Why invest in supply chain infrastructure? By Sarah Benson, Search Consultant
There are more than a billion people across 54 countries on a continent bigger than Europe, the USA, China and India combined, yet Africa is barely present on the map of world trade. When the Economist published a new report on emerging Africa, “Africa Rising”, they commented that “Africa can be a hard place to do business in”. It goes without saying that the continent’s terrain and geography have a huge impact on critical transport infrastructure and consequently translate into real costs for supply chains.
According to the World Bank, it takes just 12 days to transport cargo from Egypt at a cost of USD$625 and yet from Angola the same cargo will take over a month and cost three times as much. The high costs associated with supply chain and logistics networks is a global challenge and can be prohibitive to growth. In Africa there is an urgent need for industries to work more closely with government and state-owned enterprises so that companies can more effectively optimise their supply chains.
The realities of Africa’s changing economies is this: more than 70% of the world’s biggest consumer goods companies are already operating in Africa with observers saying that the retail markets will grow significantly over the next ten years. The unique opportunity presented by this burgeoning market is the development of a less formal market place. ‘Micro-distribution’ strategies are forming to enable reaching African consumers and as a way around less-developed supply chains.
In this new world there is a definite need for manufacturing to move closer to the customer base. Companies are returning to what was once the de facto strategy of establishing manufacturing operations in close proximity to their customers and using technology to harness information to develop greater efficiencies in supply chains e.g. carrying less inventory and therefore using less warehousing.
By US Army Africa from Vicenza, Italy [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons
Transport and Logistics companies now have a vital role to play in putting Africa in motion. It is proven that better transport and logistics have a profound impact on economic growth potential and now is the time for those companies to start developing their strategies around building a presence in Africa. In such a competitive and complex ecosystem, it will be the companies who build and nurture great partnerships effectively which will flourish in the coming years and will see logistics providers acting as partners with their clients rather than just service providers.
It goes without saying that Africa is becoming an increasingly important region for investors looking to venture into emerging markets, as more and more multinational companies are choosing to grow their presence within Africa. Doing so effectively will require substantial investment in supply chain and logistics across Africa. As such, is Africa the next land of economic opportunity or will the existing low connectivity between the 54 countries combined with poor internal infrastructure, be a hurdle too high to overcome?
By Sarah Benson, Search Consultant
Sarah joined Executives in Africa direct from the FMCG sector where she had a UK-wide remit, resourcing for Commercial, Manufacturing, Procurement, Supply Chain, HR and Marketing roles. Subsequently moving into the Drinks industry she covered senior management roles across Europe, Middle East and Latin America including Europe Country Managers, Commercial Managers in Latin America, Brand Directors as well as Senior Sales and Category roles.
Sarah’s passion lies in really understanding a client’s talent needs, from a business and cultural perspective, and matching that to both skill set, but more importantly, an individual’s character, in order to deliver the right overall fit to the opportunity. Bringing experience of psychometric assessments and job profiling, she has completed training with the British Psychological Society and is also a qualified NLP practitioner.
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