Big 10, that’s how we’ve classified the feature on Africa’s Supply Chain Leaders.
Ethiopia Airlines’ rapid innovation and revenue performance during the Covid’19 pandemic favoured the government-owned and operated airline group. Egypt found Swvl’s rank as the largest Middle Eastern Unicorn to go public on the Nasdaq Stock Market in March this year, and Bollore Logistics’ unmatched African network plus its recent acquisition by the Mediterranean Shipping Company, echo the sentiment that Africa’s supply chains are on a high innovation trajectory, as the industry organises around a new wave of technology and policy disruptors.
Rwanda’s agenda, to attain middle-income status by 2035 and upper-income status by 2050, is an indication of the policy and governance drivers that have earned the country its nickname – Africa’s Singapore. As usual, this edition shares a women’s perspective, highlighting the key markers of gender-responsive sourcing in Africa. Although public procurement comprises 30 to 40% of GDP in developing countries, only 1% of the $11
trillion spent annually on public procurement is awarded to women-owned businesses. Factors preventing women from entering and fully participating in public or corporate supply chains include; lack of financing due to institutional bias, lack of collateral, and cultural norms.
We round off with an SME spotlight and a snapshot of Supply Chain Educators in Africa.
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Awarded best airline in Africa for three years in a row, Ethiopian Airlines, originally established in June 1945, had its first scheduled flight in April 1946 and has since evolved to become the largest aviation group in Africa; serving 127 international, 62 African and 22 domestic destinations as of June 2020.
The company group, wholly owned by the government of the Federal Democratic Republic of Ethiopia is one of only three airlines in the world to have made a profit in 2020 (fiscal year ending in June). At the height of the covid-19 crisis, and without a bailout, the airline maintained its 17,000-plus workforce and sustained positive revenue performance by rapidly growing its cargo transportation business.
In line with its mission to be the global connector of people and goods with award-winning services in all parameters, the airline group combines passenger and cargo transport with aviation training, flight catering, maintenance repair and overhaul (MRO) and ground service operation.
The Skytrax-certified four-star global airline reported $3.5 billion in revenue in 2021.
Uber’s 2013 launch in South Africa, spurred rapid expansion across 7 other African countries - Egypt, Nigeria, Kenya, Ghana, Tanzania, Uganda, and Ivory Coast. Its over 1 billion rides feat, attained in May this year solidifies its position as the biggest transport mobility-as-a-service provider on the continent, amid market frictions.
With stiff competition from Bolt and local players such as Kenya’s Little Cab, Uber’s pricing and incentive models, have been reported to affect drivers’ earnings, and undermine workers’ rights. The company contends with unfair rewards claims, constrained by an operating environment where drivers are hardly ever car owners themselves and therefore subject to steep vehicle financing and rental obligations which often leave cab drivers in Africa with little compensation for their work, compared to owner-driver counterparts in other parts of the world.
Despite these challenges, the American brand continues to entrench its African footprint; expanding to over 30 cities across its major markets in the past year; 21 cities in South Africa, 4 cities each in Kenya and Nigeria, and 2 in Ghana. Uber’s head of communications for East and West Africa Lorraine Onduru in a statement shared with TechCrunch credits the company with creating over 6 Million economic opportunities in over 50 cities across sub-Saharan Africa.
Found in Egypt in 2017 and headquartered in Dubai, Swvl is a global provider of tech-enabled mass transit solutions, and the largest Middle Eastern Unicorn to go public on the Nasdaq stock market in March this year, backed by an all-female special purpose acquisition company Queen’s Gambit Growth Capital, SPAC merger, which valued the brand at $1.5 billion.
With over 100 million bookings since its inception, SWVL delivers intercity and intracity mass transit options at a fraction of the cost of private transportation. Its platform provides semi-private alternatives to public transportation for individuals who cannot access or afford private options.
The company’s ride-hailing platform for private buses, is similar to Uber’s model for taxis, offering more flexible schedules and routes than public transportation while catering to individuals, businesses and schools. They operate in 115 cities across Europe, Africa, Asia, the Middle East, and Latin America.
Evolving from the ownership transfer of two pioneer railway stations situated in the Cape and Natal in 1872 and 1977 respectively, and several restructurings in the 1970s and 1990s, Transnet SOC Ltd. was formed on the 1st of April 1990 after 80 years of government and parliamentary control. Self-described as the largest and most crucial part of the freight logistics chain that delivers goods to each and every South African, Transnet remains a state-owned entity operating Transnet Freight Rail, Transnet Rail Engineering, Transnet National Ports Authority, Transnet Port Terminals, Transnet Pipelines and Transnet Property.
