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Navigating the future of logistics in sub-Saharan Africa: opportunities and challenges

The potential for logistics in Sub-Saharan Africa is immense. With a population exceeding one billion and a rapidly growing middle class, consumer demand for goods and services is on the rise. According to the African Development Bank, the continent’s GDP is expected to grow by 3.4% in 2024, driven by increased consumer spending and improved business climates in key economies.

Initiatives like the African Continental Free Trade Area (AfCFTA) aim to boost intra-African trade by reducing tariffs and streamlining customs procedures. This agreement, covering 54 African countries, is creating a single market of 1.2 billion people with a combined GDP of over $3 trillion, offering unprecedented opportunities for growth. Investors are increasingly exploring opportunities in Africa across sectors such as energy, mining, construction, and logistics.

As the global transition to renewable energy accelerates, Africa further has the potential to become a key hub for both renewable energy and critical minerals. The continent is rich in critical minerals vital for manufacturing renewable energy sources and possesses untapped natural gas fields. Effective integration of strategic logistics solutions is essential to fully unlock this economic potential.

The opportunities and challenges that lie ahead for logistics in Africa present a unique landscape for growth and innovation. However, to harness this potential, we must address the inherent challenges with foresight and strategic planning.

Opportunities abound

The logistics sector in Africa is poised for significant advances due to several key factors.
Firstly, the continent's infrastructure development is gaining momentum, with numerous investments targeting roads, railways, and ports to enhance connectivity. Improved transport networks will facilitate smoother distribution channels, allowing businesses to thrive.

The rise of e-commerce in Africa is transforming the way goods are traded, creating a burgeoning demand for efficient logistics services. As more consumers turn to online shopping, companies must adapt their logistics strategies to support rapid delivery models.

The adoption of technology in logistics—ranging from advanced tracking systems to automation—offers the potential for increased efficiency and reduced costs.

Lastly, as African countries continue to embrace renewable energy solutions, there's an opportunity for sustainable logistics practices to emerge, aligning with global efforts to combat climate change.

Collectively, these opportunities signal a transformative era for the logistics landscape in Africa.

Challenges to overcome

Despite these opportunities, the logistics sector in Sub-Saharan Africa faces significant hurdles.
One of the primary challenges foreign investors face in Africa is the underdeveloped infrastructure for logistics. The World Bank reports that less than 30% of the continent’s roads are paved, which exacerbates the costs and complexities of moving goods. This shortfall hinders the economically viable import and export of essential strategic goods and minerals needed to establish new markets and infrastructure.

While large international corporations have recently made substantial investments across the continent, it is crucial for African nations to focus on upgrading and repairing existing supply chain assets, such as roads, railways, ports, and warehouses to enhance their capacity to attract further foreign investment.

High logistics costs, exacerbated by inefficient port processes and a lack of digital solutions, remain a primary concern. Moreover, regulatory hurdles continue to impede the seamless flow of goods across the region. Inconsistent customs regulations and lengthy clearance times can lead to delays and increased costs, impacting the overall efficiency of supply chains.

Inefficient port processes are critical nodes in the logistics network, and many African ports suffer from inefficiencies that lead to delays and increased costs. Modernising port infrastructure, implementing advanced management systems such as automated container handling, and real-time tracking could significantly enhance port efficiency. Additionally, while the potential of digital technologies is vast, their current adoption in Sub-Saharan Africa is slow, necessitating investments in technology and digital literacy to overcome these challenges.

A strategic approach

At DACHSER South Africa, we understand these challenges and are committed to providing intelligent logistics solutions that cater to the unique needs of the Sub-Saharan market. Our approach leverages technology and a deep understanding of the local market. We offer customised services such as air and ocean freight, contract logistics, and warehousing solutions tailored to specific industry needs. For instance, our expertise in automotive and healthcare logistics allows us to support these critical sectors with precision and reliability.

Information security is a cornerstone of our operations. We have obtained TISAX® Level 2 certification, ensuring that our logistics processes meet the highest standards of data protection. This commitment to security helps safeguard our clients' supply chains and builds trust in our capabilities. Sustainability is also a key focus for DACHSER. We are actively working to reduce our carbon footprint through investments in energy-efficient technologies and more sustainable transport solutions. Since 2022, Dachser has been purchasing 100% green energy on a global level.  By promoting eco-friendly practices, we aim to lead the charge towards a more sustainable logistics future in Africa.

