Supply chain quality, reliability and timeliness are key for any emerging market. However, with all of the attention on Africa as an investment destination in recent years, the continent’s infrastructural deficiencies, fragmented transport networks and institutional weaknesses have highlighted the importance of improving logistics and freight transport. Although freight transport in Africa is generally characterised by high prices and long delays, the situation varies substantially across the continent and is improving significantly in certain regions thanks to the construction of new infrastructure and efforts to streamline administrative processes. This is particularly the case in North Africa.
Traditionally the best-performing region on the continent in terms of the movement of goods, recent years have seen some countries in North Africa make additional strides. Heavy capital spending in transport and industrial zones, such as Morocco’s Tanger-Med port or Algeria’s Djen Djen port, have helped expand shipping capacity, with concomitant investments in warehousing, multimodal facilities and domestic distribution networks also playing their part.
However, the region is not without its constraints. The closed border between Morocco and Algeria limits broader integration and constrains regional trade to less than one-tenth of overall trade volumes, though the outlook does appear to be brightening.
High Costs Low Efficiency
While freight remains expensive in Africa as a whole, North Africa has traditionally performed better. In the World Bank’s 2014 “Logistics Performance Index” (LPI), MENA only slightly underperformed upper-middle-income countries when measured on the efficiency of the clearance process, quality of infrastructure, ease of shipping, timeliness and quality of logistics services.
Egypt fared the best in the region, ranking among the top-10 middle-income performers globally, while Algeria came second, Tunisia third and Libya fourth. Morocco was not included in the index. In all but one area North Africa fared better than sub-Saharan Africa.
Similarly, according to the trading across borders category of the World Bank’s 2014 “Doing Business” report, importing and exporting a standardised container is more costly in sub-Saharan Africa than in North Africa. Exporting a container cost €1470 on average, while importing cost €2154. In MENA, by contrast, export costs ran at around €857, while the cost to import was closer to €961 – significantly lower.
The same differences play out in terms of timing. World Bank data showed it took longer on average to import a container in African countries than in any other region – 37.6 days. Likewise, at 30.5 days it also takes longer to export a container from Africa than from any other region except South Asia (33.4 days). In MENA figures were closer to 29 and 19 days, respectively. Even the amount of paperwork is lower in the region, with two to three fewer documents required for both.
Multi-Modal Challenges
This is not to say that everything is perfect in North Africa. The average time it takes to ship something from its point of origin to an export node in Algeria is three days, according to the World Bank’s LPI. Furthermore, interfaces between major modes of freight transport are also underdeveloped, in particular linkages between sea and land transport – though multimodal integration is strong in some countries, notably South Africa and Morocco. As a result, shipping containers often arrive at a port and, instead of being loaded onto trains or trucks, are emptied of their contents, which are then transported to their final destinations via other, less efficient means of transport (known as “stripping and stuffing”).
While factors such as limited rail capacity and the closed border between Morocco and Algeria play a major role in this problem, the issue runs deeper. For example, the African Infrastructure Country Diagnostic found that “Customs administration and restrictions on entry into transport markets are blocking the development of multimodal transport”.
Several countries are looking to roll out linkage programmes to reduce transfer and distribution times. The Algerian government is currently building several new cargo areas to facilitate logistics operations, including the Rouiba logistics platform in Algiers. A second cargo area is being developed in Bordj Bou Arréridj to serve the Béjaïa port. Covering 20 ha at a cost of AD3.5bn (€32.2m), it should be operational by 2015.
New logistics areas at two other ports will also help alleviate the lack of space, including the AD500m (€4.6m), 5-ha cargo area of Ighil Ouberouak, 5 km from the Béjaïa port, and a larger area, spanning 19 ha, in El Kseur. The latter is strategically located near the Constantine-Algiers rail and the East-West Highway.
Algeria is not the only one making changes. Moroccan authorities plan to complete a network of 15 industrial parks and 18 dedicated logistics zones by 2030, spurring activity in agriculture, retail, manufacturing and natural resource processing, among others. Some are already in operation, including two platforms in greater Casablanca, with the government planning to launch work on at least nine more in the coming years.
Customs
Long Customs clearance periods are one of the biggest issues affecting transport times, and by extension, costs. The World Economic Forum’s 2012 “Executive Opinion Survey” saw burdensome import procedures as the most problematic factor for importing goods into Africa, while the 2013 “Africa Competitiveness Report” noted that “excessive physical inspections” are a major source of delays on the continent.
Customs procedures are often highly inefficient. A 2012 African Development Bank report found “the average Customs transaction involves 20-30 different parties, 40 documents, 200 data elements (30 of which repeated at least 30 times), and the rekeying of 60-70% of all data at least once”, with extensive Customs procedures usually required on both sides of the border. Inefficiencies arise in part from the low prevalence of automated electronic Customs processing systems, as well as from underdeveloped information and communications infrastructure and services, undermining administrative efficiency and adding to costs and delays.
While North Africa outperforms the continent, it still faces challenges. Algeria requires twice as many documents as an OECD country to import a container, which can take up to 10 days to prepare. At points in the past, Customs inspected all containers rather than following random inspection procedures, dramatically slowing processing. However, this is improving as well. In 2013 Faysal El Hajjami, DHL Express president and managing director for the Maghreb region, told OBG that in Morocco, “the Customs clearance process has improved over the last three years. The open dialogue between Customs authorities and the private sector has resulted in a significant increase in the speed and volume of clearance operations”.
International linkages are set to improve thanks to greater cooperation between Mediterranean ports in recent years. The ports of Oran and Béjaïa were recently included in the EU’s Motorways of the Sea project, which aims to standardise management and port procedures in the region, with the two ports set to receive technical support from the EU to enhance operations.
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