Africa’s Supply Chain Challenges
Africa currently offers investors unparalleled growth, but supply chain hurdles are preventing many businesses from making inroads to the continent. It is, however, possible to overcome these.
Africa is currently viewed by the rest of the world as offering great, unchartered expanses of opportunity. In 2013, according to the African Development Bank, Africa maintained an average growth rate of about 4%, compared to 3% globally. Sub-Saharan Africa performed even better at 5% on average. There is no question that Africa is the place to be.However, one of the most significant challenges that businesses face when considering expanding into Africa is logistics. Supply chains as the rest of the world knows them simply do not exist in Africa. Transport infrastructure, goods supplies and markets are entirely different here. This presents some problems.
For one thing, transport in Africa is expensive. In some cases, it is more expensive to move goods between African countries than it is to move them between Africa and other continents. Ports, airports and road and rail infrastructure struggle experience bottlenecks as they struggle to cope with the inflow of goods as a result of burgeoning business on the continent.
In addition to this, “Africa” is not a single, homogenous entity – in fact, as far as customs and regulatory environments go, Africa is far more diverse than, for example, Europe. This means that transporting items across multiple borders can present overwhelming bureaucratic complexities for the uninitiated.
This is not intended to deter investors from seeking growth opportunities in Africa. Rather, it is meant to highlight the value of preparedness. A few factors will mean the difference between success and failure in Africa, and working around the logistical challenges is key among these.
Here are some of the vital points that need to be considered before setting foot onto the continent (or north of South Africa, if that’s the case).
The first point is that local expertise on the ground in every location is invaluable. While there certainly are experts on “Africa”, nothing beats the knowledge contained within each country by the people who transact in that environment every day. To establish a supply chain in Africa, enlist a network of experts in every location in which you want to operate – or use a logistics company that has these – for your best chances of actually getting things done.
Next, do your research. While you may be relying on local expertise in each country, you cannot go blind into any new environment. There is a wealth of information available online, and you can broaden your own understanding of any nation by meeting with locals – government officials, businesspeople, men on the street – and picking their brains about the business and regulatory environment.
Finally, be willing to be creative and innovative. Working in Africa requires a dauntless entrepreneurial spirit. A solution that works one week may not work the next. So once you’ve established your network of local experts, be willing to continue to engage with them, to find workarounds and to establish new relationships every time you encounter a hurdle.
With the right vision, mindset and willingness to invest in the appropriate expertise, it is possible to take advantage of all the opportunities and growth that Africa currently offers.