The successful implementation of the African Continental Free Trade Area (AfCFTA) is expected to drive substantial growth in the transport and logistics sector, with projections suggesting an increase in intra-African freight demand by 28%. This could result in a need for nearly 2 million trucks, 100,000 rail wagons, 250 aircraft, and more than 100 vessels by 2030. A recent report by the World Economic Forum highlights the opportunities for growth in the transport and logistics sector that the AfCFTA will open up. The following are the main takeaways from the study:
- Unlocking intraregional trade will skyrocket the demand for logistics, with more small and medium-sized enterprises needing logistics providers to connect to bigger markets. If commodities prices drop due to the removal of trade barriers and import costs, consumption and demand will increase, to the benefit of African manufacturers and the logistics and transport sector.
- Road and maritime freight transportation offer, at present, the biggest opportunity as the infrastructure for air and rail transportation is still being developed.
- There is potential for digital logistics companies to step in and reduce costs, as well as improving the quality of services. One of the prominent players in this field is Nigeria’s Kobo360, which connects truck owners with clients requiring cargo transportation – an Uber for trucks. Other companies with similar business models include Lori Systems and Sendy.
- Closing the urban-rural divide presents significant opportunities for the logistics sector. Inadequate road infrastructure in rural areas can create isolation and challenges for businesses operating there. To address this, start-ups are developing innovative solutions such as cargo drones, inland waterways and ports, and alternative forms of transportation to improve connectivity and accessibility.
- Business-to-business logistics is expected to dominate the sector in the short to medium term. AfCFTA will accelerate opportunities for companies providing B2B services, including those specialising in digital logistics.
- However, business-to-consumer logistics will continue to grow as consumer spending rises, e-commerce becomes more prevalent and urbanisation increases.
Source: How We Made It in Africa