Africa’s Emerging Markets
The logistics and transport industry in Africa is ready to move beyond the traditional hubs of Johannesburg, Cairo, Nairobi and Lagos as trade in Africa continues to present huge opportunities for both established and emerging markets. Namrata More … While logistics companies continue to explore emerging markets in Africa, regional integration will continue to play a […]
The logistics and transport industry in Africa is ready to move beyond the traditional hubs of Johannesburg, Cairo, Nairobi and Lagos as trade in Africa continues to present huge opportunities for both established and emerging markets. Namrata More …
While logistics companies continue to explore emerging markets in Africa, regional integration will continue to play a key role in unleashing the continent’s growth potential. Some of the areas being talked about and focused on include a continental free trade zone, single customs union, a common currency, all of which should significantly improve intra-regional trade, which presently is less than 20 percent. There has been some progress made by the East Africa Community comprising Kenya, Uganda, Tanzania, Rwanda and Burundi, who are working on developing a number of projects to improve the roads, ports, rail. According to the DHL Global Connectedness Index, Africa’s biggest challenge in terms of realizing its trade potential is an under developed infrastructure, but this is slowly improving as several Africa regions continue to invest large amounts of capital into infrastructure development. “In Africa, challenges to trade include congestion in major cities, such as Lagos and Nairobi, customs inconsistencies with regards to product classifications and duty and tax exemptions, which can lead to complex customs clearance processes, and a lack of air connectivity with just over 12 percent of cities served by just one flight a week,” says Charles Brewer, Managing Director, Sub Saharan Africa, DHL Express. Off late, the trend of outsourcing logistics has also steadily increased due to the specialization and complexity associated with integrated supply chain management. “Businesses are increasingly acknowledging that outsourcing this function allows them to focus on their core business. From the logistics landscape perspective, it’s difficult to ignore e-commerce on the continent, as it has become a way of life, as customers realize the safety, convenience and time saving benefits of shopping online,” Brewer adds.
DHL was one of the first international companies to set foot in Africa 37 years ago. Today, DHL operates in every market in Africa. “We employ more than 3,500 Certified International Specialists, operating out of more than 200 facilities, utilize 1,250 vehicles and are the only express carrier to fly our own dedicated aircraft, with 14 across Sub Saharan Africa,” says Brewer. South Africa, Nigeria and Kenya continue to be DHL’s largest contributors along with strong contenders like Mauritius, Ghana, Ethiopia and Zimbabwe. “We have seen significant growth in the technology, financial and health sciences sectors, not to mention robust growth in the energy sector – particularly due to exploration companies mobilizing new campaigns in countries such as Cameroon, Congo & Gabon,” adds Brewer.
Some of the biggest service providers like CEVA Logistics are also supporting their major multinational and local customers for many years. “Africa is a complex but attractive market, to which we have devoted considerable resource and effort. The structure we have adopted, working with strong local partners to complement our international network and activities, is highly effective and much appreciated by our customers,” says Jerome Lorraine, Executive Vice President Balkans, Africa, Asia, Middle East and Central Asia at CEVA Logistics. Despite the regional tensions in the North African market, Egypt continues to show a lot of potential.
Among the new markets Ceva Logistics has been active are Angola, Congo and Ghana, where more industrial and retail projects are being planned, while Mozambique is in the process of being established, with a planned start date for operations during the second quarter of this year. “All business is of interest to CEVA, whether for our freight management services or full logistics offerings. But we anticipate the strongest growth will be within our existing core competences: industrial, automotive, energy, oil and gas and retail,” confirms Lorraine. Mozambique and Angola are surely two very exciting markets where CEVA will be very active. “We foresee Africa as a whole expanding much faster than any other global market, and we intend to embrace this opportunity as a key element in our ambitious global development plans.” Going forward, the young and dynamic nature of many African markets will see entirely new generations of importers and exporters emerging, as economies and industrial activity develop. “CEVA has the patience, flexibility and knowledge to work with new young companies, and guide them as they take their first steps into the global trade arena.”
For Agility Global Integrated Logistics (GIL), Africa remains a key strategic focus. “We have invested US$70 million in developing capabilities and assets there since 2006. We have established our own operations in Kenya, Uganda, Algeria and Egypt through both acquisition and green-field investments. Our business in East Africa is making excellent progress,” says Sylvain Kluba COO Middle East and Africa & SVP – Africa. Agility is keen on growing its West Africa operations to service the growing oil and gas industry within Nigeria, as well as the growing consumer markets of Angola and South Africa. “Agility is also expanding its footprint to Tanzania and Mozambique. Mozambique presents a number of opportunities, particularly linked to the abundance of mineral resources,” says Kluba.
For the future, he views Tanzania as a viable future transport hub, with the potential to serve growing economies in the land-locked heart of Africa from Uganda on its north border to Malawi in the south.As with all emerging markets there are a range of challenges including political risk, weak corporate governance, macroeconomic volatility and a lack of IT infrastructure. However, there are also a number of positive developments, and progress is being made through the various African regional trading blocs. For example, The Economic Community of West African States (ECOWAS) recently announced plans to implement a single customs tariff regime for 2015. “African countries continue to establish political stability in recent years, improved governance and transparency and are becoming increasingly open to regional and global integration. This has attracted global investors seeking growth opportunities beyond the depressed Western markets of Europe and North America,” says Kluba.
Indeed,Africa is becoming a more viable and attractive destination even though it is still a fledgling market, it continues to develop and remains ripe with opportunity. At the same time, small to medium enterprises will continue to remain an integral part of the emerging markets.