Despite a net profit of R5 billion in 2021, a reversal from the R8 billion in losses in the previous financial year, reports indicate that Transnet’s monopoly has been questioned on account of performance inefficiencies and corruption allegations. The cost of an inefficient Transet to the South African Economy is estimated at R385 billion annually or approximately 10% of the country’s GDP according to Professor Jan Havenga, head of logistics management at Stellenbosch University cited in BizNews.
The company’s “Transnet’s 4.0 Strategy” targeted at attaining an R100 billion business by 2020; is aimed at repositioning the country’s freight system for competitiveness within the fastchanging, technology-driven context of the 4th industrial revolution.
Maersk’s vision ‘to become the Global Integrator, offering truly integrated logistics solutions that connect, protect and simplify customers’ supply chains’ is firmly entrenched across Africa, with services covering the broad spectrum of container vessels, terminals, oil drilling rigs, sea and land freighting and distribution amongst others.
Operating on the continent for more than a century, Maersk retains 9 out of its 67 ports in Africa, presence in 45 African countries, and locations in 130 countries globally, while hiring 100,000 employees, maintaining 730+ container vessels, over 3 million sqm warehousing capacity, and 67 terminals across 42 countries.
Established in 1904, the global shipping company headquartered in Copenhagen, Denmark with an asset base of $73 Billion, achieved record-high growth and profitability in 2021, driven by Covid-19-induced market conditions –revenue grew by 55% to $61.8 billion compared to 2020, earnings before deductions tripled to $24 billion and free cash flow was $16.5 billion. According to the CEO, Soren Skou cited in the company’s 2021 release, we see conversations with customers change from procurement-led freight rate discussions to more holistic conversations on how we truly partner to keep supply chains running end-to-end. This clearly validates our strategy.
Suez Canal Authority ‘SCA’ is the Egyptian state-owned authority which owns, operates and maintains the Suez Canal. It was set up by the Egyptian government to replace the Suez Canal Company in the 1950s. With over 1.4 million ships transiting the waterway since its 152-year inception, the Suez Canal’s unique geographical advantage makes it the shortest route between the East and West – it is the longest canal in the world without locks, records near zero accidents and navigates both day and night.
According to Business Insider, The Suez Canal is a major lifeline for global seaborne trade since it allows ships to travel between Europe and South Asia without navigating around Africa, thereby reducing the sea voyage distance between Europe and India by about 7,000 km.
The entity achieved a historic highest annual revenue performance of $6.3 billion in 2021, backed by an all-time high crossing of 20,694 ships compared to 18,830 ships in 2020, which marks a difference of 1,864 ships and a 10% increase. 2021’s total net tonnages amounted to 1.27 billion tons compared to 1.17 billion tons in 2020, a difference of 100 million tons and an increase of 8.5%.
07The German logistics company was founded in San Francisco in 1969 and has grown to become the global market leader in the international express and logistics industry linking more than 220 countries and territories worldwide. In Sub-Saharan Africa, DHL Express employs over 3,500 Certified International Specialists, utilises over 1,250 vehicles, and over 20 airside facilities, with 5 hubs and 15 dedicated aircraft. Its divisions include; DHL Express, DHL Global Forwarding, DHL Freight, DHL Supply Chain and DHL eCommerce Solutions.
DHL Express’s strategy to grow its offering across Africa earmarked its 2019 collaboration with Link Africa, the company behind MallforAfrica, to launch DHL Africa eShop. The e-commerce service’ connected online shoppers in 34 African countries with over 200 UK and US sites by integrating the existing online retail and brokerage platforms developed by MallForAfrica with DHL Express’ global logistics network.
2021 was the most successful year in the history of the company, with a record three-time increase in earnings projections, a Group EBIT of €8.0 billion, and a 65% increase in operating profit. According to its 2021 annual report, demand for the group’s logistics solutions reached a new all-time high last year, driven by the significant increase in global trade and continued strong e-commerce with further growth in shipment volumes.
Jumia is a pan-African e-commerce platform consisting of a marketplace, which connects sellers with consumers, a logistics service, which enables the shipment and delivery of packages from sellers to consumers, and a payment service, which facilitates transactions among participants active on its platforms in selected markets.
The sole Africa-based tech company listed on the New York Stock Exchange, Jumia credits its $47.6 million revenue in the first quarter of 2022, up by 44%, to growth across all its product categories, combined with progress in its fast-moving consumer segment. 2021 witnessed all-time highs in active consumers, sellers, orders and gross merchandise value.
With a presence in 11 African countries, warehousing in 10 of these (10,000 sqm) and a presence in China, Portugal and UAE, Jumia’s logistics business combines a network of over 300 courier partners, proprietary technology for tracking optimal delivery routes, inventory, and payments, and a network of drop-off and pick-up stations that offer the company a wider offline presence.
