Thursday 27th Jul 2017 - Logistics & Supply Chain

Guns before butter

At the end of August, a group of senior people gathered in Johannesburg to discuss some of the weighty logistics issues affecting the Dark Continent.

Good news? Africa at last taking proactive action to sort out its own problems? Well, not entirely. The pros had foregathered in South Africa’s leading city of business to talk about – defence logistics, most importantly how to supply armies on the move, in the field and, just occasionally, back in barracks.

The African Defence Logistics Summit was billed as a must-attend for defence ministers, generals and admirals. Speakers included Lt Gen S Z Binda, chief of joint support for South African national defence, but delegates were drawn from across the continent.

Though the conference boasted of its aim to promote peace and security it pretty much summed up the problems of Africa, so recently at the centre of world debate when leaders of the G8 met in Scotland. While much of Africa’s industry and agriculture finds it difficult or impossible to get its goods to markets that will buy, the brass hats were talking about ‘streamlining supply chain and maximising efficiency’ in military organisations. Guns before butter.

On a positive note
Happily, not everything is gloomy. Earlier this year, South Africa produced its first state logistics survey, showing that there are at least some business folk who recognise logistics has a role to play in reviving and growing the country’s economy. But South Africa is far ahead of every other African country in seeking to adopt an integrated approach to supply chain matters. In most others, logistics infrastructure is fragmentary and supply chain planning rudimentary or non-existent.

So when you look at South Africa’s problems, it’s important to realise those problems are writ ten or a hundred times larger in other African states. The core logistics problem identified by the survey, conducted by South Africa’s Council for Scientific and Industrial Research (CSIR), was that the country’s annual e24bn logistics costs represent 14.7 per cent of gross domestic product compared with only 8.5 per cent in the US.

The survey identified what it called ‘core structural problems’ with South Africa’s logistics. For example, in many large developing countries long-distance freight is transported by rail with roads feeding goods into the rail heads. In South Africa though, ‘structural shortcomings have caused an unhealthy situation, with three-quarters of long-haul tonnage being transported by road’. As a result, ‘South Africa’s dense long-haul corridors are intrinsically more expensive than a possible inter-modal (win-win) solution’.

The study, conducted with the aid of the Department of Logistics at the University of Stellenbosch, identified a number of issues for the future. These included assigning national accountability and responsibility for supply chain investment and maintenance strategies, and measuring the country’s logistics to identify leads and lags.

It’s encouraging that South Africa has centres of expertise in logistics and that these are seeking to raise macro logistics issues with the country’s policy makers.

A while ago I was speaking to the owner of a major international company who has more than 35 years’ experience of doing business with Nigeria. He first went to Nigeria in 1968, shortly after oil had been discovered in the country. He recalls first driving from Lagos to Warri, a town on the edge of the main oilfields, along dusty roads in an old taxi. Now proper highways link the oil region with the capital and the ports. But in other ways, he says, the country’s logistics infrastructure has deteriorated amid poor management and rising corruption.

Look around Africa and you’ll too often find a similar picture. Where there’s a high-value product it’s in the interest of the West to bring to market, you’ll find advanced logistics infrastructure. Elsewhere, little or nothing. Yet one of the key challenges of logistics in an evolving state should be to include all the population in the economic life of the country.

But these are high policy matters beyond the scope of any one logistics provider to solve. Perhaps the only solution is to adopt a gradualist approach and to seek to raise the issue of logistics as a contributor to economic development, as the CSIR is nobly doing in South Africa.

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