The Roadblocks to Efficient Logistics in Africa

Africa used to be the heart of global trade. Remember the legendary trans-Saharan trade routes? Logistics is the lifeblood of modern commerce and has a rich history dating back to ancient civilizations. From the Silk Road's camel caravans to the Roman Empire's intricate road networks, this sector has always been a key driver of economic growth and cultural exchange.

Fast forward to today, while the world has witnessed significant advancements in logistics, Africa continues to face unique challenges that hinder its potential for economic growth and development. With a massive population, a ton of resources, and a growing middle class, you'd think we'd be dominating the global supply chain.

But what's the deal? Africa's potential remains largely untapped. Why aren't we leading the charge in global logistics? What are we missing? Is it corruption, a lack of investment, inadequate policy frameworks, or the lack of skilled labor? Or perhaps it's a combination of all these factors and more.

A Bumpy Road to Prosperity

One pertinent hurdle for smooth logistics in Africa is, and your guess is right, the lack of good roads, railways, and ports. These weak links slow down the movement of goods and make them more expensive. This is especially tough for businesses in rural areas, where getting products to market is harder. Just like in the Agricultural sector where a farmer in a remote village loads a truck with fresh produce after an abundant harvest. If the roads are bumpy and the nearest market is far away, getting the goods there takes more time and money. This can lead to higher prices for consumers, lower profits for farmers, and less fresh food on the table.

Africa needs to invest in better infrastructure. This means building standard roads, expanding railway networks, and improving the ports.

Navigating the Complexities of Intra-African Trade

This is also why it is crucial we do all we can to make AfCFTA work, but let us emphasize how hard it is to move goods across borders, as rules and taxes are complicated and take a long time. This is bad for businesses that sell things in many different African countries, as they have to deal with so many different rules.

A company that trades commodities in Kenya and wants to sell them in Gambia will have to deal with customs officials in both countries, who might charge taxes (in most cases, even extra) or make you wait a long time to get that commodity through the border. This will make the product more expensive for the end consumer and less competitive in the market. Also, different countries have different rules about how to label products, what materials to use, and what safety standards to meet so it is confusing and time-consuming for businesses, especially on a micro-level.

Even the banking systems in many African countries have yet to bank the unbanked, making it hard to pay for goods and services across these borders. This usually leads to delays and extra costs for businesses.

The Cost of Corruption

We can all agree that corruption remains a persistent problem in many African countries. Bribery and other forms of corruption delay customs clearance, increase the cost of doing business, and undermine the rule of law. This creates a hostile environment for businesses and discourages investment in the logistics sector. For instance, this has turned into a norm, where business owners are forced to pay bribes to customs officials to expedite the clearance of their goods. When you hear people complain about the hostility they experience while doing business in Africa, they are not kidding, it is as real as it gets.

When you engage in a deep analysis of why logistics innovations aren’t scalable in Africa, you find that these challenges we shared earlier created a complex web of problems that contributed to most of these businesses closing shop.

To reiterate, there are;

• Poor infrastructure, bureaucratic hurdles, and security concerns automatically drive up operating costs.
• The lack of real-time tracking and visibility into supply chains makes it difficult to manage operations effectively.
• The challenges associated with logistics in Africa can deter investors, as it is becoming more difficult to justify investments in the sector.
• A shortage of skilled logistics professionals can limit the growth and innovation of logistics businesses.

The Obstacles for African Logistics Startups

While traditional logistics players face numerous challenges, some existing startups are addressing the continent's logistical needs. These innovative companies, with technology and a fresh perspective, are working to improve efficiency, reduce costs, and enhance the overall customer experience.

One of these startups is Jumia. While Jumia has made significant strides in e-commerce in Africa, it also faces logistical hurdles. These include the lack of reliable transportation infrastructure, particularly in peri-urban areas, which can lead to delayed deliveries and increased costs. Jumia must navigate complex customs procedures and regulatory environments in different African countries, which adds complexity and time to its operations.

Kobo360, a Nigerian logistics startup, has also experienced its share of challenges. Infrastructure limitations, such as poor road conditions and limited rail networks, have impacted the efficiency of Kobo360's operations. Moreover, regulatory hurdles and inconsistencies in customs procedures may add delays and costs to cross-border shipments. The lack of a robust payment infrastructure, particularly in rural areas, in one way or another, may also be hindering Kobo360's ability to collect payments from customers and pay its drivers and partners.

In these critical times, governments, businesses, and international organizations need to work together to heavily invest in addressing these challenges, which will substantially create jobs, reduce poverty, and improve the lives of millions of people across the continent.