Bollore Logistics is a top 10 global transport and logistics company. Its Africa business Bolloré Africa Logistics, is the biggest transport and logistics operator in Africa, with a network of 250 subsidiaries, and 21,000 employees in 49 countries, including 47 countries in Africa.
The company’s multimodal transport specialisation subdivides into Bolloré Ports, Bolloré Logistics, Bolloré Energy and Bolloré Railways. In Africa, the company operates 16 container terminal concessions (Côte d’Ivoire, Ghana, Nigeria, Cameroon, Gabon, Congo, Togo, Guinea-Conakry, etc.), 7 roll-on/roll-off terminals, 2 wood terminals and a river terminal, plus a conventional stevedoring activity. Its Africa operations include 3 rail concessions Sitarail, Camrail and Benirail.
Involved in more than 100 energy projects in Africa, including the development of the Inga dam in the Democratic Republic of Congo (the second largest in the world) and the Kenya Lake Turkana wind farm (the largest in Africa), Bollore Africa sold the entirety of its Africa business valued at $5.7 billion to Swiss container shipping major Mediterranean Shipping Company (MSC) in April this year.
Nigeria LNG Limited (NLNG), was incorporated in 1989, to harness Nigeria’s vast natural gas resources and produce Liquefied Natural Gas (LNG) and Natural Gas Liquids (NGLs) for export loaded its first cargo of Liquefied Natural Gas (LNG) in 1999 for delivery to Montoir Terminal in France.
Today, NLNG’s six-train complex has the capacity to produce 22 million tonnes per annum (mtpa) of LNG, and 5 mtpa of NGLs from 3.5 billion (standard) cubic feet per day of natural gas intake. Its outputs are sold for export on a Free on Board (FOB) basis to pre-qualified companies and it distributes a significant portion, (mainly butane) within Nigeria as domestic LPG
Jointly owned by NNPC, Shell, Total and Eni, and reported to be Nigeria’s most successful commercial venture, NLNG’s global reach includes Europe, the Far East, Greater Middle East, North America and South America. Ranked among the world’s top10 suppliers of LNG, the company controls about 7% of the global LNG trade and maintains assets (i.e., property, plant and equipment) worth about $17.5 billion with an estimated 1% contribution to Nigeria’s GDP.
In February, Russia, one of the largest global suppliers of crude oil, natural gas, and grains invaded Ukraine, the breadbasket of Europe. This invasion coupled with sanctions from the West (US, UK, and EU) on the Kremlin, and by extension, its major export commodities have led to the worst energy and food crisis the world has experienced in a decade. Of the many problems, the war brought disruption to global trade and supply chains. Unfortunately, global supply and trade had not fully recovered from the COVID-19 pandemic and its attendant lockdown measures before the war came in to wreak more havoc. According to the International Chamber of Shipping (ICS) data, Russia accounts for 10.5% of the global shipping workforce, with Ukraine providing 4%.
Furthermore, China the world’s manufacturing powerhouse is still reeling from the COVID-19 pandemic causing the country to maintain its strict lockdown measures that have slowed economic activities including supply and trade. China is crucial to global supply chains as it accounts for about 30% of the world’s manufacturing activities.
The war, combined with the slowdown in manufacturing and supply activities from China has led to blocked shipments, port congestion, and closures, manufacturing shutdowns, labor shortages at ports, and higher transport costs. In turn, these
issues have led to supply shortfalls, triggering an increase in food and energy prices. For instance, the United Nations Food price index is currently 60% (135.9 points as of October 2022) above its thirty- year average of 85.48 points. In addition, global oil prices (Brent) are at the highest level in nine years ($102pb on average). As a result of this, global inflation has peaked at unprecedented levels not seen since the financial crisis of 2008. The IMF predicts that global inflation will climb to 8.8% this year.
Many African countries import from and export to Europe and China. As of January 2022, China alone has bilateral trade agreements with 30 of the 54 African countries (56%). Exports from the Asian tiger to African countries have grown 22x to $110 billion in twenty years. While exports to China from African countries have grown, albeit slowly, to $80 billion. Also, about 16 African countries import at least 50% of their wheat from the warring countries.
With African countries highly dependent on imports from and exports to these countries, supply chain disruptions are harmful to the continent. The World Trade Organization already mentioned that the supply chain challenges will be here longer than expected and African countries that house an
A war miles away is raising the need to improve Africa’s supply chain.
enormous amount of the world’s poor and vulnerable population will suffer the most. Essentially, developing economies will be persistently marginalized by weak links in global supply chains.
