“You need to take into account the logistics and infrastructure cost when it comes to transporting into Africa. We all know that infrastructure is relatively poor, especially when we’re looking at [the continent],” Frost and Sullivan Africa senior consulting analyst Craig Parker told CNBCafrica.com.
On a macro-economic level, transport and logistics infrastructure provides access to consumer markets, connects raw materials, to beneficiation markets and promotes regional integration.
On a micro-economic level, however, transport and logistics infrastructure have a direct impact on a country’s handling capacity for imports and exports, distribution route development and related services.
TRANSPORT INFRASTRUCTURE IN KENYA
Apart from tea and coffee, Kenya is one of the world’s largest exporters of flowers, and its exports to the European Union contribute 35 per cent of all flower sales.
Kenya’s local transport infrastructure is however in dire need of improvement. According to a report entitled ‘A Snapshot of Key Infrastructure Developments Across Africa’ by Frost and Sullivan, despite Kenya’s 63,572.48 kilometres of road, majority of them are gravel and earth surfaces.
As a result, over 800 million dollars is being spent on the Mombasa port expansion, the Nairobi and Thika highway and on the construction of a railway linking Nairobi with Thika, Limuru, Athi River and Lukenya.
All these factors affect how competitive a country can be within a specific market.
TRANSPORTATION OF OIL IN UGANDA
Correspondingly, Uganda also plans to spend over 400 million US dollars within the next two years to improve 623 kilometres of road. Uganda’s discovery of oil is also expected to prompt more infrastructural plans to improve the international and local transportation of oil.
“There are certainly issues when it comes to infrastructure development in Africa. Africa is a lucrative marketplace at the moment, and that is why we contend that we need further research into specific economies in Africa,” Parker explained.
“You need to do a deep dive into your specific region or country that you’re interested in looking into to actually assess what challenges there are and how those costs will impact your geographic expansion strategy into those various markets.”
Similarly, Tanzania’s poor ports, rail, industry-specific and airport infrastructure and capacity has slowed the growth of local and international trade.
“When it comes to road infrastructure, the development has to take place on the long term. If we look at your gross fixed capital formation that’s gone into many of the countries in Africa, it’s relatively poor in the past 20 to 30 years,” Parker added.
THE BUTCHER BUSINESS IN TANZANIA
Tanzania’s livestock industry in particular is under slight pressure due to lack of dip facilities and veterinary services.
According to a report by the African Agri-business and Agro Industries Development Initiative, Tanzania has the third largest livestock population in the continent, which contributes more than a tenth of GDP.
The industry is however ill-equipped in terms of both marketing and proper handling. Auctioning of livestock at the markets is often the only means of marketing, and meat retailing us often done through privately-owned butchers.
This is as local butchers cannot afford the appropriate tools and equipment necessary for meat handling.
In the event that local butchers had the appropriate tools and knowledge of healthy meat handling, livestock trade outside of its borders, meat retailing in the country could significantly improve in terms of quality and health standards.
Transport and logistics infrastructure will however always been linked to other industries, and improvement will be essential to the thriving of those other industries.
“There are some definite challenges that need to be overcome, especially this time of year when consumer markets pick up,” said Parker.
“The positive is that in the 2000s, especially from 2005 onwards, a lot of policy changes have been made. Many governments have realised that infrastructure is the way forward.”