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Consumers key to African growth

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Consumers key to African growth

Consumer spending by a fast-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.
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.
“The results show a serious disconnect between the perception of the market and actual opportunities,” says Geoffrey White, CEO of Agility Africa. “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.
“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 seventh 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.
China, the world’s second-largest economy, remains the leading emerging market by a large margin. Among the countries at the top of the Index rankings this year, UAE (number two), India (three) and Malaysia (four) leaped over the commodity-dependent economies of Saudi Arabia (five), Brazil (six) and Indonesia (seven). Rounding out the top 10 are Mexico (eight), Russia (nine) and Turkey (10).
The leading markets in sub-Saharan Africa are South Africa (number 16 overall) and Nigeria (17). South Africa has Africa’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 (number 22 overall) 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).
The Index also found that, among countries in Sub-Saharan Africa, South Africa has the best “connectivity”. In North Africa, Morocco has the best business climate and connections.