Enhanced Logistics Systems Will Be Key For Agriculture Development

Absa’s philosophy is to be relevant in the markets we do business in, and simultaneously we want to be a force for good. This is why we are excited by increased activity in the agriculture sector, but we need a serious review of logistics offerings on the continent to help realise the potential that Africa has.

At its core, we need to look at the logistics element from a couple of angles. The first and most obvious will be the physical infrastructure that is required. The second will be around cutting the red tape and making the movement of good as seamless as possible.

Food security and food supply are linked to the most basic of human needs and this is why we find great purpose in being one of the leading funders of agriculture on the continent. Our expertise here enable food producers and innovators in the agriculture sector to contribute to develop meaningful businesses that not only service the local community but also attract valuable export opportunities. This is key; we are not just servicing internal clients, we are wanting to be able to plug into global supply chains and showcase our products through international market places.

Across the whole African continent, we are seeing a lot of interest in high-value export products and investment in staple technologies and the production of staple foods. East and West Africa in particular are developing some exciting export markets and we are watching developments here closely.

Investment in logistical infrastructure is needed  

It is clear that the African Free Trade Agreement (AfCTFA) will have a positive effect in the short to medium term on the flow of produce on the continent. It is early days and difficult to measure the true impact at this stage. It is positive on its own, but to have a real, game-changing impact, it needs to be augmented by logistical improvements. One has only to look at the general state of roads, railways, harbours and storage facilities in South Africa – which is dubbed Africa’s most advanced economy. It is difficult to move goods profitably within the same country let alone across borders and this is a real concern – particularly for primary agriculture producers.

Dilapidated infrastructure, warehousing and clearing facilities are not functioning effectively and reliably and this is adding real costs to the local producers. Both the private and public sector will need to commit significant investment in the logistics arena. This is crucial to ensure AfCTFA can make the difference it intends to make.

Logistics investment follows good policies

While the AfCTFA agreement is a potentially game-changing development, this is only the starting point. To truly realise these benefits, we need to ensure that we standardise systems and legislation to move goods between African countries.

You get sound investment when you have good policies in place. The role of governments and regulatory bodies across the continent will remain crucial in terms of drafting and finalising policies – specifically those that stimulate ease of free trade and certifications of goods for import and exports.

The more governments can do to make logistical chains more reliable and offer their support through policies that enable producers to trade quicker and cheaper; the easier it’ll be for agriculture sector participants to improve profitability and cashflow. This makes it easier for financing partners such as ourselves to fund transactions in this space.

Absa understands that food is fundamental for the people on the African continent to survive physically as well as economically. In our pursuit to be the leading Pan-African banking group on the continent, we are looking forward to partnering with producers and processors to enable growth in agriculture through sustainable financial services offerings.