Supply chains across industries are going through an unprecedented global disruption in the wake of the Covid-19 pandemic which has shuttered airports, seaports and hampered the movement of goods and people around the world.
A lot of the early focus on supply chain disruption was on China as the world’s manufacturing center and the first venue of the Covid-19 breakout. That concern quickly shifted from day-to-day widgets to worries about the global pharmaceutical supply chain, China and India alone supply 90% of the finished product or raw material of many small molecule drugs to the United States, Europe and Africa.
With Africa much of the focus is on supply chains around health and agriculture including food security—30% to 50% of the food produced in Sub Saharan Africa is estimated to be lost along the supply chain. The issue might be less about major disruption on continent but more about the over-reliance on underdeveloped supply chains which struggle in the wake of the global crisis.
This month the United States Agency for International Development (USAID) announced a $15 million award to support a training center in supply chain management in Ghana to meet some of these challengess. The new Center for Applied Research and Innovation in Supply Chain-Africa (CARISCA) will be established at the Kwame Nkrumah University of Science and Technology in partnership with Arizona State University.
The center is set to “train researchers and practitioners, produce new research, and translate and apply state-of-the-art research from around the world to improve local supply-chains, particularly in health care and agriculture.”
“It’s important we start addressing the broken and inefficient supply chains which have stunted Africa’s economic growth and the place to start is by training people to better manage the supply chains that currently exist,” says Brian Aoeah, a New York-based venture capital investor originally from Ghana and grew up in Nigeria. His firm Refashiond Ventures specializes in backing supply chain startups. “There’s much work to be done, but this is a good start.”
One of the challenges the USAID sees in Ghana and other African countries is professional managers making key supply chain decisions with “little or no formal training” in supply chain management. The belief is this has led to inefficiencies in service delivery which inevitably end in inflated prices and decreased availability of essential goods.
Over the last decade as China’s influence has grown across Africa with, hundreds of millions of dollars in investment by Chinese entrepreneurs opening everything from factories to wholesale warehouses, there has been a school of thought Africa would eventually be the world’s next manufacturing base, as it promised cheaper labor than China, where labor costs have rising. However, one of the reasons other observers have poured cold water on that idea is the lack of widespread basic infrastructure and expertise to efficiently run the time-sensitive supply chains needed to shift significant manufacturing production to the continent.
Aoeah says the global economy is dependent on the efficiencies of the various interlinked supply chain networks so even just a 1% improvement in operating an aggregate $90 trillion economy could be significant. Africa could achieve much bigger savings than 1%.
A transformation of supply chains is expected around the world in a post-Covid world and for Africa there’s plenty of hope being placed in the Africa Continental Free Trade Agreement (AfCFTA) as an opportunity to create larger markets and make regional manufacturing economically more feasible.
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