an additional $700,000 in fuel costs.
00:36 Ships must stop in South Africa, Mozambique,
00:39 Namibia, or Angola to refuel, restock, and recruit,
00:43 which could provide lucrative business opportunities.
00:46 Unfortunately...
00:48 - These countries have not benefited
00:51 to the extent that one might expect.
00:53 And this is largely due to the fact
00:56 that they lack the infrastructure to seize the opportunity.
01:01 - Actually, it will take years
01:04 for African ports to become major players.
01:07 By then, the Red Sea route will be open again.
01:10 But global shipping still faces multiple threats.
01:14 - You have the crisis in the Black Sea,
01:16 which has been going for as long
01:18 as the Ukraine conflict has been ongoing.
01:20 And then you have the Panama crisis
01:22 as a result of drought itself in Central America, rather.
01:26 - And African ports are adapting,
01:28 like the Lekki Deep Sea port in Nigeria,
01:31 which China has heavily invested in.
01:33 - And that is seen to be one of the most important
01:36 port infrastructure development project
01:38 Nigeria has encountered and is expected to save the country,
01:42 receiving large shipments.
01:44 - But the real money in shipping lies ironically
01:47 in connecting deep sea ports
01:49 to functioning overland trade corridors.
01:52 - If there were real corridors, for instance,
01:55 connecting Nigeria to North Africa, to Algeria,
01:59 maybe we'll see a real benefit
02:02 because then they can dock in deep sea ports in Lekki
02:05 and then with rail, they can connect to North Africa.
02:08 - Having influence over trade routes
02:10 is key to economic prosperity,
02:12 especially in turbulent geopolitical times.
02:15 - Africa will occupy a strategic role in the globe.
02:19 I'm talking about the global energy transition.
02:22 And all of those factors constitute a window
02:26 of opportunity for Africa and a reason for why
02:31 it is important to double down
02:33 on the development of port facilities.
02:36 - That was "The Flip Side."
02:38 (dramatic music)
02:40 [BLANK_AUDIO]