Executive Briefings

Logistics Companies Find Much Positive About Africa, Report Says

In terms of logistics, Africa is one of the most exciting investment opportunities anywhere in the world, according to Sub-Saharan Logistics 2012, a report from Transport Intelligence, or Ti. Its untapped natural resources are vast, and foreign direct investment has poured in as Africans' purchasing power grows.

However, investors and logistics companies will have to adopt a more positive approach if they wish to exploit the region's opportunities, according to Ti's business development director, Mike Nordmann, a veteran of the African logistics market. "Many international logistics providers have either ignored Africa or served it at arm's length through partners or agents. 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 report identifies key reasons why Sub-Saharan Africa has attracted so much attention:

• Many countries in the region, such as Nigeria, are characterised by an increasingly rich 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 high-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 & 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.

Of course, 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.

Sub-Saharan Africa Logistics 2012 is available online from £1,095.

Source: Transport Intelligence

However, investors and logistics companies will have to adopt a more positive approach if they wish to exploit the region's opportunities, according to Ti's business development director, Mike Nordmann, a veteran of the African logistics market. "Many international logistics providers have either ignored Africa or served it at arm's length through partners or agents. 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 report identifies key reasons why Sub-Saharan Africa has attracted so much attention:

• Many countries in the region, such as Nigeria, are characterised by an increasingly rich 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 high-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 & 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.

Of course, 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.

Sub-Saharan Africa Logistics 2012 is available online from £1,095.

Source: Transport Intelligence