Blog: Realising East African growth potential by closing the infrastructure gap – by Igor van der Essen, Chief executive for Europe and Africa

Avocados from Kenya are the perfect example of how fast an export market can develop, given the right circumstances. According to the Agricultural Outlook report from the Food and Agriculture Organisation of the UN, production of avocados doubled between 2016 to 2021. The rise of this popular fruit and the industry around it shows just how much integrated logistics and local businesses can develop together. I will come back to that shortly.

As a logistics partner and port operator, we have identified a huge potential for East African trade. Right now, we see a gap between the opportunity for growth and productivity in different sectors and infrastructure needs.

USD 100 billion infrastructure gap

The African Development Bank estimates between USD 130 billion and USD 170 billion is required for infrastructure development each year, leaving a gap of about USD 100 billion compared to planned investments.

This means that some of the fastest growing economies of the region are simply outgrowing their current infrastructure, limiting export potential. This infrastructure gap must be closed to release the full potential for international and interregional trade. And here, we as a terminal operator can play an active role.

There is a direct relationship between seaport infrastructure, economic growth and participation in international trade. Building the infrastructure to produce more domestically and to enable exports across the continent will also enhance the resilience of local companies.

Increased competitiveness

In addition to building the infrastructure, it also needs to be utilised as effectively as possible. Operational efficiency makes it cheaper for shipping lines to call and generate higher volume through increased competitiveness. Another potential ripple effect of this, is that shipping lines change their services improving the region's connectivity and is an area where East Africa and its ports are still making progress and where our core expertise comes in. By working together, we can lift the standard of inter-connectivity between countries in the region.

As part of A.P. Moller-Maersk, we have been doing business in Kenya since 1963 connecting Kenyan businesses to the world through the port in Mombasa. APM Terminals set up office there in 2012. Maersk carries one third of all ocean imports and half of all exports to and from Kenya. It also connects to the extensive hinterland by rail and road, operates a depot in Mombasa and warehouses in Mombasa and Nairobi along with providing Customs and Supply Chain Management services.

Integrated logistics through Maersk

The strong ties between our ocean operations, landside connectivity and terminals give us the potential to grow export opportunities and strengthen supply chains locally and in East Africa. And here is where we come back to avocado exports. Kenya has become the fifth-largest producer in the world, and it takes advanced logistics to make the export happen.

Thanks to cooling containers (reefers) which Maersk often brings into Kenya empty to enable exports, Kenyan avocados can now travel longer and be sold to a much larger consumer group, giving local farmers more opportunities. These days, Maersk carries 9 out of every 10 Kenyan

avocados shipped to Europe. Last year alone that was roughly half a billion avocados. And each fruit needs the perfect conditions to end up on the consumer’s dinner table. That is why our services in Kenya e.g., have 24-hour monitoring of CO2 and oxygen-levels in the containers as well as temperature and every leg of the journey from farm or cold store. On top of that, we have dedicated lanes for the reefers in the ports to secure the transport.

Cost savings

Similarly, we are rolling out the services for Kenya’s flower and vegetable export allowing significant cost savings compared to air freight – delivering fresh produce to market with a significantly lower carbon footprint. The learnings from Kenya we will use in other countries of the region to support export opportunities and job creation.

Integrating logistics and connecting with local needs are the strengths that we offer as APM Terminals as part of A.P. Moller-Maersk. In sensitive supply chains, we make each other stronger and more efficient. And creating the opportunity for development and diversification of businesses go hand in hand with our commitment to our employees, wherever we operate.

We do not only want to create jobs but build careers and enable betterment of the community and entrepreneurship through upskilling and education as part of our value proposition. A vision that can power sustainable long-term economic growth and productivity.

At APM Terminals, we have an industry-leading ambition of reaching net zero by 2040. I was very inspired by meeting President Ruto from Kenya at the recent Africa CEO Forum, where I also addressed our commitment to contribute to the logistics infrastructure in Kenya.

Shared commitment to net-zero logistics

Kenya already sources more than 90 per cent of its electricity from renewable sources. We share the same agenda for developing a sustainable and efficient logistics gateway that will benefit both growth and the diversification of business opportunities, whilst benefiting the communities living close to the ports.

We see Kenya as a regional growth engine and leader in decarbonisation. A country where we can mutually benefit from our current and future business and expanded landside offering, in line with our strategy of being the global integrator of container logistics.