Africa Update: News from the Logistics Sector

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Somalia and Ethiopia have jointly invested in four seaports to attract foreign investment in both countries. E-Commerce is still on the rise in Africa with a growing demand for logistics capabilities. And Air Namibia launches new flight services from Namibia to Ghana and Nigeria. Here is a small summary of news from the African logistics sector.

Somalia and Ethiopia invest in four seaports on the Red Sea

Somalia and Ethiopia have jointly invested in four seaports to attract foreign investment in both countries. Somalia’s President Mohamed Abdullahi Farmaajo and Ethiopia’s Prime Minister Abiy Ahmed during a meet at Mogadishu, issued a joint statement of pledges to cooperate on everything from the development of infrastructure including roads linking the two countries to expanding visa services to promote cultural exchanges.

The Horn of Africa’s Red Sea coastline extending north of Somalia through Djibouti and Eritrea toward the critical Suez Canal is already dotted with ports owned or run by countries locked in a regional struggle: The United Arab Emirates and its ally Saudi Arabia on one side, and Turkey which backs Qatar on the other.

“The leaders further agreed to invest in logistics and service provision especially to leading ports in the continent that can serve both the Indian Ocean and the Red Sea,” the statement read.

The day before Abiy’s visit to Somalia, UAE pledged to give $3 billion to Ethiopia in aid and investments, in a major show of support for the new leadership in Ethiopia. The strengthened partnership between Ethiopia and the oil-rich Gulf monarchy is significant in the context of Addis Ababa’s ties with Mogadishu. Somalia and the UAE have been at odds for months over the broader dispute in the Gulf region. In May, Ethiopian state media reported that Ethiopia had taken an unspecified stake in the port of Djibouti, its main gateway for trade.

Changing Landscape of African E-commerce

Despite Africa’s transport and regulatory infrastructure being riddled with challenges, some countries of the region are taking the initiatives wherever possible to build e-commerce logistics capabilities. The pace of adoption for logistics technology and online payments solutions is slow. Poor logistics integrator network, lack of postal services, and poor road connectivity for last-mile delivery to landlocked countries, in addition to air freight capacity constraints, need immediate redressal for e-commerce to thrive in Africa as the transportation costs are three to five times higher compared to that of developed countries, Nahida Jafferi reports.

African consumers are projected to spend nearly $75 billion online annually by 2025. According to Statista, the e-commerce sector in Africa generated $16.5-billion in revenues last year, and it is estimated to make $28.9-billion in revenues by 2022. Around 93 percent of the population in African continent own cell phones, according to ‘Afro Barometer’. Less than a third of Africans have the internet service to make online purchases.

Due to logistics issues and lack of funding, 70 percent of e-commerce startups in Africa are not profitable, finds a report by Disrupt Africa on e-commerce startup ecosystem 2017. It also found that 90 percent of investment is going to startups in five African countries. Of the total, 54.40 percent of Africa’s e-commerce ventures are located in Nigeria, the continent’s largest economy and most populous nation (more than 180 million people). Jumia.com has become the best-funded online marketplace in Africa that surpassed a billion dollars in market value. Jumia.com that has presence in 11 African markets, is betting big on Nigeria as its base for expansion. Its other markets include Algeria, Cameroon, Egypt, Ghana, Ivory Coast, Kenya, Morocco, Senegal, Tanzania, and Uganda.

Air Namibia launches flights on Lagos-Accra route

Air Namibia launched the Windhoek-Lagos-Accra flight service, with the return routing from Accra-Lagos-Windhoek. The new service is expected to reduce flight hours in West Africa by 60 percent.

The airline said the new route fits in with the growing business and increases our footprint on the African continent. The Air Namibia route to Ghana and Nigeria will reduce travelling time to West Africa by 60 percent. The acting MD of the airline, Mandi Samson, said the airline anticipates closing a gap in the market by competitively connecting Southern Africa to West Africa within less than six hours.

Air Namibia will service this new route with the Airbus A319-100, offering a seat configuration of 16 business class and 96 economy class seats and offers two tons of cargo space. The service will operate four times a week on Sunday, Monday, Wednesday and Friday.

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