Third Eye

Modern warehousing key to realising AfCFTA dream

Wednesday, November 3rd, 2021 00:00 |
Health ministry headquarters in Nairobi. Photo/PD/FILE

Richard Hough 

Kenya has often been referred to as the ‘gateway to East Africa’ because of the strategic importance of Mombasa, which has one of the busiest ports on the East African coastline, and the central political-economic roles she plays in the region. 

The government has been pushing for rapid economic growth through social, structural and economic reforms under the Big Four agenda, which focuses on food security, affordable housing, universal health care, and manufacturing.

This is all aimed at turning Kenya into a middle-income country by 2030. 

We are now in the last decade of Vision 2030 timeline, with numerous goals left to hit.

The onset of the Covid-19 pandemic, and its eventual circumvention of the globe by mid-last year seriously curtailed economic growth worldwide.

Kenya was no exception. Since then, however, concerted efforts are being put towards building back better and weaving resilience into world economies. 

The depth and breadth of interference the pandemic has had on global economies highlights just how vulnerable we are to shocks.

Across sub-Saharan Africa, the combined shocks of Covid-19, conflicts and climate change have denied more than 190 million Africans access to the most basic of needs – food. 

This year’s Africa Green Revolution Forum, which was held in Nairobi, brought stakeholders from all over Africa together to discuss how agriculture and agri-food systems can be transformed to improve food security and reduce poverty across the continent.

The African Continental Free Trade Area was singled out as an opportunity to increase intra-African trade and take advantage of a marketplace of 1.3 billion people with a combined GDP of $3.4 trillion, to freely move farm inputs and food products across the borders. 

The AfCFTA not only considers the value that reduced trade friction will have on agriculture, but also on all other sectors of African economies.

It is estimated that by 2035, implementing the agreement could lift more than 30 million people from extreme poverty and 68 million more from moderate poverty. 

Kenya, due to large scale public investment in transport infrastructure, is poised to take advantage of the relative ease of movement of goods across borders as proposed by the AfCFTA.

Landlocked countries in East and Central Africa only have to look to Mombasa and the new Lamu port as the gateway to moving their goods to the world, and Kenya’s 50 million-strong population as a market for goods that aren’t produced locally.

Access to both is being significantly improved by growing road and freight networks. 

While transport infrastructure has faced rapid and significant changes over the past decade, the warehousing landscape has pretty much remained stagnant until Africa Logistics Properties (ALP) made its entry into the Kenyan market.

As the first provider of Grade A warehousing and storage solutions, ALP is particularly powerful economic enabler, providing businesses with industrial facilities for storage, distribution, packing and processing capacity, all of which support business and international trade. 

According to a recent report by the CDC Group on the impact of Grade A warehousing, businesses stand to make savings of between 45 and 60 per cent on the cost of storage per pallet primarily due to the higher stacking heights allowed by Grade A warehouses of  at least 12m.

The report goes on to list the savings made on turnaround time of deliveries (up to 63 per cent) and on overheads.

These are all possible because of the thought that goes into designing the warehouses which consider not only profitability but also sustainability of businesses operating from them. 

According to the report, the productivity gains that tenants at ALP have made since 2017 are contributing directly and indirectly to improved livelihoods and economic opportunities across their respective value chains.

ALP’s tenants have created a host of high-quality jobs, not to mention all the semi-skilled work that is created in the construction of their warehouses. 

As the market stands, 22.1 million square metres of warehousing is Grade B and C; only 65,000m2 is estimated to be Grade A.

There is potential for the impacts presented by CDC Group to be multiplied by increased uptake of Grade A warehousing to support its position as a logistics hub for Eastern and Central Africa. 

The economic and social value to be created for Kenyans is limitless. As Kenya looks to capitalise on the dream of the AfCFTA and become a vital cog in multi-sector value chains, warehousing must be part of the conversation.  — The writer is the chief executive officer, Africa Logistics Properties

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