The problems are deeper in that many African countries are struggling with thin fiscal coffers and high debt burdens. For example, 19 out of the 35 countries in sub-Saharan Africa are at risk of debt defaults or in debt distress. With less revenue, the ability of African countries to develop their supply chains is limited. Except they turn to the private sector, through strategic partnerships or at least support the private players by creating an enabling environment for smooth operations through friendly policies and incentives.
In all, the need to standardize and strengthen value chains have now become paramount. Especially as the continent’s population grows (16% of 8 billion) and demand
increases. Africa’s consumer market is set to grow from 1.2 billion people today to 1.7 billion by 2030.
The good news, however, is that these issues affecting global supply chains have exposed the loopholes in supply chain management and the heavy dependence of Africa on countries like China. The vulnerability of this interdependent supply chain model leveraged by most African firms has now made it imperative for Africa to tighten its seatbelt on its supply chain, especially with the African Continental Free Trade Agreement (AfCFTA) in view. Africa needs to take advantage of the AfCFTA now as it will increase production and improve the value chain for several commodities across the continent. The trade agreement is expected to offer US$2.5 trillion. And the first hurdle is solving the problems associated with our supply chains.
The major challenge is our reliance on foreign supply chains.
While the current supply chain model cannot be obliterated, a gradual shift towards domestic supply chains is what Africa needs. And the starting point is to build resilient manufacturing sectors in most countries, followed by strengthening production chains and then supply and distribution. From the provision of trucks or trains to technology- enabled systems to automate supply processes to adequate infrastructure and investment in skilled supply chain personnel, the government of each country (especially commoditydependent countries) needs to invest time and resources in improving supply chains in Africa. Again, it emphasizes the need for the government to lie in bed with the private sector.
It is too important to begin the gradual shift from heavy
dependence on China for finished goods and Russia or Ukraine for the transportation of goods to more localized and domesticated production and supply chain processes.
If the hard work is not done now, we will remain vulnerable to global supply chain shocks for a long time and it could be catastrophic.
Today, African countries rank among some of the fastest-growing nations in the world. The continent is teaming with widespread innovation as a young demography applies itself to new pathways in technology, digitization and entrepreneurship. That innovation drive is evident in the supply chain sector where increased attention informed by COVID-19-induced supply shortfalls, and renewed policy commitment via the Africa Continental Free Trade Agreement (AfCFTA), are driving the need for, and investment in supply chain education.
Formal supply chain education has existed in Africa for decades, but informal work placements and apprenticeships have been the bedrock of human capital training and sustainability in the trade and agriculture sectors. One such well-known method is the trans-generational Igbo Apprenticeship System common among the Southeasterners of West Africa’s most populated nation –Nigeria. This apprenticeship system enables young adults to learn a trade by serving (igba boi) an experienced entrepreneur (usually a family member or townsman), for a few years. After successfully serving, the young adult is compensated with their freedom, and business start-up capital, and expected to adopt other young apprentices, thus sustaining a knowledge transfer and reward circle.
In no particular order, Africa’s top supply chain educators are reviewed:
South African-based “SAPICS” (South African and Inventory Control Society): is a professional partnering with authorised educators like; Simera, P&L Academy, and ifundi, to offer short local programmes and internationally recognised This hub’s core mission is to curate activities, educational programmes that improve and Supply Chain Management. Courses include; Driven Supply Chain Fundamentals (DDSCF), Supply Chain Analyst (CSCA), and Certified Inventory Management (CPIM)
The prestigious LBS (Lagos Business School) Logistics and Supply Chain Management seminar, alongside specialized seminars like Design Thinking Operational Excellence.
African Production professional body Simera, local training recognised certifications. activities, events and and encourage include; Demand(DDSCF), Certified in Planning and
SCHOOL School) offers a seminar, Thinking for
This supply chain education platform derives it’s name, “kazi” from the East African Swahili word for “job”. Edukazi’s online courses are interactive, and available on-demand enabling students to learn at their own pace, and priced from $50 to $1050 with the exception of the Supply Chain Risk and Resilience in Healthcare Level 1 which is free. Master International Trade, Introduction to Warehouse Management, and Supply Chain Risk and Resilience Bundle for Public Healthcare are some of the titles available on Edukazi.
One of the big four global professional services firms is rarely categorised as a supply chain education provider, yet the corporate’s South Africa practice offers Salesforce Trainings, and a Procurement Bootcamp is offered by its Nigeria arm.
Although no formal ranking of supply chain educators in Africa exists, other lesserknown names include; Upskill Development Institute, Nairobi, Kenya, Global Leadership Institute, Rwanda, The Chartered Institute of Logistics and Transport, Egypt, “GDS” Global Dominium Services, Cameroon and Blue Ocean Academy, Tanzania.
