Although supply chain digitization of in Africa and the rest of the world is not a new concept, it has been emphasized in recent years due to the pandemic and recent geopolitical crisis, which caused many disruptions for supply chains across the globe.
Across the globe, an average supply chain has a digitization level of 43%. However, that number in Africa is much less, with roughly less than 10%. Yet, digital supply chains are lauded as the next frontier in the global supply chain industry. However, in Africa, it remains a dream. Well, mostly. And that is not good enough for the fastest-growing economy in the world.
A lot needs to be done if we will have any hope of catching up with other developed nations.
In a world where corporations are investing in significantly more technologies to streamline their supply chains, what are the reasons for the slow rise of supply chain digitization across Africa?
Poor Leverage of Technology
It is a popular school of thought that small and medium businesses in Africa find it difficult to invest in technology.
However, the same business owners have no problem investing in those technologies for personal use. So the problem is not the lack of embrace or rejection of technology. Its a lack of motive to leverage the technology in the supply chain. Many of these businesses are doing the bare minimum when investing in technology tools for their supply chain.
For example, it is 2024, and Excel Spreadsheet is still the go-to tool for many supply chains.
It makes one think that supply chain digitization is still far from becoming a norm on the continent. A chief reason for the refusal to leverage technologies is that many supply chains already enjoy decent success. Although it comes at the cost of many man-hours. With labour being so cheap in the continent, you might be inclined to give the businesses and supply chains a pass.
However, consider how much more effective they will be by embracing more technology.
Businesses that invest in supply chain digitization enjoy a 3.5% increase in profit. but that’s not all there is to it. With the cheap cost of labour across the continent, how much more do supply chains stand to gain from digitization?
Poor Infrastructure
Unfortunately, the African continent is riddled with poor road networks, electricity supply, security, and bad government policies.
These factors significantly complicate the digitization of supply chains for many businesses. The thing about digital supply chains is that they are designed on the blueprint of traditional supply chains. But the average traditional supply chains are already complex enough without the pressure of external factors like poor infrastructures or bad policies from the Government.
When you factor in these two, It creates a unique set of complexities, making it difficult for supply chains to adapt digitization.
Take, for instance, the Apapa port in Nigeria, the largest in West Africa. The port is drowning in so much backlog with very little government assistance. Transported imported goods from the port can take a business months. Then, the business has to battle the country’s poor terrain and rising insecurity.
The point is tt will be very difficult to get a business or supply chain manager to adopt digital supply chains when they believe the problem lies with the government.
Lack of Skilled Labour
Globally, there is a shortage of skilled labour.
Africa is one of the economies hit the hardest by this, especially in agriculture, construction, and healthcare. In recent years, the continent has also suffered a max exodus of skilled labourers from these industries to different countries and continents across the globe. It presents an odd problem, especially regarding business and supply chain investment.
Without skilled labour, it is difficult for businesses to implement and maintain digital supply chains.
Considering the size of investments, businesses and supply chains would rather avoid taking the risk.
Lack of Access to Funding
Businesses can only grow and scale with adequate funding.
This funding usually comes in the form of loans or grants. And in Africa, it is increasingly difficult to access loans and other credit facilities, primarily because of the economic downturn brought on by the pandemic and the poor economic situation plaguing the entire continent. Even when businesses have access to funding, it often pales in size to the estimated sum needed for the investment. With the foreign exchange value at an all-time low, businesses need more incentive to invest in supply chain technology, especially when they do not believe they can recoup their investment.
The good news is that we can turn it around, but it requires more than just the business owners. All stakeholders must play their part.
Africa has a lot to offer economically, but when their supply chain suffers, it cripples the impact of the economy.
Obinabo Tochukwu Tabansi is a supply chain mastro and writer with a decade of experience working in different facets of the supply chain. Today he is living his passion for writing on all things supply chain. His blog, Supply Chain Nuggets, is Africa’s fastest-rising supply chain blog, helping professionals, business owners, and curious minds navigate the supply chain complexities on the continent.
