Supply Chain Challenges Africa – reaching your customer base in fragmented markets

As an expatriate based in Ethiopia in the late nineties, just-in-time (JIT) delivery seemed like a Nollywood (Nigerian film industry) fantasy. With most of our raw material imported, the lead times could be anything from four to six months. Based in a landlocked country also didn’t help and added significant cost to the business. Even today, freight cost is higher from Djibouti to Addis Ababa than China to Djibouti.  With a significant increase in traffic, African ports are increasingly struggling under the load.  According to the World Bank, West Africa has seen traffic increase by 364% from 1995 to 2005. African ports are also hamstrung by old equipment, creating bottlenecks in handling cargo. As customs and regulatory environments differ widely from port to port, it becomes imperative to find a logistics partner that understands lead times and processes. Finding the right third party logistics (3PL) can be a daunting undertaking.

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However, for most companies, getting goods into the country is just one step in the supply chain. Finding the right Route-to-Market to customers and consumers is a whole different challenge. A lot has been said about the growth of modern trade in Africa. The expansion of South African retailers such as Shoprite Checkers, Massmart, and other regional players such as Nakumatt (East Africa) and international players such as Carrefour (North, West & Central Africa) are receiving increased attention. For any executive on a whistle-stop tour of the air-conditioned shopping malls of Accra, Lagos and Nairobi, it might appear that the future is already here. While Accra Mall, Nairobi’s Sarit Centre and The Palms in Lagos are windows of things to come, the reality is that modern trade is still in the very early stages of development. The numerous traditional trade outlets (e.g. small groceries, mom & pop shops, dukas or souks) remain the biggest segment of the market. View Full Article 

 

Strategic Marketing Africa, Q2 2014

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