Rwanda, the land of a thousand hills, has earned the nickname “the Singapore of Africa” for good reason. For nearly three decades, the East African country has had strong macroeconomic performance, with annual GDP growth averaging 7.5%. Rwanda is also one of Africa’s top investment destinations, ranking second on the continent and 39th globally for ease of doing business in 2020. The foundation for this remarkable growth rests on bold aspirations and effective governance mechanisms established over time. But things were not always this way.
Twenty-eight years ago, Rwanda experienced one of history’s most
brutal ethnic cleansing - the Tutsi genocide. The 100-day carnage had roots in years of escalating ethnic conflict. The event weakened the country’s economy, infrastructure, and social structures. With approximately 800,000 Tutsis killed, millions of civilians displaced, and seeds and livestock destroyed, Rwanda lost its productive capacities. Inflation reached 64%, the poverty rate reached 78%, and growth slowed by 50%, with GDP per capita falling from $315 in 1993 to $127 in 1994.
The country needed to start over. It did. And its economic growth so far has been impressive, exceeding
estimates of what it would have been if the genocide had not happened. Rwanda’s willingness to innovate and adapt, not only in terms of technology but also in terms of strategies, policies, and institution building, has been crucial to its success.
In 2000, the government launched Vision 2020, a 20-year growth strategy to reduce poverty, lift the country into middle-income status, and increase access to and quality of national health services. This would require attaining an annual per capita income of $900 (later revised to $1,240 in 2012), a poverty rate
of 30 per cent, and an average life expectancy of 55 years. As of today, Rwanda remains a low-income country. However, its annual per capita income reached an all-time high of $834 in 2021, the poverty rate was at 38.2 per cent as of 2020, and the average life expectancy is now 69.69 years.
Teddy Kaberuka, an international consultant on critical market intelligence and strategic direction, says a key reason for the relative success of Rwanda’s Vision 2020 strategy was the government’s multipronged approach to development, something most African countries lack.
“What Rwanda is doing differently than its peers is its multipronged approach to development. The entire economic sector moves together, and no sector is left behind. The public and private sectors, primary and secondary sectors, and the service industry took off simultaneously. This approach is more profitable. It prioritises every sector.”
He echoed the words of Thomas Echlin-Harradine, Managing and Founding Partner at Whitfield Echlin & Co. LLP when he said Rwanda’s implementation of Vision 2020
paints a picture of a development strategy that approaches complex issues from an innovative and integrated angle. “This highlights that issues are rarely simple enough to tackle in isolation and must be viewed as multifaceted when developing solutions,” Echlin-Harradine wrote.
With innovation at the heart of the Vision 2020 strategy, Rwanda has made great strides in its startup ecosystem and health and ICT sectors by investing in digital and tech infrastructures. 4G cellular networks cover more than 95% of the population. In 2016, the Rwandan government pioneered the use of drones for blood delivery, signing a contract with Zipline, a private company. By the end of 2021, Zipline served 75% of Rwanda’s blood needs outside of Kigali. Furthermore, the country’s community-based health insurance program has significantly advanced universal health coverage.
Given its business-friendly environment, the country has become a haven for entrepreneurs, technology firms, and
manufacturers. In 2018, Andela launched a pan-African tech hub in Kigali to recruit and train software developers across Africa. The following year, the Nigerian innovation lab, CcHub, launched a design lab to foster collaboration among researchers, designers, product engineers and global stakeholders to solve systemic problems on the continent. Last year, Swedish coworking space and investment fund Norrsken Foundation launched its first entrepreneurship hub outside Sweden in Kigali.
Earlier in March, Rwanda launched a Centre for the Fourth Industrial Revolution in partnership with the World Economic Forum. The centre is part of a network of 16 centres globally. Its vision is to shape Rwanda’s digital transformation trajectory through agile and human-centred progressive technology governance to
address the country’s most pressing challenges. Informed by national development priorities, C4IR Rwanda will focus on data governance, artificial intelligence and machine learning.
Riding on the relative success of Vision 2020, Rwanda is now aiming for middle-income status by 2035 and upper-income status by 2050 as part of Vision 2050. The new vision is tied to the growth drivers identified by the Rwandan government and the World Bank in a 2018 joint study. They include innovation, integration, competition, and agglomeration. The study suggests reforms in human capital development, regional integration with outside markets, competitive domestic enterprises, urbanization, agricultural modernization, and accountable public institutions.
Despite Africa’s natural endowments, import dependence remains high due to low transformative capabilities; a factor and outcome all at once of the continent’s low manufacturing output.
Excluding Africa’s 10 most developed countries which include; Mauritius, Seychelles, Algeria, Tunisia, Botswana, Libya, South Africa, Egypt, Gabon, and Morocco, “majority rank low on ease of doing business and amongst the highest globally in terms of supply costs”
Africa’s supply chain has over the years suffered slow growth due to infrastructural challenges, protectionist policies, and limited transaction activities which reflects in its reliance on imports for production inputs.
