According to McKinsey, Africa’s consumer-facing industries are expected to grow by $400bn by 2020.
But Geoffrey White, CEO for Africa at global logistics services provider Agility, says that few African countries currently have the storage and distribution facilities needed to support the growth and expansion of fast-moving consumer goods (FMCG) businesses.
“The FMCG market is really strong and currently very underserved,” says White. “So moving goods for that sector is fundamental to our growth story and we are very bullish… FMCG is backbone of our African business.”
To meet this growing demand, Agility is undertaking a long-term strategy to establish a network of logistics distribution parks in 70 locations across the continent. “We have an initial target list of eight locations we are focusing on, and then we will just keep scaling it from there onwards. Looking at the lack of warehousing across the continent, and especially the lack of international standard warehousing, it’s clear that we need to go into every major city,” White explains.
“Speaking to our global clients, it’s interesting how many would like to do business in Africa but don’t, purely because they perceive that it is too difficult, if not impossible, to move goods into and out of markets. So hopefully this network of distribution parks will build confidence that people can do more business in Africa…”
The first of Agility’s new developments – a 16ha distribution and office park – will be unveiled this month in Accra, Ghana. White explains that Agility chose Ghana because it is a politically stable and easy environment in which to do business. He adds that Tema Port, Ghana’s largest seaport, is also about to expand, allowing more cargo to move through the country and to its landlocked neighbours.
The majority of Agility’s FMCG clientele across Africa are global multinationals with strong brands that either want to enter the continent, or expand their African portfolios.
“Equally importantly, there is a growing presence of young entrepreneurial businesses addressing the FMCG market from a local perspective. We are putting in the infrastructure to help those companies to grow and expand,” says White. “For local producers, having the right infrastructure and warehousing capabilities nationally and in neighbouring countries enables them to effectively expand their business regionally. It also builds a proper infrastructure base for people to be able to begin to export.”
Agility’s small and medium enterprise (SME) customers are drawn from the entire FMCG spectrum, and companies can take up individual units as small as 1,000m2. For small businesses constrained by cash flow, White explains, having access to warehousing in properly-organised distribution parks without having to make huge capital investments can be a game changer. At Agility’s facilities, companies pay a three-month deposit, sign a five-year lease and then have their own facility to operate from.
Even though sub-Saharan African economies are expected to post the slowest growth rate in over a decade, White says that Agility remains optimistic about the region. “Our commitment to investing capital at this stage remains exactly the same.”