The future of logistics in Sub-Saharan Africa is bright, but realising its full potential requires a concerted effort to overcome existing challenges. By harnessing the region's opportunities and addressing its hurdles with innovative solutions, we're confident in our ability to drive growth and efficiency in this dynamic market as we work with our clients to navigate the complexities of the logistics landscape and unlock new avenues for success in Africa. The AfCFTA and regional cooperation will be vital in this transformation, connecting African markets and enhancing global competitiveness. Now is the time for businesses to invest in Sub-Saharan Africa; the potential for growth and development is immense, and with the right strategies in place, the region can become a global logistics powerhouse.

Overcoming Africa’s logistics challenges: Dachser South Africa's approach to customs 

Trade is the lifeblood of any economy, and the smooth operation of customs and trade procedures is critical. However, logistics companies moving goods across the African continent face a unique set of challenges. These include inadequate road and rail networks, poor infrastructure, excessive official and unofficial roadblocks, significant border delays and complex customs and excise. A lack of coordination among multiple government agencies often results in inefficiencies and bottlenecks that hinder the smooth flow of goods across borders.

The establishment of a single market has introduced new distribution systems for customs and excise revenue, which has necessitated adjustments from logistics companies. The secretariat of the African Continental Free Trade Area (AfCFTA) agreement launched an interim trading arrangement with eight qualifying countries (Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania and Tunisia) to test the agreement’s provisions while negotiations are ongoing. Although trading under the AfCFTA started in January 2021, commercially significant trade has yet to happen, primarily due to the delayed Phase 1 negotiations on trade in goods and services such as the negotiations on Rules of Origin (RoO).

Regional integration arrangements further complicate matters. For example, the coexistence of the Southern African Customs Union (SACU) and the Common Market for Eastern and Southern Africa (COMESA) poses specific challenges. Intensive documentation requirements, samples for laboratory analysis, complex tariff classification, and valuation delays are some other hurdles that affect trade facilitation.

In this challenging environment, logistics companies play a pivotal role. DACHSER South Africa has been successfully navigating these complexities for over forty years, providing comprehensive logistics and customs management solutions that ensure the smooth movement of goods.  “Our commitment is to provide our clients with a holistic and seamless solution and we see ourselves as an extension of their businesses.  This means that we take care of all aspects of the transportation, including customs, storing, handling and the safe delivery of goods from origin to destination.” 

To deal with customs challenges, DACHSER focuses on compliance, transparency, and adaptability, says DACHSER Managing Director Detlev Duve. "Compliance with local and international customs regulations is essential, requiring a detailed understanding of these laws and regulations. Transparency in operations helps build trust with authorities and clients, while adaptability allows logistics companies to adjust to changing regulations and market conditions."

In order to avoid significant time delays and unforeseen cost implications, Duve says it’s vital that companies involved in international trade understand and comply with changing regulations and requirements. However, getting to grips with regulatory environments be challenging for companies and divert resources away from core business priorities, making a trusted logistics partner an essential part of doing business.

Duve says DACHSER's teams are well-versed in customs regulations and procedures. “We ensure compliance with customs requirements, including correct classification and documentation, which can save customers considerable time. Understanding Incoterms and maintaining a good working relationship with local customs authorities are key components of our approach. We further consider where costs can be saved or passage expedited. For example, certain processes could entitle an importer or exporter to claim back a percentage of duties paid to customs.” 

Customs developments have also created some opportunities for logistics companies and clients to streamline their operations.  For example, in South Africa, the government has introduced measures such as accredited client statuses for those registered for customs and excise activities.

Global logistics operations like DACHSER are also able to fully leverage technology to improve their customs handling processes. “Our digital tools assist in accurately calculating duties, tracking shipments, and ensuring documentation is correctly filed, reducing the risk of errors and delays,” says Duve.

DACHSER South Africa also offers value-added solutions for clients such as bonded storage, which allows cargo to be stored for up to two years, improving cash flow for importers. The company further provides an option for clients when a portion of imported goods will be directly exported, sparing them from having to pay duty and VAT twice. “If the client does not need to clear the entire shipment, DACHSER South Africa will clear the goods directly into our bond store and no duty or VAT will be paid until the cargo is moved out,” Duve explains. “If a portion of the stock needed to go to an African country, we would move this out with a bonded truck to that country, where the cargo would be cleared.” 

While the customs landscape in South Africa and Africa presents formidable challenges, logistics companies like DACHSER South Africa have found ways to navigate these complexities and deliver excellent service to their customers. Now more than ever, the value derived from using an experienced logistics provider in Africa can lead to significant cost savings.

