Not to be ignored: Africa is the promised land for investors, logistics

AFRICA is being targeted as an emerging market and investors and logistics companies are being urged to adopt a more positive approach if they wish to exploit the region's opportunities.

"Many international logistics providers have either ignored Africa or served it at arm's length through partners or agents," said the UK's Transport Intelligence business development director Mike Nordmann.

"However, this approach is increasingly difficult to sustain, as global clients need logistics providers willing and able to develop supply chains across the continent," he said.

Ti's latest report identifies key reasons why Sub-Saharan Africa has attracted so much attention. It highlights that many countries in the region, such as Nigeria, are characterised by an increasingly affluent middle-class. This has boosted sales of consumer goods, most of which are imported from China, Europe and North America. Global manufacturers are increasingly taking the market seriously and enhancing or building their marketing and distribution channels.

South Africa, the most developed country in the region, has large and growing manufacturing sectors, such as pharmaceutical, chemical and automotive. This provides opportunities for inbound logistics services.

The perishables sector is of major importance to countries in East Africa, especially Kenya and South Africa. A large proportion of fruit and vegetable exports are air freighted to developed markets, primarily in Europe.

As far as the hi-tech industry is concerned, governments in many countries have plans for new "technology cities", aiming to create a "silicon savannah". Multinational companies are also investing on a larger scale. All the while, the mobile phone boom will continue.

The exploitation of natural resources will continue to characterise economic growth in Africa over the next few decades. This will provide a range of opportunities for logistics providers including transporting mined commodities by road or rail, handling commodities at port terminals, supplying spare parts and delivering heavy and out-of-gauge mine equipment and machinery to name just a few.

The oil and gas industry in Sub-Saharan Africa is concentrated in just a few countries. The region's largest oil industries are found in Nigeria and Angola while the largest gas sector can also be found in Nigeria. The logistics market, both project and spare parts, is likely to grow.

The report's authors add: "The challenges to doing business in the region are still high. South Africa offers a more mature and developed corporate environment, which is not replicated in many other countries. Weak transport (road, rail, air and sea) infrastructure, lack of quality service providers, a disparate population, security issues and corruption combine to make doing business highly problematic."