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Senegal, Dakar Container Terminal

Transforming Dakar's port facilities to support essential trade, both now and into the future

Background

Dakar, the capital and port city of Senegal, is a strategic gateway to West Africa, and is set at the crossroads of several major trade lanes. Dakar offers excellent cargo access to landlocked sub-Saharan African countries and an efficient container port – with room for expansion – is critical to the economic development of the country and wider region. However, the existing port has fallen far short of its potential.

Phase I of the transformation of Dakar into a world-class port is complete and became fully operational in 2013. Finance was provided to expand and modernise the three existing container terminals: developing roads, extending quays, installing and supplying electricity, adding more ship-to-shore cranes, along with new buildings and IT systems. When traffic volume at the existing facilities reaches a certain threshold, a phase II option involves developing and managing an entirely new container terminal (Port du Futur) at an adjoining site, with potential 20ft equivalent cargo capacity (TEU) of 1.2 million.

In 2007, DP World FZE (DPW) won a competitive tender for a 25-year, renewable concession awarded by Société Nationale du Port Autonome de Dakar (PAD). The total transaction size of the first phase was US$294m.

The majority of the project investment came through domestic or foreign direct equity injections from DPW. These were supplemented by US$87m of loans from a consortium of commercial banks, including Standard Chartered Bank as well as Development Finance Institutions including EAIF, IDC, Proparco, AfDB and FMO.

The deal

Dakar Deal Info

Role of PIDG

The public-private partnership between the Government of Senegal and DPW sparked interest in funding this transaction from international commercial financial markets. The initial plan involved financing the whole deal with funds from commercial banks, however this proved to be difficult. Therefore, AfDB stepped in as co-arranger with Standard Chartered, and facilitated the involvement of other DFIs, including EAIF. Without the involvement of a large private container terminal operator, such a large scale investment would not have happened.

Development Impact

Project investment

Total investment commitment

 

US$294m

Fiscal benefits

The Government of Senegal received an initial US$61.6 million up-front, the entry ticket for the concession paid by DPW.

The project will generate approx. US$9.6m (€7m) per annum for the Government of Senegal in the form of corporate / withholding taxes.


Job creation

Short Term

Long Term

 

300 people

339 people

 

Additional Benefits

  • Financial additionality

Commercial banks required political risk insurance for this transaction. EAIF took sovereign risk thereby reducing the cost of the financing.

  • Additional benefits

Significant increase in container handling capacity at the port from 335,000 TEUs to 550,000 TEUs a year.

Reduction in shipping costs and increased access to shipping services will increase export revenues and lower the cost of imports, benefiting firms and consumers in Senegal and increasing trade opportunities for the landlocked territories of the region.

The project is expected to have a large positive impact on indirect employment and economic growth.

  • Demonstration effect

Adopting a similar model, the Government of Senegal have subsequently entered into a PPP to develop a toll road in Dakar.