Finnfund

The port of Maputo, capital of Mozambique, is seeking a central role in Southern African freight traffic. After long years of decay during the civil war, the port is to be restored to prosperity by an international partnership of foreign investors and the government of Mozambique.

This is apparently the first port project in Africa based on the Public Private Partnership (PPP) model. The government of Mozambique has awarded the concession to manage the port to the Maputo Port Development Company (MPDC), which is 51% owned by an international consortium of foreign investors. State-owned Mozambique Ports and Railways owns 33% of MPDC.

The group of financiers is led by Standard Corporate and Merchant Bank of South Africa. The others include the Development Bank of Southern Africa, the development finance companies of the Netherlands and Sweden, FMO and Swedfund, and the Nordic Development Fund NDF. Finnfund is providing mezzanine finance worth 3 million U.S. dollars.

“Developing Maputo port is a challenging project,” says Finnfund’s senior investment manager Thomas Schmidt. “Preparations for the project took a long time and we learned a lot from it. Finnfund would be interested in similar projects in the future.”

Private company manages port operations

MPDC is run by an international consortium led by one of Britain’s largest port operators, Mersey Docks and Harbour Company. Other consortium members are the Nordic construction company Skanska, the Portuguese port operator Liscont and its Mozambique partner Gestores.

The government of Mozambique has been planning to transfer Maputo port operations to private hands since the end of the 1990s. MPDC, formed after long negotiations and a tendering competition, took charge of the port in April 2003.

The MPDC concession is for fifteen years, after which the company has a further option to continue managing the port for another ten years. Mersey Docks and Harbour Company has said it will invest about $70 million in developing Maputo port.

Complete renovation for dilapidated port

MPDC’s first job was to begin full-scale modernization and repair of the port. It is a sign of its state that only two of the port’s loading cranes were at all operational and they dated from the early twentieth century.

The main contractor in ongoing renovation work is Skanska. The value of the project is about 30 million dollars. In addition to modernizing quays and port equipment, new tugs are being acquired, and transport connections by road and rail with neighbouring countries are being upgraded.

Southern African freight junctions

MPDC aims to raise the amount of freight passing through Maputo to more than 13 million tonnes a year during the fifteen years of its concession. This means that present freight volumes would be trebled.

Maputo has traditionally been one of the most important ports of southern Africa. Before the Civil War in Mozambique, which began in 1975, the port handled as much as 17 million tonnes of freight each year. The war reduced this to a couple of million tonnes.

The government of Mozambique also wants to use private finance to improve other national infrastructure. The main focus will be on developing transport connections in the Maputo corridor. Traversing the corridor to South Africa are the N4 highway and the Ressano Garcia railway line. Both will require complete modernisation before they can be properly utilized.

The cost of upgrading the railway line alone is estimated at about 200 million South African Rand, or about 26 million euros. The government of Mozambique has given the railway operating concession to a South African company, Spoornet.

Port will be a profitable investment

Mozambique believes that upgrading traffic connections in the Maputo corridor will be a profitable investment both for the country itself and for foreign investors.

The port will improve access to world markets for products from Mozambique. Port modernisation and operations will create new jobs and increase economic activity in the Maputo area.

The favorable location of the port is expected to attract companies not only from South Africa but also from landlocked Botswana, Swaziland and Zimbabwe. The three countries do not have their own ports, and Maputo offers them an alternative route for foreign trade and will let them reduce their dependency on transit traffic through South Africa.

But the biggest customers for Maputo port will be South African exporters and importers. From South Africa’s economic powerhouse of Johannesburg, the journey to Maputo is about 500km, which is a slightly less than to its largest port city, Durban.


For further information please contact Mr Thomas Schmidt, tel. +358 9 3484 3327, email firstname.lastname@finnfund.fi