Africa’s economy is rapidly evolving due to continued industrialization efforts and the quest to leverage its vast natural resources for economic growth and development. With an estimated population of 1.3 billion, a growing middle class and advancements in technology, the continent’s economic potential is enormous. The push to strengthen economies emphasizes the need for efficient and resilient supply chains more than ever. 

In this article, we explore the future of Supply Chain Management in Africa and how it will be shaped. 

TRENDS AND PREDICTIONS  

• A FOCUS ON SUSTAINABILITY

Environmental concerns are gradually taking center stage in global discussions especially as the effects of climate change and deforestation become more glaring. The Food and Agriculture Organization of the United Nations reported that Africa had the largest annual rate of net forest loss between 2010 and 2020 at 3.9 million hectares. Even though Africa’s contribution to global carbon emission is relatively low, the continent is susceptible to the damaging effects of global warming. 

As shown by the number of African countries taking part in the COP29 conference in Baku, Azerbaijan, there is a move towards reducing carbon emissions and promoting climate change literacy. These efforts combined with the push to efficiently utilize natural resources and the desire to safeguard human welfare across the continent increase the focus on sustainability and the adoption of green practices. 

This is happening through changing regulations, a growing emphasis on circular economy and a shift towards cleaner energy. 

In the West Africa sub-region, countries like Ghana have unveiled several initiatives such as the Green Ghana Day which aimed to plant 10 million trees in the 2024 edition and the transition to cleaner fuel standards by setting a Sulphur content benchmark of just 50 parts per million (ppm). 

Some businesses are also exploring ways to reduce carbon emissions by optimizing their operations and using fuel-efficient technologies. In industries like Food and Beverages, waste management strategies are being implemented to either reduce waste or recover it for other purposes. These sustainability initiatives not only offer cost savings but also improve brand reputation and ensure compliance with regulations.

• TRADE AGREEMENTS AND REGIONAL INTEGRATION  

Discussions on trade agreements and regional integration are expected to continue across the continent. Initiatives like the African Continental Free Trade Area (AfCFTA) have been set up to liberalize and promote trade among African countries. The agreement has created the single biggest market in the world with 54 member states across an estimated population of 1.3 billion people and a combined GDP of approximately USD3.4 trillion. The African Union at its 18th ordinary session also endorsed the action plan to boost intra-Africa trade (BIAT), aimed at improving trade policy, trade facilitation, productive ability, trade-related infrastructure, trade finance, trade information and factor market integration. Additionally, the United States government’s Africa Growth and Opportunity Act (AGOA) which aims to support the economies of African countries, encourages trade within the continent through its rules of origin which includes 35% local content originating from within AGOA beneficiary countries. 

These initiatives are expected to lead to the development of localized and regional supply chains across Africa as businesses look to take advantage of these provisions by sourcing raw materials and other inputs from within the continent. Ultimately, this will reduce the reliance on imports from outside Africa, shorten delivery times and mitigate global supply chain disruptions.  

Such integration will propel the development of human capital and infrastructure such as roads, railways, ports and telecommunications. With this connectivity, Africa will not only benefit from efficient logistics operations but also achieve economic growth and improved comparative advantage in the global market. 

• ADOPTION OF TECHNOLOGY AND DIGITAL TRANSFORMATION  

Emerging technologies such as artificial intelligence, blockchain technology and cloud computing are expected to shape Africa’s supply chain landscape. Embracing digital transformation in supply chain operations leads to improved visibility for better decision-making and efficiency. 

Blockchain, big data and artificial intelligence enable streamlined, transparent and efficient operations across various sectors of the economy. Adopting these innovative technologies will significantly improve trade processes such as customs procedures and licensing. 

For instance, to implement AfCFTA successfully, the African Union is encouraging African countries to invest in technologies such as broadband connectivity, e-commerce, integrated payment systems and digital identity systems. 

Digitalization has also emerged as a practical solution to tackle the issue of corruption in public procurement in several African countries. It is a game changer that streamlines procurement processes and boosts transparency. For example, Ghana is implementing the Ghana Electronic Procurement Systems (GHANEPS), Kenya has adopted the Electronic Government Procurement (e-GP), South Africa has the eTenders Portal and Cameroon aims to fully digitize public procurement by 2025.

• AN EMPHASIS ON RISK MANAGEMENT AND RESILIENCE

Recent global happenings such as the outbreak of the COVID-19 pandemic and the Russia-Ukraine conflict have exposed the vulnerabilities of African supply chains underscoring the need to build resilient and adaptable systems. Considering these developments, there is a shift in focus on adopting the best risk management practices and developing capabilities to better deal with the uncertainties in the global economy. 

Supply Chain Professionals are implementing strategies such as localization of supply sources, supplier diversification and development of strategic relationships. Despite the benefits of lean operations such as “Just-in-Time”, professionals are embracing inventory management strategies where they hold buffer stock of critical materials along their supply chains to minimize the impact of supply disruptions. There are growing investments into supply chain visibility tools to enable real-time monitoring of supply network activities and proactively respond to potential disruptions. This risk management approach is expected to continue into the near future considering the current turbulent nature of the global economy and shape supply chain practices across the continent.

• A BOOM IN E-COMMERCE AND LAST-MILE DELIVERY

In a publication by the International Trade Administration of the U.S. Department of Commerce, Africa is forecast to surpass half a billion e-commerce users by 2025, which will have shown a steady 17% compound annual growth rate (CAGR) of online consumers for the market. This boom is primarily driven by rising incomes, a youthful and tech-savvy population and increasing internet penetration. Revenues from online sales of goods are forecasted to continue steady growth through 2025 with fashion products predicted to reach USD13.4 billion and consumer electronics predicted to reach USD11.2 billion across African markets.

This growth is influencing supply chain demand, particularly in last-mile delivery. Logistics companies have started investing in innovative solutions to overcome the hurdles related to urban congestion and lack of adequate infrastructure. Alternative delivery methods such as bike couriers and mobile pick-up points have become popular to ensure fast and reliable service. Also, investments in warehousing and fulfilment centers are growing because they enable quicker deliveries and reduce transport costs. 

CONCLUSION

The demand for innovative and efficient supply chain solutions will continue to increase as the economy of Africa grows. The future of supply chain management across the continent looks promising with a focus on sustainability, regional integration, technology adoption, an emphasis on risk management and a boom in e-commerce. Understanding these emerging trends is necessary for businesses looking to tap into Africa’s dynamic market. African supply chains can become more efficient and resilient by implementing strategies to safeguard their future and contribute to economic growth.

Briefly, supply chain management in Africa is set for a significant transformation which will provide both opportunities and challenges. Businesses that adapt to this evolving environment can leverage these emerging trends to achieve competitive advantage and overall success. 

_{Featured image source: vecteezy.com}