Interview: Geoffrey White
What potential does Ghana offer as a trans-shipment and transit centre for nearby countries?
GEOFFREY WHITE: I think Ghana is the natural gateway to West Africa. It has political stability and a strong economy in the medium and long term, supported by cocoa and oil, and is well positioned to become the centre for regional distribution. However, the efficiency of cross-border trade in West Africa is very poor and, as a result, trade within the region is estimated to make up only 15% of its total trade compared to up to 50% in developed markets. There are many constraints to growth in regional trade: lack of logistics infrastructure, such as roads, railways and airports; insufficient cargo handling capabilities; incompatible border systems for Customs and paperwork processing; outdated technology, IT and systems infrastructure; non-harmonised legal frameworks and regulatory incompatibility as well as language barriers and historical mistrust between countries.
What challenges do firms face when it comes to trading goods across West African borders?
WHITE: Distribution networks in West Africa involve some of the most expensive logistics routes in the world. This directly impacts all aspects of the economy, increasing the cost of goods for sale, the cost of manufacturing, the cost of imports and exports and the competitiveness of the region.
The high distribution costs in West Africa directly reduce the consumer’s capacity to purchase, as goods are more expensive. This leads to lower demand and therefore reduced volumes to be delivered, thus creating a negative economic cycle that is self-perpetuating. The solution to break the cycle has two components: the first is to invest in the physical infrastructure capacity in order to reduce congestion by developing logistics platforms with improved efficiencies; and the second is to develop the integrated systems, regulations and procedures to bring compatibility and simplified processes that result in lower costs and improved efficiencies.
How will expansion in domestic consumption impact warehousing capacity in West Africa?
WHITE: This consumer boom is triggering overwhelming interest from the global fast-moving consumer goods (FMCG) manufacturing sector, where manufacturers and suppliers increasingly understand the scale of the opportunity in West Africa and are seeking the logistics capabilities and services that are required to deliver products into this burgeoning market. In order to meet this demand for logistics support from new FMCG customers as well as from a growing number of African companies, Agility, for instance, is investing in and developing an integrated network of logistics distribution parks across Africa. The first of these, located at Tema port in Ghana, will open in the first quarter of 2016.
What can be done to reduce the cost of domestic distribution in West Africa?
WHITE: To support its economic development, it is vital for West Africa to pursue seamless integration of a multi-modal logistics network that aligns airports, ports, roads and railways into a single, coherent platform and provides for efficient cargo movement into and out of markets. Without the ability to trans-ship goods at competitive prices – by sea, air, road and rail – and to efficiently transfer freight across each mode of transport, economies struggle to develop. The infrastructure deficit in West Africa requires hundreds of billions of dollars of investment each year in order to develop the required capacity to meet market demand and build a competitive environment. This deficit can only be solved through the cooperation of governments, development finance institutions, banks and the private sector in developing innovative and collaborative funding solutions.
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