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Logistics professionals eye Africa’s growing middle class, but remain wary of entry

Logistics professionals eye Africa’s growing middle class, but remain wary of entry

Consumer spending fuelled by a rapidly-growing middle class is as important a growth driver for Africa as mineral and resource demand, according to a new survey of global logistics executives.

In the survey, which is part of the 2016 Agility Emerging Markets Logistics Index, industry executives rank South Africa, Nigeria, Kenya and Ghana as the most promising markets in Sub-Saharan Africa. Poor infrastructure, lack of power generation and corruption continue to pose the most risk to African economies, according to the more than 1,100 executives responding to the survey. It almost goes without saying that these factors are a strong deterrent to investors.

Despite recent growth and surging foreign investment, Sub-Saharan Africa remains a challenging frontier for many. Only 21.2 percent of logistics industry executives surveyed said their companies have operations there. Another 12.7 percent said they are in the planning stages to enter African markets. More than 43 percent said they have no plans to set up in Africa.

Geoffrey White, CEO of Agility Africa said: “The results show a serious disconnect between the perception of the market and actual opportunities. These are some of the world’s fastest-growing economies. Africa’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 don’t know how to get started in Africa or aren’t willing to take the risk.

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“The 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.”      

The Agility Emerging Markets Logistics Index, now in its 7th year, offers a snapshot of logistics industry sentiment and ranks the world’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 is home to the continent’s most advanced logistics industry and transport infrastructure, but its economy has been hobbled by chronic power outages, falling commodity prices, a plunging currency and labour unrest.

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Nigeria climbed 10 spots in the 2016 Index, tying with Egypt (No. 22) for the biggest gain by any country in the seven years since the Index was first published. Nigeria’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).                                 

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SOURCES: [Agility Africa]                        

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