UNIDO’s industrial analytics platform reveals that over 65% of manufacturing firms in Botswana, Egypt, Ethiopia, Lesotho, Madagascar, Malawi, Morocco, Namibia, and Zimbabwe participate in either direct or indirect importing which is substantially higher than in the U.S. where only 20% of manufacturing firms participate in importing.
Vijaya Ramachandran, an economist at the Center for Global Development (CGD), in an article titled ‘Can SubSaharan Africa Be a Manufacturing Destination?’ compared the supply costs in Africa to other parts of the world and revealed that factories in Africa were almost always more expensive to start and run. According to the article, small African firms were 39% more expensive
than comparative firms elsewhere while medium and large firms were around 50% more expensive.
There are several key drivers of the supply cost of businesses in Africa which include Infrastructure, labour and capital cost, technology level, exchange rate, and global external shocks. The aggregation of these drivers determines the success or failure of the continent’s supply chain and as a domino effect, the productivity and profitability of manufacturing firms.
Insufficient road infrastructure is a challenge to the movement of inputs to manufacturers and finished goods to consumers within and across African countries. The high cost of transportation aggravates the cost of commodities in African markets. Studies have shown that poor road, rail, and port facilities add between 30% to 40%
to the costs of goods traded among African countries.
The African Development Bank (AfDB) estimated Africa’s infrastructure financing needs to be as much as $170 billion a year by 2025, with an estimated gap of about $100 billion a year.
Similarly, the Programme for Infrastructure Development in Africa (PIDA), revealed that the road access rate in Africa is only 34% compared with 50% in other parts of the developing world and transport costs are 100% higher.
A report by the Trade Law Centre affirms that African countries have higher labor costs and lower productivity when compared to developing countries in other continents like Bangladesh in Asia. The report which is titled “Even Africa’s poorest countries are too expensive
to be the world’s next manufacturing hub,” indicated that South Africa’s labor costs are “very high” despite its over 30% unemployment level. It added that stable, coastal countries like Senegal, Kenya, and Tanzania seem like strong candidates for a role in global manufacturing, yet they’re still too expensive.
The labor cost per Kenyan worker is $2,118 compared with Bangladesh, where it’s $835. The capital cost per Kenyan worker is nearly $10,000 but is less than $1,100 per worker in Bangladesh. As a middle-income country, Kenya does have a higher GDP per capita ($1,116) versus Bangladesh ($853), but low-income Senegal (GDP per capita $775) is still twice as expensive as Bangladesh in terms of labor and capital costs. This high labor cost is attributed to the skills deficit and the high-cost base of the economies.
Poor infrastructure is a significant problem in Africa as it lags behind the rest of the world in the key infrastructure classes including energy, road and rail transportation, and water infrastructure, according to a report by Mckinsey, a global management consulting firm.
Over 640 million Africans have no access to energy, giving an electricity access rate of just over 40%, the world’s lowest, according to the AfDB. Cost of production in Africa is exacerbated by low power supply as firms have to depend on crude oil for power generation which is also imported in its final form.
Manufacturers in Africa rely on imports for production inputs as most of them are not available locally. Other than causing an unfavourable balance of trade, this exposes them to foreign exchange problems and the adverse impact of currency devaluation. A low exchange rate lowers the prices
of exported goods and services but raises the prices of imported goods and services for consumers in the low-value currency country. Consequently, the cost of imports for manufacturing hikes production costs while eroding profit.
The Africa Continental Free Trade Area (AfCFTA) which commenced in January 2021 has the potential to improve the continent’s supply chains as it eliminates tariffs, harmonizes payments platforms and reduces other barriers to African trade.
The United Nations Economic Commission for Africa (UNECA) projects that the trade agreement will provide a market of 1.2 billion people and boost intra-African trade by between $50bn and $70bn in monetary terms, with a 40% to 50% increase over the first 20 years of its implementation.
Specifically, the removal of tariff barriers and non-tariff trade barriers across the AfCFTA member states will facilitate raw material sourcing within the continent which can form a regional manufacturing cluster and a one-stop for manufacturing operations. This will significantly reduce production costs as well as possible supply shocks.
Adeniyi Yussuf’s trucks carry everything from industrial to retail goods from Nigeria’s port terminals in Lagos and Port Harcourt to warehouses all over the country “We own three trucks,” Yussuf says, and manage forty-seven for different owners. We source for the jobs, handle the maintenance and daily expenses of running the business.”
On occasion, he spends close to ten million naira ($22,500) – loading containers, fuelling the trucks, paying drivers and sometimes rescuing containers from accident sites.
