SA risks losing role as world’s ‘supply chain gateway to Africa’

South Africa risks losing its role as the world’s ‘gateway to Africa’ if it does not respond to rising competition from other African countries, indicates research released last week.

In its 2012 publication of SupplyChainForesight, Barloworld Logistics said that Nigeria was seen as the most likely to overtake South Africa as the leading economy and gateway to Africa.

“South Africa’s position is now under threat from other African countries like Nigeria, Egypt and other Southern African trade corridors such as the Maputo corridor,” said Barloworld Logistics marketing executive Kate Stubbs.

“The research highlights that South African organisations need to understand the threats and opportunities present for industry and the national supply chain in other African markets,” said Stubbs.

Respondents comprising top management and business owners across all sectors of the South African economy ranked making better use of the supply chain to gain competitive advantage as a critically important strategic objective.

More specifically, respondents indicated that when it came to supply chain management, the cost of transport is the most significant constraint when doing business in the country: South Africa’s economic hub, Gauteng, is located about 600 km from the closest port, making it a transport-intensive economy. Furthermore, its imbalance between road and rail costs will be exacerbated by the imposition of tolling and carbon tax fees.

Other factors cited as restraining the supply chain include finding skills and expertise to enhance the supply chain segment, the inefficiency of ports and harbours, labour unrest affecting supply chains and reducing the environmental impact of supply chains.

“These days cost management and partnership are essential to the use of the supply chain as a competitive advantage,” said Stubbs.

Meanwhile, in further recognition of Nigeria’s improving economic conditions, rating agency Standard & Poor’s has issued an upbeat report on the country’s banking sector.

In its report, Standard & Poor’s said the overhaul of Nigeria’s banking sector, beginning in 2009, had strengthened corporate governance and improved banks’ performance.

“Nigeria now has fewer, but larger, banks, with better corporate governance and regulatory oversight.”

But Standard & Poor’s warned that Nigeria’s banking sector still needed a longer regulatory track record before the rating agency could stop considering corporate governance and regulatory oversight to be among its key risks. “In our opinion, risk management — particularly in higher-risk lending such as foreign currency loans and retail — and access to low-cost funding will be the key differentiators affecting banks’ performance going forward,” it said.