While South Africa is a major agricultural producer, the majority of its food exports currently bypass the African continent. This was unveiled during a webinar about the transport and logistics industry as a catalyst for the movement of goods across Africa.
Experts explored how more needs to be done to support the transport of agricultural products, especially on the African continent where there is a great need for food supply amid ongoing droughts.
The railway system plays a vital role in Africa’s transportation infrastructure, contributing significantly to the continent’s economy, society, and development. Calls were made to speed up investment in the railway system across the African continent.
Pros and cons of exports in Africa
Abilash Kunjupilla, the managing director at Imperial Clearing and Forwarding South Africa, explained that South Africa as an agricultural provider probably does not have most of its exports going to Africa, especially from a food perspective, however, some fruits like pomes like apples and pears, potatoes, and onions go into Africa.
“The latter does not really need a lot of cold chain, but the likes of apples and soft citrus do. What we are seeing in the agricultural industry right now is that there is a big shift happening from our traditional exporters selling into the northwest continent and Europe, and mostly Asia,” he said.
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Kunjupilla said the agricultural industry is a growing market in the Middle East and other African countries. He and his team are more involved in the airfreight of fruit and vegetables every week in Nairobi.
In silos, he added, there is enough protection for cold chain transport within the Southern African cluster.
“But if we start looking at areas north of South Africa like Zimbabwe and Zambia, which have a significant amount of agricultural produce being made. Most of that is for local consumption and not really for cross-border exports besides the non-cold chain commodities like maize and grain.
“For us, it is mostly to try and figure out how to bring rail capability from inland countries to across all the African ports,” he said.
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Investment in warehousing
Meanwhile, Mark Prommel, business development executive at Imperial Logistics, said there is a lot of product transportation done by road across the continent. However, he expressed the biggest mission to achieve is accurately discovering more about the warehousing systems.
“Some products might need to stop along the route and it is important to summon all the necessary figures correctly because of the growth that we are going to experience in the agricultural industry in Africa,” he said.
According to Prommel, because of the anticipated growth, there would be a need for an investment of about 8 billion dollars to get warehouses set up in strategic locations across the value chain.
“There is still a lot of investment about to take place and it is also about measuring the scale to achieve cheaper rates.
“We are starting to engage with a lot of clients who are already interested in the agricultural sector as a new market. We just started with those negotiations and we have appointed an industry lead in agriculture, and the South African Breweries (SAB) is one of the focus areas that we would like to work with in future,” he said.
Challenges hindering growth
Promell highlighted that most of SA’s intra-Africa imports come from Nigeria, Eswatini, Namibia, and Botswana, adding that SADC countries represent a large percentage of South Africa’s export destinations.
However, the transport industry still has challenges hindering further progression, namely the high tariffs, which he explained are the leading causes of trade friction. They bring significant risks to the economy of Africa, leading to few consumer choices, higher prices, and slower technological innovation.
“Despite some progress, sub-Saharan Africa has one of the lowest implementation rates in terms of paperless cross-border trade and government perspective.
“The 14.1 hours median cross-border times at South African borders are spent and trip rates make provision for the cost of lengthy border delays,” he said.
Prommel said there is still a lack of cold chain infrastructure to assist the transport of agricultural and perishable goods, which often leads to a loss of products.
A growing industry
However, Prommel remains confident that the demand for transport and logistics will vary across key sectors in Africa as trade barriers and import costs are lowered, and trade volumes increase.
“When it comes agriculture and agro-processing, intra-African trade in agriculture is expected to increase by 674%, if tariffs are eliminated under the AfCTA.”
Africa’s agriculture sector has huge growth potential and could be worth $1 trillion by 2023 if yields improve.
“Input providers will play a critical role in transforming Africa’s agricultural sector, not only to help the continent achieve domestic food security but also to become a global food exporter by 2050,” he said.
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