The expansion of the Suez Canal will also affect trade in sub-Saharan Africa

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The expansion of the Suez Canal will also affect trade in sub-Saharan Africa

The Suez Canal Authority released a statement saying that transit charges for tankers passing through the canal would increase by 15%. A 10% increase will be implemented for bulk carriers and tourist vessels. The increase will be effective from January 1, 2023

Although it was initially perceived as a sub-regional problem, its impact could extend to the whole continent, particularly in East Africa.

The chief executive of the East African Shippers Council (SCEA), Gilbert Lagat, noted that East Africa depends on ports for exports to Europe and imports from Asia. Indeed, the increase in transit fees is expected to affect East African traders.

“East Africa depends on most of its imports from Asia, which uses an alternative channel, where goods exported from the region must pass through the Suez Canal. This will complicate exports and some vessels may change destination due to economies of scale. Dr. Lagat.

“We hope that we as shippers will find a solution or renegotiate with the authorities for a better rate.” she added.

East African exports to Europe mainly include agricultural products. Crops such as coffee, tea, tobacco, cut flowers, fruits, vegetables and fish. Others are textiles and clothing, and handicrafts, the region’s main exports abroad.

Subsequent increases in transit fees are the result of global inflation. The head of the Suez Canal Authority, Osama Rabi, said; “This increase is inevitable and necessary in light of current global inflation rates.”

However, experts point out that the fee hike will not have a massive impact. Tim Huxley, president of Mandarin Shipping, told CNBC that “the price of oil is currently falling and so if the price of the competing channel (which circles Africa) itself goes out, the authority of the channel will be the loser”. Several other analysts share his feelings.

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