In its simplest form, a supply chain refers to the sequence of processes involved in producing and distributing a commodity. In 2020, the global supply chain management market was valued at $15.85 billion. By 2026, the value of the global supply chain market is expected to reach about $31 billion.
Seeing how significant this is, it’s important that we address the importance of innovative supply chain processes for Africa so that its economy and the people can benefit from such a huge market. In its 2023 report, the United Nations Conference on Trade and Development (UNCTAD) revealed that Africa could emerge as the new force in global supply chain if African economies can harness key market and investment trends by driving investment in large-scale private investment, removing regulatory barriers to trade and putting in place regional industrial development plans.
In light of UNCTAD’s recent projections on the bright future of the African supply chain ecosystem, African policymakers will have to intensify their efforts concerning putting supply chain management in Africa on safe footing. The rest of this article will identify the requisite policy actions to help Africa overcome its many supply chain hurdles.
Read also: Positioning Africa as the next global supply chain hub
Policy actions that can help Africa overcome its supply chain hurdles:
1. Addressing the state of logistics on the continent
Poor logistics continue to block the sweeping wave of economic prosperity across the length and breadth of the African continent. In the paper “Associations between Logistics and Economic Growth in Africa,” African economists Chengete Chakamera and Noleen Pisa argued that five of the six key logistics performance indicators continue to be debilitated in 32 African countries, especially between 2007-2018.
According to economists, the economic growth potential in African countries depends mainly on improvements in logistics performance. Thus, prioritizing logistics efficiency can significantly improve Africa’s long-term growth and economic development. Improving regional transport corridors, building rural roads, embarking on operations that permit the integration of different modes of transport, carrying out cross-cutting road infrastructure rehabilitation and maintenance programs, and engaging in public-private partnerships for the development of multi-sectoral projects are just a few of the ways by which African policymakers can significantly address the state of logistics on the continent.
2. Improving the use of technology on the continent
The economic future for Africa looks alluring while laced with a few roadblocks. Yet, adopting digital technology innovations is one of the most reliable ways African countries can face the future with boldness, certainty, and equanimity. The World Economic Forum (WEF) confirms that African countries need to invest more in research and development by seeking local and international partners to offer investment support to create home-grown digital solutions.
In a nutshell, it is a fact that for Africa to achieve its sustainable development goals (SDGs), mitigate the effects of climate change, and lift its teeming population out of poverty, innovative technological solutions must be at the heart of Africa’s economic policy.
Read also: Managing the supply chain and outsourcing for businesses
Currently, sub-Saharan Africa (SSA) displays the largest gap between the availability of digital infrastructure and the population’s actual use of digital technology. For instance, while 84 percent of the inhabitants of sub-Saharan Africa had some level of 3G mobile internet connectivity, only 22 percent of the population used mobile internet systems at the end of 2021. Mobile internet usage in South Sudan stood at an abysmal average rate of 6 percent.
To transform internet availability into job growth, African policymakers must create systems that ensure affordable access to digital skills and digital technologies that meet the needs of Africans.
Public investments that support digital economy ecosystems like Wi-Fi stations and electric charging booths can also help to close the African digital divide and unleash tremendous economic potential for Africa’s burgeoning population.
3. Connecting Africa’s fragmented markets
A low level of connectedness remains an existential bane against the development of the African supply chain management ecosystem and, by extension, the African economy.
Due to the fragmented nature of internal African economics, most African countries still economically depend on export trade with their former colonizers. Of course, this economic trajectory is only possible because the colonizers initially designed the trade routes that underpin African business with the West to facilitate the movement of raw African resources to developed European and American markets.
For Africa to achieve its sustainable development goals (SDGs), mitigate the effects of climate change, and lift its teeming population out of poverty, innovative technological solutions must be at the heart of Africa’s economic policy
To break the race to the bottom involving the export of raw materials to Western countries, African countries must massively scale up their inland trading system, especially in a way that reduces market fragmentation and grossly boosts connectedness. As a matter of utmost exigency, African governments must invest in new infrastructure that brings down artificially constructed colonial borders and raises the level of trade relations between African countries and their neighbours. Indeed, only by doing so can the African Gross Domestic Product (GDP) witness a massive boost.
Read also: Bringing sustainable supply chain practices to Africa
The most assured way African countries can reduce market fragmentation and boost interconnectedness is by reducing strenuous visa requirements, easing border controls between African countries, and improving African transport infrastructure.
On arduous African customs procedure, studies reveal that, on average, a customs transaction in Africa involves documentation with 20 to 30 different parties, 40 documents, 200 different data actions (30 of which are repeated), and quite terrifyingly, the re-keying of as much as 70 percent of all the manually collected data at once.
The customs-related delays across Africa, equivalent to about 85 km of travel distance, inevitably create nefarious, expensive, and complex trading systems. Little wonder the cost of moving money between Tanzania and Rwanda is eight times more than that between the UK and Pakistan. To remedy Africa’s cumbersome trade connections, border posts, and customs procedures must be radically improved. This will instantly boost African governmental revenues by up to 25 percent and rapidly accelerate economic development across the continent.
In conclusion, the future of the African economic landscape continues to look promising. Even though, the supply chain management system that underpins the African economy still faces long-standing challenges. Despite these obstacles, adopting the policy actions described above will result in smooth sailing for Africa’s economic posterity.
