This is Africa
Countries are “dissolving” in the transportation world as regionalisation is becoming the talk of the town, but African countries are still trading more with Europe than with each other … We take a look at some freight and logistics challenges hindering trade on the continent.
According to Photy Tzellios, supply chain director at Shoprite Checkers, the African continent is almost like a science fiction movie or a different world … “Supply chains in Africa are almost like fiction – they exist, but were only discovered recently,” he says with a smile, speaking on the topic of Supply Chains into Africa, at the Transport Forum’s Special Interest Group meeting in Cape Town, during July.
Tzellios isn’t sucking this out of his thumb, he is speaking from experience. The Shoprite Group is reportedly Africa’s largest food retailer – operating more than 1 500 corporate and 350 franchise outlets, from supermarkets to furniture stores, in 15 countries across the continent and on the Indian Ocean islands.
“We entered Africa in about 1994 – when South Africa was no longer the ‘ogre out there’, and we were allowed to come back into the world economy,” Tzellios points out. “Our first country of entry was Zambia, as it liberated its economy and moved to free-market enterprise. From there we slowly progressed.”
The retailer has, however, withdrawn from some of the markets it entered initially – such as Egypt and Tanzania. “In some areas of Africa things are successful and in others they are challenging. You need to understand that in a market where you don’t make a profit, you need to move out,” says Tzellios – adding that you have to accept that there are successes and failures. “We trade from the east to the west coast, and on the islands of Mauritius and Madagascar.”
He says that legislation is a major factor when transporting goods in Africa. “For example, in Angola legislation states that labels on products have to be in Portuguese,” Tzellios explains. “A number of years ago, out of the blue, they said that ‘from the month of September everything has to be in Portuguese – we don’t care about the rest’,” he adds.
“You can imagine the nightmare that such a situation causes, because you might have a product on its way into the country that now doesn’t comply with the rules when it arrives,” Tzellios points out. “So there is a whole set of dilemmas, relating to decisions that are made in Africa, that catch you by surprise.”
The continent, however, provides a lot of known challenges as well. “Different products shipped into Africa require different certificates – which all add complexity and costs before your shipment even moves,” says Tzellios. “So, when shipping into the rest of Africa, you could have boxes full of paperwork that need to accompany the load – otherwise you can’t clear your products.”
This can provide a massive headache if you’re shipping many different products – which retailers often do – each with different requirements. But don’t think that interregional trading makes things any easier, for example, within the Southern African Development Community (SADC) …
“Loads of goods going into SADC countries often require up to 50 different SADC certificates,” explains Tzellios. He adds that, while there are trade agreements – and politicians often believe they’ve done some fantastic work when these are signed – when you try to execute them, they amount to nothing. “Trade agreements don’t always mean much,” he says.
Every country still has its own rules and regulations, which complicates things substantially, but you have to accommodate them. “Border post congestion has also been one of our key observations. Over time, everyone has rushed into Africa, but the infrastructure has not grown,” says Tzellios. “The ports aren’t big enough to accommodate the volumes. The border posts aren’t able to handle the traffic – and the general infrastructure is lacking … there are more and more vehicles, but not enough tarmac.”
He continues: “Thank goodness for the Chinese, because they came in and assisted (for instance in Angola) and built infrastructure and got things changed.”
Tzellios notes that Africa has improved over the past two to three decades. “Growth rates in Africa have been higher, stability has improved and, with each passing decade, there’s less uncertainty and turmoil in Africa,” he says. “This is what attracted us into the rest of Africa. There is business to be done … growth in South Africa has its limitations.”
He adds: “You have to get out there to realise what the hurdles are. Africa has lots of hurdles and you have to find ways to overcome them. Africa is about the unpredictability of doing business. So you have to know how much ‘pain’ you can afford to take and for how long …” Tzellios says that trading in Africa is not for the short term – you have to go in with a long-term view – and you have to persevere with the continent and learn some patience.
“I must say thank you to the transportation industry. You have assisted us in breaking through some of those barriers, because you are basically that interface from when the load leaves South Africa, until it gets to our store,” notes Tzellios. “I think it is transporters that have opened up Africa for us. They have played a fundamental role in doing business in Africa.”
He concludes: “Improved infrastructure and breaking the red tape will liberate trade on the African continent. Africa has a lot of promise, but, while it is not the Mars of the world, it isn’t easy to trade in Africa. You need to have patience to stay for the long term.”