12 Sep Interview with Lucas Osorio, CEO, MPDC – Maputo Port Development Company
Can you provide an overview of the Port of Maputo and its contribution to the economy of Mozambique?
Maputo port has been in operation since 1903, marking over 120 years of existence. Since 2003, it has been under the management of the private sector, totaling 21 years under private ownership. The port achieved a milestone with a record volume of 31 million tons, solidifying its status as the largest port in the country. Remarkably, nearly half of Mozambique’s port traffic flows through the port of Maputo.
Strategically positioned in the nation’s capital, the Maputo port is a crucial transit hub. It significantly bolsters the South African economy, which ranks as the largest or second-largest economy on the African continent, depending on metrics. The port actively contributes to public finances through economic activities generated within the port, tax revenues and shipping fees.
The port handles various types of cargo, including containers for import, local consumption, transit and bulk shipments. It facilitates the export of vital commodities like coal, chrome and other ores, benefiting regional and international markets. Furthermore, it plays a pivotal role in supporting the economies of neighboring countries such as Zimbabwe and Eswatini. From a fiscal standpoint, the port’s overall economic impact is substantial, contributing an estimated 6% to tax revenues. This figure accounts for direct port-related activities and the broader economic multiplier effect it generates. Additionally, the port is a significant source of employment, directly employing approximately 2,000 individuals and indirectly supporting around 10,000 jobs, including those dependent on the port’s operations and the toll gate along the Maputo-South Africa route.
The Maputo port emerges as a vital economic engine, facilitating trade, generating revenue and fostering employment opportunities. Notably, around 70% of the cargo handled originates from South Africa, destined for international markets, further highlighting its pivotal role in regional commerce and beyond.
Amid Mozambique’s growing economy and increasing exports, the Port of Maputo has seen notable expansion. What are the key milestones and challenges faced by the Maputo Port Development Company (MPDC) in managing the port’s operations?
One of the primary milestones revolves around substantial investments in infrastructure. Since assuming control of the port in 2003, there has been a significant upsurge in infrastructure investment. Over two decades, we’ve seen a remarkable six-fold increase in cargo handling capacity, soaring from 5 to 31 million tons – a staggering growth of about 600%. This expansion owes much to infrastructure enhancements, including channel dredging, capacity augmentation and substantial investments in training and technology, driving the port towards digitalization.
From a risk standpoint, a significant portion of the port’s cargo comprises ores, with 5 million tons handled last year alone. Notably, approximately 60% of this cargo is transported by road, posing environmental and highway safety hazards. The prevalence of over a thousand trucks daily en route to the port accentuates these risks, necessitating a shift towards rail transportation. Collaborating with our railway partners, such as CFM in Mozambique and counterparts in South Africa, is crucial to fostering this transition, mitigating environmental risks and enhancing road safety.
Additionally, as a pivotal transit hub servicing 70% of regional cargo, optimizing border management systems is paramount. The current manual processes at border crossings entail time-consuming procedures, underscoring the urgency for digital integration. Streamlining border operations on the South African and Mozambican sides is imperative for efficiency. Digitization initiatives aim to expedite truck processing, eliminating redundant procedures and bolstering overall port efficiency. Enhanced efficiency safeguards trucks and augments port throughput, bolstering revenue streams for the South African and Mozambican economies.
Fundamentally, digitalization emerges as a cornerstone. Accelerating this process is critical, given its potential to revolutionize operations. The Port of Maputo is already at the forefront of digitization efforts, collaborating with Mozambique’s railways for system integration. Moreover, fostering cooperation with South African railway counterparts is pivotal for achieving seamless global integration. Bridging both borders into the 21st-century digital landscape promises to slash transaction costs, ultimately reducing product prices. We can strengthen Mozambique’s economy and promote progress by championing these initiatives.
How does the Port of Maputo ensure the safety of its employees and all incoming products to guarantee their integrity upon arrival in Maputo?
We adhere to the International Ship and Port Facility Security (ISPS) Code, established in the US after the September 2001 attacks, ensuring comprehensive security protocols. As an ISPS-compliant port, we prioritize safety and security, minimizing instances of cargo loss within the port premises. Our robust digital systems further bolster cargo security, whether handling containerized or bulk cargo, adding another layer of protection.
In addition to cargo security, we are deeply committed to road safety initiatives, recognizing it as a continent-wide concern. Through extensive campaigns, we actively promote road safety culture, understanding that it’s not just about rules but about ingrained habits and cultural norms. Our approach extends beyond the port, reaching communities to instill safer practices from the outside in.
