By Irene Gaitirira
Published January 23, 2016
South Africa, Nigeria, Kenya and Ghana are the most promising markets in Sub-Saharan Africa in 2016.
A new survey of global logistics executives see consumer spending by a fast-growing middle class in these countries being as important a growth driver for Africa as mineral and resource demand.
However, poor infrastructure, lack of power generation and corruption continue to pose the most risk to African economies, according to the 2016 Agility Emerging Markets Logistics Index.
Despite recent growth and surging foreign investment, sub-Saharan Africa remains a challenging frontier for many. Only 21.2% of logistics industry executives surveyed said their companies have operations there. Another 12.7% said they are in the planning stages to enter African markets. More than 43% said they have no plans to set up in Africa.
â€œThe results show a serious disconnect between the perception of the market and actual opportunities. These are some of the worldâ€™s fastest-growing economies. Africaâ€™s requirement for logistics services and supply chain expertise is huge and growing every day. At the same time, many of the companies that need logistics to enter the market donâ€™t know how to get started in Africa or arenâ€™t willing to take the risk,â€ says Geoffrey White, CEO of Agility Africa. â€œThe market is open for first movers who can navigate risk and nurture African talent. The opportunity is for those seeking to build long-term, sustainable businesses that bring world-class practices and adapt to local conditions.â€
The Agility Emerging Markets Logistics Index, now in its 7th year, offers a snapshot of logistics industry sentiment and ranks the worldâ€™s 45 leading emerging markets based on their size, business conditions, infrastructure and other factors that make them attractive to logistics providers, freight forwarders, shipping lines, air cargo carriers and distributors.
The leading markets in sub-Saharan Africa are South Africa (No. 16) and Nigeria (17). South Africa may have Africaâ€™s most advanced logistics industry and transport infrastructure, but its economy has been hobbled by chronic power shortages, slumping commodity prices, a plunging currency and labour unrest.
Nigeria climbed 10 spots in the 2016 Index, tying Egypt (No. 22) for the biggest gain by any country in the seven years since the Index was first published. Nigeriaâ€™s enormous potential has become clearer since its recent decision to update the methods by which it collects economic data. Even so, its economy is heavily reliant on oil and has been hurt by low energy prices.
Other countries in the region fall toward the bottom of the rankings: Ethiopia (37), Tanzania (40), Kenya (43) and Uganda (45). Among countries in North Africa, Morocco ranked No. 20, trailed by Egypt (22), Algeria (30), Tunisia (36) and Libya (41).
Nigeriaâ€™s size and growth suggest it should rank near Brazil (No. 6) or Mexico (8) in the overall Index. But Nigeria is no more business friendly than Venezuela and Uganda, and its weak infrastructure, transport links and customs regime puts it with Bangladesh, Ethiopia and Tanzania in â€œconnectivity.â€
Among countries in sub-Saharan Africa, South Africa has the best â€œconnectivity.â€ In North Africa, Morocco has the best business climate and connections.
Transport Intelligence (Ti), a leading analysis and research firm for the logistics industry, compiled the Index.