As global competition increases, logistics and supply management decision-making has become increasingly complicated; this is particularly true for Africa – a major trade hub. The peculiarity of the African market coupled with its fluid nature makes it imperative to understand the trend, issues, and challenges of logistics and supply chain management. Though African trade regarding export and import is still a meagre proportion of the global international trade market, foreign trade constitutes 50% of most sub-Saharan African countries’ Gross Domestic Product. Thus, the existing opportunities in the trade and logistics space are vast. Undoubtedly, Africa’s economy is growing, but poor infrastructure and challenging business conditions persist. For any organisation that wishes to gain or optimise existing market share in Africa, a creative and flexible approach to logistics and supply chain processes needs to be adopted. The need to increase efficiency from African logistics service providers through outsourcing is also crucial to any organisation that seeks to focus on key skills and core competency. Dr Muogboh and Dr Ojadi provide useful insight on this in the article “Indigenous logistics and supply chain management practices in Africa”, a chapter contribution to the book entitled, Indigenous Management Practices in Africa: A Guide for Educators and Practitioners, Emerald Group Publishing.
To explain the complexity of logistics management in Africa, the authors provide a historical and cultural perspective. Business implementation may sometimes be slow and lengthy because of customary procedures and communal decision making within certain regions in Africa. A common practice referenced by the authors is the business relationships between local logistics agents and foreign companies. These relationships tend to be less formal – in many cases, no contracts are formally drafted between the parties.
There are challenges specific to different African regions. South Africa has the most developed logistics infrastructure in Africa owing to the intermodal transportation system that allows goods to be transported through multiple modes, but the country cost of transportation keeps increasing. In the East African region, a well-structured transport network exists between Kenya and Tanzania which makes logistics processes relatively faster. However, Forex fluctuation in the supply chain, as well as lack of transparency between logistic partners and parties to the supply chain, pose a major challenge. Sea piracy and kidnapping were also highlighted as threats in the sub-regions of Syria and Somalia.
Issues relating to infrastructure, bribery & corruption and bureaucracy cut across different regions; though the challenges appear to be more prevalent in West and Central Africa. The frequent change in policies as witnessed in Nigeria and Benin over the past two decades is detrimental to logistics management and trade in these regions. Other specific issues identified within these two regions include insecurity, policy uncertainties, and bureaucracy.
Intra-African trade restrictions encourage cross-border smuggling, bribery, and extortion in both countries. Conversely, when trade restrictions were lifted in South Africa, the nation gained more traction in the global gold and diamond export market. Today, South Africa is Africa’s biggest exporter and the world’s biggest producer of gold and diamond.
The increasing trade flows within Africa creates vast opportunities for logistics and supply chain management. The authors identified three opportunities in African logistics and supply chain management – New Ports, Transnational highways, and Rails. Of particular note also are the transnational passageway projects linking African countries via road, for example, the Trans-Sahara Highway and Lagos-Mombasa Highway, Trans-Sahelian Highway, and high-speed rails. These opportunities are expected to enhance logistics flow. According to the authors, organisations can successfully navigate the complexities in logistics and supply chain management in the African market by building a partnership, integrating security plans to mitigate the risk of loss of goods/personnel and taking advantage of emerging trade corridors such as Ghana/Nigeria, Kenya/Uganda, and South Africa. Essentially, western logistic practices need to be adapted to indigenous practices for maximum value.
How would you rate the accessibility of export markets such as Asia, United Arad Emirates (UAE), and European Union etc.?
Based on the export promoting focus of the Nigerian government; in what ways do you think organisations such as the Nigerian Export Promotion Council (NEPC) can aid exports by Small and Medium Enterprises?
Evidence has shown that the scope, speed and scale of African countries investment in the global economy has increased, while the debate as to whether they are improving and becoming relevant in the international business environment rages on; how do you think the African Union can further foster intra continental trade?