KENYA & NIGERIAN LOGISTICS BUSINESS
Logistics process is typical yet can’t be ignored to have a concern of economic growth, if there is no logistics in the market business will get stuck. Essential elements towards country’s revenue generation will be stopped if transportation process cannot take place appropriately. Consumer goods and domestic trading cannot be a reason for provision of better life. Importing the goods and globalization should be inexpensive for people to access.
Logistics is likely to become an emerging industry in Africa having huge remunerative opportunities for Supply chain service providers across substantial infrastructure problems in the countries. Kenya and Nigeria’s logistics market is inclining towards high growth for reasons like high local trading, expansion and diversification of international demands by domestic consumers.
Nowadays logistics market with multiple players has become much competitive and it is no longer facilitated to buy the right goods at the right cost. Retailers must also get them to the right place at the right cost, in the right amount with the right operational costs. Doing this it necessarily requires an understanding of logistics and cost reducing IT solution that will allow you to deliver the goods to your customers most cost effectively.
For the first time report regarding Nigerian supply chain and specific data accumulation of logistics and transportation has been released in early 2016. Report contains target areas, economic performance of the logistics services, competition within logistics industry, logistics and supply chain volume and growth in domestic and international market. Report stated about identification of gaps for the improvement of logistics infrastructure and in this regards, the efficiency of the clearance process, time estimation of transshipment, freight cost.
1. Why struggling to incipient better supply chain system?
These high costs create significant impact on the people living in the region. The World Bank estimates that logistics cost account for 40% of consumer prices in East Africa that is figuratively 250 million people, many of whom are already living in severe poverty, who are paying more for food, household goods and healthcare products. Added to this are the large numbers of small business owners unable to grow their companies because of the high overheads connected with distributing or sourcing their goods.
Any companies based on services or products, transportation is necessary to expand but in these countries transportation has become biggest restrain towards the growth of business. Business can not expand because of no technical resources and high operational cost which results no internal growth in the country. Time is the biggest factor in transportation and logistics, giving less taking time service raise the demand of the service, its not like there is no demand from the side of country’s citizens. In an average it takes more than 6 hours to travel 100 KMs. E-commerce business has been emerging indubitably but only in urban areas increasing e-commerce demand has shown where as 46% country’s population is still reside in rural areas.
The biggest challenge of an average Supply Chain manager in Nigeria is the absence of data to work with. This had created a situation where they are left to the mercy of circumstances. Logistics is more about numbers than stories which makes data the king that makes it possible for managers to take good decisions. Data driven logistic systems bring several unique benefits for companies supply chain process as it enables organizations to fully understand their supply chain thoroughly and stay ahead of their competitors.
Eg: If any delivery is to be done across 5 KMs then transporters charge premium cost from the customers. E-commerce business also limited for specific regions, now if someone orders something worth of 5$ then delivery charge comes along with extra 4-5 $ thus it takes away the interest of people towards e-commerce business or any other transportation which results no trading and revenue. Transport companies can not assign delivery person to distribute goods for wide area because of less resources available and poor infrastructure.
2. Progress of rising opportunities :
East Africa is one of the fastest growing regions in the world. Some estimate that there is up to $68 billion of projects under construction in the region, ranging from civil engineering and infrastructure to resource development.
A new pilot program clears much of the red tape for companies bringing cargo in through the Port of Mombasa in Kenya. The port can now clear incoming cargo seven days in advance. The new program was created to increase efficiency at the port, and to support integration of the East Africa Community initiative, which aims to reduce cost and transit times for freight, and promote trade in the region.
Manufacturers should benefit the most from the program because they can clear their raw materials in advance, and haul them off immediately once they arrive at the port. Even if cargo isn’t picked up right away, the program awards domestic cargo four free storage days, and transit cargo nine free days.
The market is open for first movers who can navigate risk and nurture African talent. The opportunity is for those seeking to build long-term, sustainable businesses that bring world-class practices and adapt to local conditions. Africa’s requirement for logistics services and supply chain expertise is huge and growing every day.
A particularly surprising statistic is that Kenya is the third-largest emerging market air export trade lane by tonnage, exceeding not just its continental competitors such as South Africa and Nigeria.
With increasing scopes countries should bring up new technological resources and improve infrastructure which should include improved route mapping, warehouse management, fleet management including tyre management, vehicle tracking, fuel management, documentation and auditing, monitor shipment movement, live tracking, digital signatory receiving and confirmation, accounting, client care, on field delivery person automation.
Ex: South Africa has been ahead of Kenya and Nigeria in logistics industry because of implementing new generation technological solution and maintain a good infrastructure which help them to provide cost effective services.
Kenya is among the top-four countries in Africa with the biggest economic growth promise over the next five years, a new survey of global logistics executives shows. The highest growth will be seen in Nigeria, Kenya, Morocco, and Uganda followed by south Africa. Among all African countries largest and most breakthrough in logistics market at worth of 3 billion $, will reach compound growth annually at a rate of more than 4 percent.