It’s time for Africa
What is happening in the transport industry in Africa? What are we getting right? Where can we improve? Can we compete internationally? FOCUS gives you the good, the bad and the ugly of transport on the continent.
It is unquestionable that transport, regardless of the country or continent, forms an essential part of development and socio-economic growth, making transport infrastructures and service facilities instruments for economic improvement. Transport enables trade through the movement of people and goods, which in turn reduces poverty.
In Africa, roads are the dominant means of movement, accounting for 80 to 90% of the continent’s goods and people transported. According to Amadou Diallo, chief executive officer for DHL Freight, roads are generally the only means of access to rural areas, and vehicles are thus the most flexible and appropriate mode of transport in the economic and social life of all African countries.
The continent has a relatively low road density of 6,84 km per 100 km2 (compared to Latin America’s 12 km per 100 km2 and Asia’s 18 km per 100 km2) with the length of the tarred network accounting for a mere 24,56% of the total road system.
Due to inadequate resource allocations, the network is plagued by poor maintenance, with less than half of the continent’s repair requirements being met. The African sub-regions and their maintenance percentages are as follows: 30% in the Economic Community of West African States (ECOWAS) sub-region; 31% in the Common Market for Eastern and Southern Africa (COMESA) sub-region; 40% in the Southern African Development Community (SADC) sub-region; and 25% in the Economic and Monetary Community of Central Africa (CEMAC) sub-region.
Overloading of vehicles can also be blamed for reducing the lifespan of roads.
Despite this gloomy reality, economic forecasts have identified seven of the world’s fastest growing economies as African. Added to this, Nigeria’s economy has been projected to be Africa’s biggest economy by 2018, overtaking even South Africa. With intra-African trade having increased to 14%, regional integration is set to become a major focus in 2012.
DHL plans to assist with this by investing in an “African highway” to facilitate further trade between African countries.
“Africa is one of DHL’s fastest-growing regions in the network markets. We have the finest team in Africa and this year we have focused on investing and growing our human resources and infrastructure to ensure African businesses have access to the logistics excellence they need,” says Diallo.
The fact remains that rail transport incurs greater savings in the long run and contributes greatly to cross-border trade on other continents (for example Europe). But this isn’t the case in Africa, where the network shows very little interconnectivity and is estimated at 89 380 km for a land surface area of 30,19 million km2 (a rail density of 2,96 km per 1000 km2).
Some African countries lack railways all together. These are Burundi, Cape Verde, Central African Republic, Chad, the Comoros, Equatorial Guinea, the Gambia, Guinea Bissau, Libya, Mauritius, Niger, Rwanda, Sao Tome & Principe, Seychelles, Sierra Leone (where a former railway no longer works) and Somalia. Diallo believes Africa should first focus on the maintenance and upgrading of its core mode of transport (road), before endeavouring to expand its rail networks.
The dumping of used left-hand drive trucks is also a major challenge for Africa’s transport industry, as the continent’s trucking companies are equipped to service right-hand drive vehicles. Sander Fransen, area manager of Africa for DAF Trucks NV, says these trucks are more complex to sustain and that the company is developing its service network throughout Africa to address this problem and ensure operators’ trucks are kept on the road.
According to Erwin Stolze, marketing manager and dealer development for Powerstar, operators are realising the advantages of buying new vehicles, which are under warranty. He adds that Zimbabwe has banned the import of left-hand drive vehicles and that all left-hand drive units will be illegal on the country’s roads.
John Barnett, dealer development manager for Navistar International Trucks Southern Africa (NITSA), says other countries within the SADC region may follow Zimbabwe in the next five to six years. South Africa’s local import regulations are also making it impossible to register left-hand drive trucks.
Marja Brunninger, marketing communications manager of MAN Truck & Bus, says left-hand drive units are typically offered to customers at a very attractive price, but that MAN has difficulty supporting these vehicles. “We have noted that there is an effort by certain governments to reduce, or ban, the importation of these vehicles, which creates an opportunity for us to increase our new vehicle sales.”
Obtaining vehicle finance is another problem facing African countries, where the economic crisis has made banks even more reluctant to offer financing. Brunninger states that most deals are concluded with financial securities, which places operators at risk of losing their businesses if anything should go wrong.
Brunninger also points out that there is a lack of investment in infrastructure and a shortage of skilled personnel on the continent. “In some countries it is difficult to do business unless one has a local partner,” says Barnett. “One of the major challenges is to establish substantial numbers of local dealers who will be able to offer the aftermarket service commensurate with the brand.”
Fransen adds that there are notable differences between countries when it comes to the documentation required for customs formalities, which hinders the process of getting vehicles across borders. DHL is addressing this problem through its efforts to standardise the customs processes in all African countries. Diallo says this will promote inter-African trade and improve economic growth, as vehicles will be able to reach their destinations more promptly.
This will further contribute to the already growing African economy and may lay the foundations for the continent to compete on an international level. “Most countries do show significant growth. We have seen the strongest growth in South Africa, Algeria and Ghana,” says Fransen. “We also expect a lot from Nigeria, as we are just starting a new business there.”
Brunninger adds that the East African coast is also showing noteworthy progress.
According to Barnett, there are good prospects for growth in sub-Saharan Africa, especially if investments are made in the mining sector. This will also have a positive effect on the transport industry, as economic development and trade goes hand-in-hand.