Trade Knowledge

Africa Logistics can be Challenging but are Getting Better
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 If you’re interested in a specific country or regional market, the best thing to do is start your research there.  You can gather information for your Africa business plan by contacting your national government’s trade promotion organization.  In the U.S., it’s the U.S. and Foreign Commercial Service, which has representatives in many African countries, chief among them South Africa, Nigeria, Tanzania, Kenya and Angola.  They also provide good coverage in North Africa, where logistics tend to be better thanks to proximity to Mediterranean shipping lanes.


 

Extensive reports on these countries are available online, and there’s nothing to keep non-U.S. residents from accessing and learning from them. They’re updated annually. In addition, the CIA Fact Book is quite good for the political and economic overview, as are the country sections of the World Bank website.  There’s one for every country in Africa. Together, you’ll get an accurate, fulsome picture of what’s going on in the country, including up to date reporting on infrastructure issues, which have for years added to the cost of doing business there. Poor roads, unpredictable cold chains, mismanagement of railroads, outdated customs services, and corruption make transporting goods much more unpredictable than in other parts of the world.

 

That said, the situation is improving.  Trade facilitation is a big priority of the WTO, and members have agreed on a plan to address some of the challenges listed above.  Developed countries have pledged support, especially for upgrading customs processes which tend to be a bottle neck in many African countries where transaction costs are high and border delays long.  This effort began only recently, and it will take some time to show results.

 

They’ve been working on the railroads

 

The other interesting development is the money China is pouring into the country for infrastructure projects.  China wants to get resources out of Africa, and the way to do it is to upgrade railroads, sea ports, airports and highways. These investments are part of the One Belt, One Road initiative, an ambitious scheme to link the world to a resurgent China.  Of course, they will expect things in return, but in the meantime non-Chinese and non-Africans can take advantage of the upgrades.  Construction of new rail lines is one thing to watch, as the Chinese are eager to sell technology to African countries in order to get their goods to the sea. The long-term costs to the U.S. and Europe of ceding the investment high ground to China is a topic for another day, but if China can make it a win for Africa, more power to them.

 

Logistics giants such as FedEx, UPS and DHL have been working in Africa for years and know their way around.  They are good at getting high value shipments in and out but can also do bulk items. Freight forwarders with specific expertise in Africa are another good option but do make sure they know Africa.

 

Your customer or partner in Africa may also be well schooled in all aspects of doing business in their market.  If they’re not, you might look for another partner.  Your embassy in country may have advice on who’s good to do business with and who’s not.  Don’t hesitate to use them for vetting purposes.

 

Financing may be important, both for working capital and especially for insurance against non-payment, loss and other unplanned setbacks.  There are government programs to make sure you get the coverage you need without breaking the bank.

 

Africa is too big and changing too quickly to ignore.  One day in the not distant future, it will have the world’s youngest population and some of the best growth rates.  Put getting up to speed on Africa on your to-do list.
( Melissa )05 Jul,2018

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