Things couldn’t be better for Yussuf’s Cedersuff Logistics and Transport Company than they are now. Access to working capital loans has made it so there is no limit to the number of orders he can accept. But this wasn’t always the case.
According to the World Bank, smalland medium-sized enterprises (SMEs) in sub-Saharan Africa have an unmet financing need of US$330 billion. With the stringent conditions set by traditional lenders, SMEs, especially in the supply chain industry, cannot access external financing as quickly as they need to. In some cases, they are unable to provide key financial information about their businesses because of inconsistent cash flow and a lack of transaction visibility.
Yussuf ‘s challenges with financing were reduced significantly when he became a Pivo customer in 2021. The company had just been launched by cofounders Nkiru Amadi-Emina and Ijeoma Akwiwu.
Amadi-Emina was a software engineer working as Ports Lead at
Kobo360, a logistics start-up. Akwiwu was a lawyer at Gilmor Engineering.
Before Pivo, the duo had set up SourcePro, a procurement platform for agro commodities for exportation.
“We would get a purchase order for a product, find a farmer to supply but the hold-up always came when we had to transport to the point of collection,” Akwiwu says. “We had to use personal funds to help the truckers fulfil their orders.” This experience was not new to either of them. As Ports Lead, Amadi-Emina dealt with the same problem countless times. Akwiwu while working on infrastructural projects also saw first-hand how suppliers struggled
with making timely deliveries. Pivo was the solution they came up with – a financial services platform for SME vendors that operate within large supply chains.
By the end of October 2022, a year after launch, Pivo had disbursed over $4.5M to their customers and recorded a gross transaction volume of more than $8.5M through Pivo accounts.
Access to credit is not the only problem Pivo solves. “A business owner should be able to open their app and see that the business has spent twice the amount on maintenance as they did in previous months, for example,”
Amadi-Emina says. “This could mean there’s a leak somewhere or a vehicle needs to be changed.” Having information like this handy via digital tools translates directly into better expense management and business planning that drives growth.
Yussuf set up his company in 2019 and already has plans to expand his business to Kenya. Pivo will be waiting for him.
The fintech, which closed a $2M seed round investment in November 2022, will be setting up operations in East Africa in 2023.
Seven years ago, the world adopted 17 Sustainable Development Goals (SDGs) to build on the Millennium Development Goals and complete what they did not achieve. A primary objective of the SDGs is to achieve gender equality and empower women and girls since they are necessary to achieve the other SDGs. In the words of former World Bank President, Robert Zoellick, empowering women is smart economics.
The World Economic Forum reports a positive correlation between gender equality and a country’s level of competitiveness, its GDP per capita, and its rank on the Human
Development Index. Women make up half of the world’s population; if they fail to reach their full economic potential, the global economy will suffer.
Unfortunately, several financial and non-financial barriers prevent women entrepreneurs from entering or fully participating in the formal economy and corporate supply chains where ample opportunities exist to promote gender equality and women empowerment through purchasing policies and practices.
According to UN Women, participating in the corporate supply chain provides Small and medium-
sized enterprises (SMEs) with increased revenue, financial stability, and instant credibility. But breaking into the industry can be difficult, “as evidenced by the relatively small number of companies that have managed to do so. This is particularly true for businesses owned by women.”
Supply Chain Marketing Specialist, Catherine Larkin, said this represents a vastly untapped opportunity. “SMEs are the engines for economic growth and job creation. In South Africa, SMEs currently contribute approximately 52 to 57 per cent of the GDP and 61 per cent of employment. It is estimated that women-owned SMEs account for approximately 35 per cent of total SMEs in the country and 40 per cent of informal SMEs. But sadly, women-owned businesses currently account for less than nine per cent of public procurement spending,” Larkin said.
A crucial factor preventing women from entering and fully participating in public or corporate supply chains is a lack of financing due to institutional bias, lack of collateral, and cultural norms. As many as 70 per cent of women-owned SMEs in the formal sector in developing countries are unserved or underserved by financial institutions. There is a $42 billion funding gap for female entrepreneurs in Sub-Saharan Africa. And although public procurement comprises 30 to 40 per cent of GDP in developing countries, only one per cent of the $11 trillion spent annually on public procurement is awarded to womenowned businesses.
Gender-responsive procurement is a powerful tool to release the full potential of women-owned businesses in supply chains. And governments and corporations are well-positioned to use this tool. Supply chain coach and founding member of African Women in Supply Chain (AWISCA), Lebogang Letsoalo, said corporations
should use this tool to create policies and frameworks to support women entrepreneurs and allocate a significant portion of their procurement spending to them. “Supporting women-owned businesses should be a part of the organisational strategy. It should be a commitment from the top - the CEO, CTO and the like. Corporations also need to contribute to policies set by the government for women’s empowerment.”
