The conversation about logistics cannot be discussed without trade. Trade opens up borders and allows for the free movement of goods. The most recent development on the African continent was the signing of an African Continental Free Trade Agreement (AfCFTA) by 44 African countries in March 2018. The ambition of the agreement is to boost intra-African trade with the eventual aim being creating one single trading bloc for African countries. It seemed like a mountain to climb prior to the signing of the agreement considering that negotiations started in 2015.

These negotiations are being led by the African Union with support from entities like UNECA. The signing alone marked a significant milestone on the continent especially since Africa as a trading bloc has lagged behind markets like the European Union. Total trade among African countries is still below 11%, according to the UN Economic Commission for Africa (UNECA). If the intra-African trade improves as a result of this agreement, then it would present an opportunity for logistics companies because all the available goods will need to be moved around the continent.

The economies in Africa are growing and countries continue to invest in infrastructure projects that would boost industrialization. As countries do this, they will need to access markets. Some of those markets are available in Africa. Often it is noted that Africa’s trade imbalance with countries like China remains large. The opportunity as a result of the emerging trade agreements on the continent would be that Uganda gets to export to other countries in Africa.

Recently, African leaders attended the Africa-China Summit where the Chinese government pledged $60bn. This amount is mostly earmarked for infrastructure projects. For the continent to boost trade, it needs the infrastructure. It is that infrastructure that will boost productivity and eventually spur trade.

Already some African countries already have trading blocs where they have been implementing trade facilitation initiatives. For instance, working with TradeMark Africa (TMA), one-stop border points have been implemented with several countries like border points between Uganda, Kenya, Rwanda, and Tanzania. The aim of this is to eliminate the long hours – sometimes days – that are spent clearing goods. Any reduction in time spent at border points leads to increased trade and better cost management. This initiative is made possible because of the already existing East African Community (EAC).

Improved technology is another trend noticeable in Africa. An example is the Electronic Cargo Tracking System implemented by Uganda and Kenya – so far. This means by just viewing from their computer screens the customs authorities are able to track the movement of goods in the region. This helps in the elimination of the thorny matter of None-tariff barriers, a limitation to trade. Goods can be tracked from the point of entry to the exit point and the system is able to trigger an alert of tampering if it happens. This once again boosts trade because it eliminates stoppages and also enables authorities to know in real-time whether goods are headed to the destinations they are supposed to go.

The growth of the retail sector in some African countries is also a trend to watch. In East Africa, the region has only recently been grappling with the collapse of the largest retail giant in the region, Nakumatt. However, the collapse of Nakumatt, a factor considered to be attributed to internal mismanagement has not stopped other retailers from expanding. Shoprite for instance in Uganda has already taken up anchor tenant space for of Nakumatt’s former outlets at the Acacia Mall. Additionally, Shoprite will also open another outlet in a new mall that will be opened in Nsambya. Space previously occupied by Nakumatt at the Oasis Mall will be taken up by a new player in Uganda, Carefree, which already has outlets in Kenya. Retail growth increases the need for an improved supply chain and that is where logistics companies come in. This is exactly what they are doing at the moment.

All over the continent – especially with countries that access to Oceans, there is the investment or planned investment in port expansion. From the Horn of Africa in Djibouti, there is the port expansion. Kenya is also planning a new port in Lamu. This is coupled with the expansion of the already existing Mombasa Port. In Tanzania, due to the prospects of the oil pipeline from Hoima in Uganda to the Port of Tanga in Tanzania, expansion is also taking place. The Dar-es-Salaam port is also set for further expansion as it seeks to tap the routes to Rwanda, Burundi, and Uganda. There is also further port expansion in places like Angola, DR Congo and parts of West Africa. For logistics companies, this is something to watch since these trends will define the future of transportation.

It is a race for the future. It is the most competitive countries that will benefit from these trends. That explains why competitiveness is the key topic of discussion at the Global Logistics Convention that will take place in Kampala on 17^th and 18^thSeptember 2018. The convention is supported by the United Kingdom’s Department for International Development (DFID), through Trademark East Africa (TMA).

The conference is organised by Uganda Freight Forwarders Association (UFFA) and the National Logistics Platform at the Private Sector Foundation Uganda (Psfu)

Source Muma Keith

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.