How access to financing can transform African supply chains

Access to financing has all it takes to ensure African supply chains can have the freedom they deserve. Freedom to succeed, expand, or fail.

One of the major challenges plaguing many African supply chains is the issue of financing. Because of the lack of it, these supply chains have been majorly limited in what they can achieve. Some that rise through will take years of savings, risk aversion, and luck to get to the point where the supply chain can expand. But this doesn’t favour the economy.

Supply chains are the lifeblood of any economy. No matter how great a product may be, until it reaches the customer, the business has achieved nothing. This is why, in any economy, supply chains have the most spotlight.  Beyond tech, banking, and other appealing industries.

If any economy is reliant on its supply chain operations, it stands to reason that it is in the best interest of that economy to see to the expansion and growth of the supply chains operating within it. One such way is providing access to financing for these supply chains.

In this article, we will explore some of the ways financing can transform African supply chains.


1. Access to financing increases the capability of African supply chains

The success of any supply chain depends on its ability to meet the business and customer’s needs. The more a supply chain can do this, the better off the business and customers are. In fact, two of the core concerns of any business – customer happiness and costs are directly linked to the supply chain. However, many supply chains across Africa do not have what it takes to increase their capacity.

As a result, you have constant breakdowns of various infrastructures, including production machines, vehicles, etc. The business or the supply chain is constantly trying to meet increased demands but can’t do so. Providing financing for many of these businesses would be a game changer for them and many parts of the African economy. Increased capacity will also allow these supply chains to invest in alternate energy sources, security, and skilled labourers.

It’s no secret that infrastructure in Africa is severely lacking, and most successful supply chains have found a way to make for themselves by catering to their basic needs. Supply chains that cannot do this are basically left for dead.

2. Financing can promote innovation within African supply chains

Innovation is the cornerstone of civilization. All great civilizations across history were littered with innovative brilliance. African supply chains can also do the same. Innovation in supply chains usually falls into two categories: the product and the process. Many people tend to focus on the process because it is cheaper and leads to cost-cutting. On the other hand, and on many occasions, innovating the product will cost money, but that is ultimately more important.

Financing African supply chains allows them to innovate the products, giving customers more options and increasing satisfaction. A good example of a supply chain that did this perfectly was Amazon. The company and its supply chain could offer customers one-day delivery through innovation. A product that had never been seen. This was what catapulted Amazon beyond its peers in the logistics and fulfilment industry.

Similar innovations like that are possible in Africa, but lack of financing severely limits them and what they can accomplish.

3. Supply chains can improve their customer relationships

Customers are the end point of any supply chain operation. They are the destination the supply chain drives a business towards. Therefore, having a strong relationship with them is quite important. However, having a good relationship with customers depends on how effective and efficient the supply chain is. You will be surprised by what customers expect in a fast-paced world. Customers went from expecting deliveries in years, months, weeks, and days. Now, they are in the hour-and-minute lane.

Late deliveries generally discourage customers from patronizing a business. Incomplete deliveries and poor product return policy, and that business may never see those customers again. These are all issues that can be fixed by financing. The supply chains will suddenly have more options and the resources to ensure their customers get the best product and service at every single turn.

4. Financing will help supply chains in Africa mitigate risks

With adequate options, African supply chains would immediately have more options available to them. They can run their operations to the best of their ability and in an environment that allows them to thrive. As you can imagine, this reduces their exposure to risk because the supply chain can now choose what is best for it, rather than being forced into a corner. It is a liberating feeling for many supply chains.

Also, the opportunity to properly invest and maintain their infrastructure will reduce supply chain downtimes and allow them to get the most out of their operations.

Financing can do a whole lot for African supply chains, but it is important to note that financing with limitations and well-communicated expectations will be ideal for any business. This keeps them responsible while driving up the growth of their supply chain operations.