Moreover, we emphasize the importance of cargo handling responsibility, highlighting the value of each load. Preserving the reputation of the port as a safe and reliable hub is paramount, not only for our operations but also for the livelihoods it sustains. Ensuring safety isn’t just a matter of compliance; it’s a fundamental aspect of our existence, reinforcing our commitment to maintaining a secure environment for all stakeholders.
With Mozambique extending MPDC’s Port of Maputo operation and committing to billions of dollars of investments, how do you assess the government’s support and incentives for fostering public-private partnerships?
The government has approved an extension until 2058, valued at approximately $2 billion annually, with a significant portion dedicated to infrastructure investment. This includes expanding railways and roads to augment our capacity. Currently, the port’s nominal capacity stands at 37 million tons, with plans to increase to 42 million tons by 2033 and 54 million tons by 2058 through these investments.
The government prioritized its interests in the negotiation process with MPDC but ensured substantial contribution to state revenues from port activities. The port pays variable rents to the Mozambican state based on gross revenue, leading to revenue generation and job creation. This mutually beneficial arrangement is a success for the country, as private management of the port does not burden operators with infrastructure costs. We must maintain the infrastructure in good condition for continued usability even after our tenure.
Our long-term investment and extension will help us focus on growth and improve the Port of Maputo’s positioning. To better serve the economies around us, we need an efficient railway system, digitized borders, streamlined processes and robust logistics.
Could you elaborate on any strategies you’re implementing to capitalize on the construction of the Lobito Corridor in Angola?
The integration with the Lobito Corridor presents a multifaceted process still in its conceptual phase. Initial considerations involve the integration of the railway network from Mozambique northward, extending connectivity to Zambia and eventually Angola. However, such initiatives entail comprehensive governmental coordination and are subject to national processes.
As a port authority, we aim to promote the Port of Maputo as a regional hub. While the financial impact may not be easily quantifiable, our efforts have been instrumental in positioning the port as a reference point within the region. Exporting the expertise and experience garnered from the Port of Maputo is a valuable contribution to Mozambique’s overall development goals. Thus, while our role primarily centers on port operations, our broader impact extends to showcasing the port as a model for regional maritime excellence — a significant project for the country’s economic advancement.
What investment opportunities do you see currently available for investors from the US within the Port of Maputo?
The primary investment opportunity lies in digitalization, an area where the US excels. Over the next three decades, remaining competitive will require embracing technologies like artificial intelligence. This presents significant opportunities for the American economy. For instance, our training center utilizes cutting-edge simulators supplied by American companies, highlighting the potential of software solutions. As ports increasingly shift towards software-centric operations, the demand for innovative systems grows. The US is already a key service provider for our port and there’s immense potential for further collaboration and investment in this space.
The port also plays a crucial role in terms of markets and maritime activities. How does the Port of Maputo compete in neighboring markets, to offer an efficient alternative for transportation and trade?
We’ve maintained a steadfast commitment to quality, ensuring the Port of Maputo operates seamlessly 365 days a year without interruption. Our focus on providing top-notch maritime transport includes significant investments in deepening and maintaining our channels to accommodate vessels efficiently.
To attract cargo to the Port of Maputo, land efficiency alone isn’t sufficient. We recognize the importance of offering an integrated solution. This entails minimizing waiting times at the canal, providing swift service and promptly releasing ships to facilitate their onward journey and revenue generation.
Understanding that port competitiveness extends beyond land operations, we’re also prioritizing initiatives on the seafront. For instance, we’ve conducted trials in the bunkering sector, enhancing service offerings to include fuel for ships. These efforts are part of a broader strategy to streamline services, ensuring seamless integration across port provisions. We’re committed to creating an integrated service that meets the evolving needs of maritime transport, both on land and at sea.
The port’s growth translates into benefits for its entire ecosystem. When we refer to the port ecosystem, we encompass not only port users and suppliers but also the surrounding community. Our journey has focused on transforming the Port of Maputo into more than just physical infrastructure — it has become a place where people enjoy being and an infrastructure that serves the community.
Our commitment extends beyond port operations to include social projects aimed at integrating the port with the surrounding cities. We believe that a port cannot thrive if it remains disconnected from the community it serves. This integration presents a significant challenge, but it’s one we’re dedicated to overcoming. We aim to ensure that the port is embraced and accepted as an integral part of the community where it operates.