Tag Archives: African business

Out Of Africa – Procurement News

On the cusp of a groundbreaking Procurement event, in the wake of catastrophic pre-COVID events, and despite grim economic outlooks and stifled Supply Chains, Africa is proving itself to be an innovative, resilient force in World Procurement


It’s an exciting time for Procurement in Africa! Two leading influencers in the African Supply Chain and Procurement profession have created AFRICA SUPPLY CHAIN IN ACTION: the largest ever online learning, knowledge sharing and networking event for the profession focusing on Africa. SAPICS, The Professional Body for Supply Chain Management, has joined forces with Smart Procurement, Africa’s leading supply chain and procurement information service, to present this ground-breaking event on August 19 and 20 2020.

More than 1000 delegates are expected to attend: a significant proportion will no doubt be the thousands of Africa-based Procurious members! Join SAPICS and Smart Procurement along with Procurious’ greatest minds and register here.

AFRICA SUPPLY CHAIN IN ACTION will help African Supply Chain professionals position themselves and their businesses to adapt and thrive, now and beyond COVID-19. Their exciting packed programme will examine what Africa has learned from the COVID-19 pandemic and how individuals and organisations must work together to change the dialogue, strategies, and operating models in response to the new tomorrow.

This happens just as Africa is currently pioneering very positive developments in Procurement Technology. Africa’s pains during the COVID-19 pandemic have been well-documented: the lockdown of key countries’ exports, closure of borders and factories, and poor healthcare facilities. However, despite the doom and gloom, there is a general level of optimism and enthusiasm for innovation by people across the continent. Entrepreneurs in Nigeria, South Africa and East African countries are developing digital applications to solve our 2020 supply chain problems. 

While fruit, vegetable, meat and seafood exports into Europe have taken a temporary hit, agritech solutions, such as remote sensing of crops and data- mining and analysis using e-platforms, are successfully being adopted by commercial farmers as part of their digital future. Nigeria is leading the way in applying technology to improving regional logistics: the transportation start-up Kobo360 is now in most countries in West Africa.  Kenya and Uganda lead the way in affordable mobile services to support small business. The South African government is using WhatsApp to run an interactive chatbot which answers all types of queries about COVID-19, including business-related issues.   

While Africa as a whole has recorded relatively few deaths from the disease, the numbers are rising and African countries are struggling to contain the spread. McKinsey has proposed different scenarios for Africa’s economic growth in the wake of the pandemic, the most likely being an annual growth rate as low as -3.9 per cent. This is based on the most realistic scenario: a lack of containment both globally and in Africa. The health of Africa’s Supply Chain and economy rests significantly on whether or not the spread of COVID-19 can be contained so trade can resume.

Africa’s trade with China

China’s exports to Africa over the last two decades have remained steady with South Africa, Nigeria and Egypt its three largest trading partners. Africa’s exports to China have been increasing, but are heavily dependent on commodity prices; the main products exported are raw materials including copper, iron ore and oil coming from Angola, South Africa and the Republic of Congo. While the data is not 100% reliable due to China’s reporting process, it is accurate enough for us to see the trend before this current crisis.

Figure 1


Foreign direct investment and agricultural investment in Africa by China has also been increasing over the same period but the trend was already slowing before the current crisis. There are still some high-value engineering and construction projects happening, especially in North and East Africa.

That was then …. this is now

Most of Africa is closed for business right now. Seaports are mostly closed, air cargo and other transport routes are limited and business lockdowns are in effect, halting exports. In China, Mass production shutdowns and supply chain disruptions due to the current crisis are causing problems. For example, 85% of South Africa’s mobile phone imports are from China, their largest import category by value. Not only does this impact the end consumer, it also affects the wider telecommunications industry and many service sectors.

The Chinese economy is not likely to bounce back from this pandemic as quickly as in previous similar episodes (Bird flu 1997, SARS 2002-2003, Swine flu 2009). Despite this, China will probably continue to be one of Africa’s biggest trading partners after the worst of this crisis has passed.  

Africa’s global trade  

Global law firm Baker Mackenzie notes that “over three-quarters of African exports to the rest of the world are heavily focused on natural resources and any reduction in demand impacts the economies of most of the continent”.  They identified such countries as the DRC, Zambia, Nigeria and Ghana as being significantly exposed to risk in terms of industrial commodity exports, such as oil, iron ore and copper.  They expect that once COVID-19 is brought under control it could lead to an increase in the demand for raw materials from Africa, especially from China.

