Small business will swell African tradeComment on this story
When she said: “It’s the little things citizens do. That’s what will make the difference,” Kenya’s inspirational environmental activist Wangari Maathai was talking about the potential of every African to positively influence the environment around them. Her “little thing” was planting trees. However, she could just as easily have been talking about the huge potential that Africa offers in terms of trade.
The growing global interest in Africa as a destination for investment is well documented. A market of over 1 billion consumers, it is home to seven of the 10 fastest growing economies in the world. The International Monetary Fund forecasts that sub-Saharan Africa will grow at about 6 percent this year, with so-called low-income countries, including Rwanda and Sierra Leone, expected to grow at an even faster rate of 6.9 percent.
This growth story has attracted serious investment. Beyond Africa’s traditional trade links with Europe, China has become a prominent player, investing actively in infrastructure, construction, agriculture and natural resources. This, and growing commercial interest from Latin American economies such as Brazil, has helped Africa feature prominently in the emerging South-South trade flow.
For me, however, all the talk of foreign investment overlooks the real potential of Africa – and that’s in the people and businesses, mainly individual entrepreneurs and small and medium-sized enterprises (SMEs), who have so much to offer already.
DHL’s own research, conducted with IHS Global Insight, has shown that SMEs that trade internationally are twice as successful as those that trade only within their own market.
At this moment in time, with the “perfect storm” of the world looking to Africa as an untapped source of growth, and internet and telecoms technologies providing global reach, there has never been a better time to take the initiative and to explore opportunities to take African products and services across borders. Add to the mix the unique heritage and culture that African entrepreneurs can draw on, and the resilience and resourcefulness of many who live on the continent, and you have a potent, unbeatable mix.
I’d like to share an example. Bethlehem Tilahun Alemu founded soleRebels in 2005, a footwear company in Addis Ababa, Ethiopia, when she was still in her twenties. Within less than a decade, she has been able to grow her business from an organisation of just five people producing for the local market, to a global organisation of over 300 employees with eight stand-alone stores, serving over 50 countries. The key to her success in a competitive retail environment was a combination of traditional African artisan skills and technologies, innovative use of local (often recycled) materials, personal drive, energy, and a global vision.
That’s not to say that going international is without obstacles. It’s impossible to condense Africa down to one common denominator. The continent is host to a vast number of diverse regions, cultures, industries and people. At the same time, most countries share many common challenges. With underdeveloped road and rail networks, and around 12 percent of cities served by just one flight a week, infrastructure and connectivity are among the most pressing problems.
A lack of harmonised rules and processes at the border also limits the efficiency of Africa’s logistics and means that its competitiveness, particularly in terms of growing the flow of goods within the continent, is being held back.
It’s clear that things are already progressing in the right direction, however. In the World Bank’s recent logistics performance index (LPI) report for this year, the three highest performers among low-income countries all hail from Africa – Kenya, Malawi and Rwanda. That these countries sit in the low-income classification highlights that there is considerable work still to be done in developing Africa’s economic potential.
However, the good news from a logistics perspective is that the biggest “seismic shifts” are possible within this segment. Investments in infrastructure and improvements in the efficiency of customs clearance, which are identified by the LPI authors as the areas that offer the biggest gains for low-income markets, can lead to drastic increases in logistics performance. This, in turn, will benefit a country’s trading activities and its economy.
DHL’s global connectedness index has shown that increases in global connectivity have the potential to boost national gross domestic product by as much as 5 percent. Additionally, logistics service providers have an important role to play in helping businesses to overcome structural challenges and inefficiencies and to focus on competing on a more level playing field through market factors such as quality, performance, customer service and price.
It would be wrong to describe Africa as the “next” frontier. DHL has been active on the continent for over 36 years, since we opened our first office in Nigeria in 1978. We are the only international express company to operate our own airline and extensive infrastructure throughout Africa. Last year alone, we expanded our retail network to over 2 200 service points and added a new operational facility in Senegal that will operate cargo flights to neighbouring markets and connect them to the global network with a freighter flight to Belgium.
So we are by no means new to Africa, and we have long seen the potential that the continent offers. From new energy discoveries in Mozambique and Tanzania to demand for dried fruits in north Africa, and from leveraging the growing ties with Asia and Latin America to tapping into the network of successful Africans now working outside of the region, the international trade opportunities are immense. From our side, we recognise the role that logistics providers can play in helping globally minded African businesses connect with partners and customers around the world.
I’ve had the pleasure of visiting Africa on many occasions – my most recent visit was at the beginning of March. I have seen first-hand the enthusiasm, energy, resilience and entrepreneurial spirit of our employees, partners and customers throughout the region. And I can say with certainty that if Africans can tap into this amazing inner capital and further swell the ranks of entrepreneurs from the region who are already making “little things” happen, then massive gains are within reach.
From our side, we’re committed to not only connecting others to the world’s biggest frontier, but to making the rest of the world the next frontier for Africa.
Ken Allen is the global chief executive for DHL Express. He is based in Bonn, Germany.