Not only were new oil and gas (O&G) discoveries in East Africa a catalyst for investment into road, rail and pipeline infrastructure, but they also contributed to the region’s economic growth, with growth of 5.5% projected for this year and an estimated 6% to 7% for 2016.

Over the past ten years, O&G exploration in the region led to discoveries in seven countries, totalling billions of barrels of oil and trillions of cubic feet of gas.

Significant finds included more than 600-million barrels in Kenya, 3.5-billion barrels of commercially viable oil reserves in Uganda, 125-trillion and 7-trillion cubic feet of gas in Mozambique and Tanzania; respectively, as well as 60-billion cubic meters of methane gas in Rwanda.

In addition to these findings, reserves have been uncovered in South Sudan and Ethiopia.

Frost & Sullivan best practices research analyst Siphesihle Hlela said that, while these regions were overlooked historically, O&G companies were now starting to realise the untapped potential.

“With investments on the rise in East Africa, international energy companies, in turn, are exploring the logistical hurdles that mark the path towards setup and management of large-scale operations.

“To meet demand, global and local logistics service providers will need to develop flexible end-to-end solutions with a focus on developing local skills to service construction and exploration work prompted by the new discoveries,” he noted.

The public sector was investing heavily in major projects, such as the $3.8-billion Mombasa–Nairobi standard gauge rail line, which aimed to connect Kenya, Uganda, Rwanda and South Sudan, facilitating exports in landlocked countries.

This project alone was expected to raise Kenya’s gross domestic product growth by 1.5%, enabling an estimated yearly growth rate of 8%. Similar projects included the 2 935 km Mombasa–Kigali railway line that would drive the export of coffee, tea, agricultural goods, minerals and machinery from Rwanda.

Closer to the ocean, the Lamu port in Kenya and the Bagamoyo port in Tanzania were preparing for the ever-growing port capacity needs of the region. The Bagamoyo port alone would become the biggest container terminal in Africa, with a cargo capacity of 20-million twenty-foot equivalent units a year, 20 times larger than the Port of Dar es Salaam, that was also set to be upgraded.

Moreover, the Lamu Port Southern Sudan-Ethiopia Transport (LAPSSET) corridor project included oil pipelines to South Sudan and a railway to Ethiopia and Uganda. These ports would also facilitate logistics parks, which aimed to meet the growing trade volumes with the transport capacity and networks to meet logistics needs for the port.

Apart from these projects, vast numbers of ports throughout East Africa were either being built or upgraded.

“These infrastructure projects are particularly important as they will enable logistics companies to deliver equipment on-site to construction and O&G companies. It is estimated that, once completed by 2017, these projects will enable East African countries to generate an estimated $2.6-billion a year from incoming traffic, as a result of reduced transport costs along the North–South and Dar es Salaam corridors,” Hlela pointed out.

Further, he highlighted that projects, such as LAPSSET showcased the unity of the East African Countries’ union in its vision to increase connectedness and the ease of doing business between these countries, which symbolised a drive for regional rather than country-specific growth.

“These are a few flagship projects in East Africa that will simplify transport operations across borders through intermodal solutions for logistics companies and benefit the economies with a smooth flow of goods between countries,” he added.

Ultimately, these projects indicated a unique opportunity for global and local logistics companies to partner and participate as a way to close the gap in the supply chain that many logistics providers would need to meet the demand of industry sectors.

Hlela noted that with complex supply chains and logistics challenges, transport costs in East Africa can amount to 30% to 50% of the export value and, in some cases, up to 75% in land-locked countries.

“Delays are known to add additional costs estimated at between $400 to $500 per trip for freight forwarders crossing borders. Moreover, bureaucracy impedes logistics operations with nontariff barriers presenting unexpected delays,” he said.

These included customs clearance and multiple weighbridges and checks along main routes; most notably, the Mombasa–Kampala–Kigali highway.

“However, corruption is on the decline with bribes for trucks in transit falling gradually,” he noted.