 Figure 2 – Africa’s commodity exports to the world

 

Source:  Chatham House 2020


Africa’s Exports to Europe

Africa’s exports to the European Union stood at around US$133 billion in 2016. Most African countries have duty-free access to the EU market.  Raw materials normally account for 49% of the value of Africa’s exports to Europe. It is expected that this will return to near normal when mining activities resume at full capacity.  It is not that clear whether manufactured goods such as textiles and machinery will get back to current levels of 35% of exports. Food products and beverages make up the other 16%. 

In sub-Saharan Africa, South Africa is the strongest and the most engaged when it comes to trade with the EU, supplying fuels and precious metals and other mining products, as well as machinery and transport equipment. The main destinations are Germany, Netherlands, Italy and the UK.  West Africa is also a leading exporter to Europe.  Animal products, vegetables, tobacco, and textiles are mainly imported from Benin, Senegal, Ghana and Guinea. Other countries, like Niger and Sierra Leone export commodities such as diamonds, uranium, and precious metals primarily to France, Italy, and the Netherlands.

What is next for Africa?

Normal business operations, as we know them, will be irrevocably changed as a result of this current pandemic. Many companies were not prepared for the level of disruption this unforeseen crisis would bring. We may not ever return to “normal” practices or to the marketplace as it was. What is clear is that companies that gave scant regard to managing their supply chain risks have received a wake-up call!  Companies are advised to consider a range of different possible scenarios and develop plans to deal with each eventuality.

How did your Procurement Team handle the crisis so far? 

As activities start to normalise, we need to reflect on how well we have been able to navigate the previous 3–6 months. A study of the success, or otherwise, of procurement events will highlight areas of improvement. 

  • How well did we execute emergency sourcing events?
  • Did we make the best use of our available technologies?
  • Did we act at the right time and in the right way with our suppliers? 
  • How could we have managed our sourcing processes better?

AFRICA SUPPLY CHAIN IN ACTION aims to answer all of these, 19-20 August 2020. Read up on the latest Procurement news and game-changing ideas on Procurious before registering here.

The path forward for Africa will no doubt be challenging, but it’s up to us to pave it – and together, we can.


How South Africa is Building Engagement with Small Business

A thriving small business community is a sign of a prosperous economy. In South Africa, a new network has been launched to help build engagement with these enterprises.

Procurement on-line portals that efficiently link prospective buyers with qualified small enterprises are the next big thing.

Technology is now available that allows us to quickly and smartly facilitate business transactions for mutual benefit, why are we not doing more to support Small, Medium and Micro Enterprises (SMMEs)? Central and local government departments spend billions; some of this procurement expenditure can be channelled in to the development of the SMME sector.

Some ‘portals’ exist primarily to deliver advice and guidance, that’s useful but it’s not enough.

Why is developing SMMEs important?

A thriving and growing small business community is a sign of a healthy economy. One main objective across Africa is to stimulate economic growth and create jobs; this is one way to do it.

Public sector bodies in South Africa have been urged to ensure their purchasing strategies “explicitly recognise the significant benefits of procuring from local small businesses”. The Minister in charge of small business development said that small businesses have been “historically shut out as a result of bureaucratic and costly procurement practices which favoured big suppliers”.

Developing the SMME sector solves many challenges for governments and for companies that have diversity or enterprise development targets.

South Africa’s initiative

South Africa has a fully functioning SMME solution that has now been in operation for five years. The Supply Chain Network (SCN) came about by necessity. Organisations are required by government to assist in creating jobs for the lesser skilled and unemployed sectors of the population. This portal is made affordable by the support of big businesses and especially by one of the major banks.

It works for the seller by…

  • Providing a profile page with all key information about the seller
  • Showing the seller’s credentials, certifications and trade references
  • Providing a platform for advertising goods and services using an e-catalogue with images

SCN provides a verification service that allows the approved seller to get a priority listing in search results.  Sellers with a high profile score have a better chance of attracting bigger and better clients.

A great feature is easy access to tenders. Available tenders are interrogated using a powerful search facility which all allows for setting up alerts using key words. Tenders can be accessed in summary form or in full detail, saving time and effort for the seller.  

Better still, it works for the buyer…

  • SCN manages vendor certification renewals so that all credentials are current, including Tax Clearance and Company Registration
  • Buyers can use verified information to update their master vendor files
  • Due diligence is simplified, as buyers can rely on the integrity of the profile information
  • The search function uses standard industry terminology (UNSPSC) and smart filters

The SCN system also provides an eRFQ facility with built-in rules. Suppliers can upload all their attachments electronically as part of the response. It is an on-line paperless solution that includes automatic notification to suppliers of any changes, updates, withdrawal, regrets and awards. Particularly useful is the full audit trail on all sourcing activity.

Supply Chain Network in South Africa is a low-cost solution that aims to promote the objectives of growing a healthy small business community. Why can’t it work in other emerging markets?

You can find out all you need to know about the Supply Chain Network on its website.