Letsoala’s advice reflects some of the steps taken by South Africa’s presidency to encourage gender-responsive procurement in the country. In August 2020, President Cyril Ramaphosa committed to setting aside 40 per cent of all public procurement for women-owned businesses. Then in October 2021, the South African government launched the Women Economic Assembly (WECONA) - a multistakeholder
initiative to facilitate the participation of women-owned businesses in core areas of the economy.
Futhi Mtoba, co-chairperson and national convener of WECONA, said, “The Assembly will activate, coordinate and monitor government and private sector actions towards preferential procurement for women-owned businesses. The initiative seeks to connect and inspire innovation, thought leadership and action to transform value chain ecosystems and to obtain a deep, common understanding and detailed articulation of sector-specific value-chain ecosystems.”
In Nigeria, Pivo, a women-led neobank for supply chains, fosters women’s participation in the industry by providing quick and flexible financing for SMEs. “Being a women-led business, we know first-hand the barriers women face in their quest to participate in the economy
and industry. Because we are women, we don’t have the subconscious bias that fuels the existing discrimination in these popularly men-led spaces. And I think that should be the very first step - eliminating the subconscious bias that exists,” Nkiru Amadi-Emina - Co-Founder, of Pivo, said.
Pivo supports the small subset of women who own businesses within the supply chain. The startup is also driving activities to encourage women to own businesses in the supply chain, giving them the needed support to scale. “In the coming months, we will roll out a feature under our banking and payment product that helps businesses get formally registered. With that, we will see an increase in the number of women-owned businesses we serve,” Emina said. Most women-led businesses in Nigeria are in the informal sector, which excludes them from the participation threshold outlined in the Public Procurement Act. Only 1 million women are in the formal sector. Hence, formalising women-owned SMEs is crucial.
So far, 40 per cent of capital disbursed by Pivo went to women-owned businesseswholesale distributors, micro-retailers, clearing and forwarding agents, and women who own trucking companies or logistics businesses. Amadi-Emina said the startup would be more intentional with disbursement in the future by identifying and collaborating with financial partners whose vertical is supporting women-owned businesses, then creating a pipeline of women entrepreneurs within the industry to be beneficiaries. “Doing this is good business because data shows women-owned businesses have a 90 per cent on-time loan repayment rate. On average, women-owned businesses typically access less capital than men, not because they are not qualified for more capital, but because from a risk perspective, they can only access based on their capacity,” Amadi-Emina said.
Another barrier preventing women’s participation in the supply chain is a lack of access to human capital. This includes formal education, industry-specific skills, experience, information, and networks. According to a survey in Senegal by UN Women, less than 10 per cent of women entrepreneurs are aware of the legislation on affirmative procurement, and less than five per cent are fully aware of the process and modes of public procurement. Also, 45 per cent of women often have difficulties drafting bids, and 40 per cent lack the technical expertise to execute contracts. “Success in various value chains in supply chain requires technical skills and soft skills. You must be knowledgeable to understand the ecosystem for your economic sector of interest. You also need to be able to brand yourself and sell your business,” Letsoala said.
Education is critical for productive female entrepreneurship in Africa, and women are often the least educated entrepreneurs. According to a UN Economic Commission for Africa (ECA) report published in 2021, secondary-and tertiary-educated women are more likely to pursue opportunities and access financial services than women with primary education or less.
To knock down this barrier and foster inclusive procurement, Letsoala advises corporations to establish supplier diversity programmes, create access to opportunities, and partner with academia to organise training and workshops. This goes both ways - corporations should educate themselves on how to source from
women entrepreneurs and train these entrepreneurs on how to sell to them. This is in line with the UN Women recommendation of strategic sourcing, which includes but is not limited to increasing access to information and social networks.
On its part, Pivo plans to introduce financial literacy support as part of the finance management tools it currently offers to help women make sense of the financial health of their businesses and help them manage their cash flow and expenses. Later this year, the startup would also launch asset financing to create entry-level opportunities for women to be part of the supply chain and to scale existing women-owned businesses in the industry. “One of the things we have decided is that a percentage of the asset finance must go to women-owned trucking companies and women-owned logistics companies. Or women who want to own trucking or logistics companies,” Amadi-Emina said.
Governments and corporations can use gender-responsive procurement to leverage the potential of women entrepreneurs to grow their economies and expand their global markets. The future of consumption is female. Women control about $31.8 trillion in annual consumer purchasing. This figure is expected to increase by up to 40 per cent in the next five years. It is in the best interest of governments and corporations to address the needs of women, beginning with closing the gender gap through purchasing policies and practices.
Written by Hadassah Egbedi