For a sustainable society: More and more NGOs are taking action around the world

In the course of globalization, internationally networked non-governmental organizations or NGOs are playing an increasingly important role. DACHSER’s partnership with children’s aid organization terre des hommes demonstrates how a company can support an NGO over the long term.

Environmental protection, human rights, joint development projects, migration, anti‑discrimination: the importance of non-governmental organizations, or NGOs, for society is great. Independent of states and governments, they advocate for social, socio-political, or environmental issues. The coronavirus crisis is making the work of NGOs more urgent, as humanitarian aid in developing countries is now more important than ever. This is a challenge for many such organizations, as their work is often hampered by travel bans as well as difficult working conditions and hygiene measures on site. In addition, many of those who donate are less willing to do so in times of crisis. Yet this is exactly what NGOs depend on, because in addition to membership fees, donations are their main source of financing. Transparency with regard to an organization’s cash flow and what it achieves with those funds is now all the more critical for strengthening donor confidence. Many NGOs inform their donors regularly via press releases, newsletters, or on their website about individual projects and the use of funds. NGOs are also monitored by auditing companies and the relevant tax authorities to ensure that they are using donations correctly. A “donation seal” from the German Central Institute for Social Issues (DZI), headquartered in Berlin, helps engender even greater trust on the part of the donors. The seal guarantees that the respective NGO is trustworthy and that the work they do is respectable.

DACHSER supports terre des hommes

According to estimates, there are currently tens of thousands of NGOs worldwide, providing medical care in crisis areas, looking after refugees, supporting micro-enterprises in the start-up phase, and more. One of the leading children’s aid organizations is terre des hommes. Founded in Germany in 1967, the organization protects children from slavery and exploitation, cares for the victims of war, violence, and abuse, and provides education and training for children. The German arm of terre des hommes currently supports 386 projects around the globe. International logistics provider DACHSER has been supporting the work of terre des hommes in South Asia, southern Africa, and Latin America since 2005. In keeping with the principle of “helping people to help themselves,” terre des hommes implements local aid projects to permanently improve the lives of children and the others in their villages. “As a global logistics company, we have operations around the world that bring people, markets, and manufacturing closer together. Yet not everyone is experiencing the benefits of globalization. It is our responsibility to stand up for these people and improve their living conditions,” explains Bernhard Simon, CEO at DACHSER.

By extending its contract with terre des hommes through 2025, DACHSER will be supporting the North Indian state of Bihar as well as projects in New Delhi and Uttar Pradesh. Taking a look at the latter, Ingrid Mendonca is coordinating an aid project there for terre des hommes Germany and is enthusiastic about the commitment of the locals, especially now during the coronavirus pandemic. “Not only do the youth groups support their own communities, sew masks, and procure food, but they are also getting in touch with young people in other villages, districts, even states and getting organized,” Ingrid Mendonca says. “Their commitment to improving the situation is inspiring.”

DACHSER employees also benefit from their employer’s commitment to social responsibility and can support terre des hommes projects on site. For example: Melanie Diem, Team Leader Project Management at DACHSER, coordinated a sustainability project by terre des hommes and DACHSER in Livingstone, Zambia. DACHSER Young Professionals and students from the terre des hommes network took part in the project. “The participants’ commitment to the cause was very impressive. DACHSER employees have the opportunity to immerse themselves in the work of an NGO, an area with which they might otherwise never come into contact,” Melanie Diem explains.

A special kind of commitment

The partnership between DACHSER and terre des hommes shows that together, a commercial company and an NGO can achieve amazing things. “Our collaboration with DACHSER is particularly valuable and important to us because it involves a huge personal commitment and open and honest dialogue,” says Stephan Stolze, head of the fundraising department at terre des hommes. “DACHSER’s employees and CEO Bernhard Simon in particular are deeply involved in the terre des hommes projects funded by DACHSER. They want to know how the people on the ground are doing and to what extent DACHSER’s support succeeds in helping to improve the living conditions of the local people.” In 2018, DACHSER’s commitment was recognized with the German CSR Award in the “Social Engagement” category. Partnering with an NGO makes DACHSER a pioneer, as only a few companies in Germany support internationally active NGOs. “Larger, international companies in particular should seriously consider the UN’s 17 Sustainable Development Goals and support projects in these areas for as long as they can,” Stephan Stolze says.