Transport & logistics as drivers of investment potential in Africa

0
114

Africa, with its fast-growing markets, has been considered the latest land of opportunity. But a continent with over 50 countries and low connectivity between them, means that development from place to place is highly varied, making it difficult to assess how much opportunity in fact exists. Despite the sheer size of this continent, it still isn’t a major source of exports, with limited consumer markets as compared to Asia, Europe, and the Americas. Consequently, the continent appears to be of little interest to transportation and logistics industries.

Or so it seems.

PwC’s professionals are experts in a range of industries that function within Africa. The company has made it their mission to understand the ins and outs of what this vibrant continent has to offer. Skilled at conducting the necessary research to see what’s going on behind the mask, PwC benefits their clients by providing services that speak to the realities on the ground, rather than just impressions, generalisations, and hearsay.

In their latest report, Africa Gearing Up, PwC delves into the future prospects in Africa for the transportation and logistics industry. Focusing their attention on 10 selected economies on the African continent, they bring to light what these economies’ demographic and economic situations are, the trading and business frameworks of each country, as well as their transport infrastructure.

PwC’s assessment of these factors enables African businesses and investors to analyse future markets and understand both relevant market risks and key opportunities. The big picture reveals that there is reason for optimism in Africa’s growth prospects.

While the continent’s history of oppression and strife led to the Economist labelling Africa the “hopeless continent” as recently as 2000, 6 of the 10 world’s fastest economies were situated in Sub-Saharan Africa between 2001 and 2010.

What does this mean for transportation and logistics companies?

While the African environment presents challenges, it also offers opportunity. The challenges can be summarised as follows:

  • The discrepancies in GDPs are significant, with South Africa reaching a GDP of US$400 billion and the Democratic Republic of Congo only achieving a GDP of US$18 billion.
  • Most people in African countries are not above subsistence level. In 2010, 84.5% of Nigerians lived below the $2/day poverty line, and in Mozambique only 2.6% of the population is considered part of the “stable middle class”.
  • The terrain varies greatly, from desert to rainforest, which impacts critical transport infrastructure in countries like Algeria and the DRC.
  • There is enormous diversity with regard to “soft factors” like customs and trade facilitation. South Africa ranks 23rd in the world, while the DRC performs dismally at 143rd.

These drastic changes from country to country brings home the fact that any sensible business or investor needs to know their stuff to make the most of Africa. The latest PwC report provides clients with a snapshot of the range of business conditions and opportunities across the continet, isolating the patterns of particular industries, while pointing to room for development with regard to various forms of transport.

Africa’s infrastructure falls behind that of the rest of the world, which means that transport and logistics companies need to become acquainted with the local constraints to be effective. This includes the following realities:

  • Most freight in Africa is transported via roads, the majority of which are unpaved or in poor condition. The situation is particularly concerning in the DRC and Angola.
  • Where roads are in a decent state, road maintenance is becoming a problem.
  • The rails in Africa are generally in even worse condition than the roads.
  • Ports are definitely the most important entry point to Africa, as most goods travel by ship, but currently there aren’t enough ports to handle existing traffic. There are plans underway to change this situation.

Creating functional logistics in Africa is evidently an enormous challenge, requiring significant financial backing, political consent, planning capacity, and subject-matter expertise. The government and private sectors are also required to work together.

Given the complex nature of this environment and the significant discrepancies between countries, there are few transportation and logistics companies who have adopted a comprehensive strategy that would allow them to establish a permanent presence in Africa. But clearly there is an enormous amount of unlocked potential that these companies have the power to set free.

PwC’s findings are crucial to enabling strategies that work, and through their suite of professional services, they’re ideally suited to acting as a long-term partner to facilitate success. Start building a better future by choosing PwC and find out more about their professional services by clicking here.

LEAVE A REPLY

Please enter your comment!
Please enter your name here