Getting products to market in Africa continues to pose logistical headaches for manufacturers, retailers and transport providers.
Dubai-based Agility is hoping to surmount these challenges by building a network of 70 distribution centres in Africa over the next five years. African Business Magazine speaks to CEO Geoffrey White about the challenges the company faces in realising the ambitious plan.
How is the expansion of your distribution parks going?
Great, we’ve broken ground on the first one in Tema Port in Accra, that’ll be up and operational in Q4 this year, so it’s designed, planned, under construction. I’m off to Nigeria to look at Lagos, we’re negotiating in Angola, in Mozambique, in Tanzania and in Kenya. So the idea is to do 70 of them in five years, which is a $4 billion investment but year one’s plan is to get five signed and under construction, so we’re well on plan for delivering that.
And so why have you identified these as key strategic areas to develop?
Our customers are saying we now understand the Africa opportunity, what we want to do is actually access it so can you build us the infrastructure and the capabilities that you do for us in Singapore, in New York, in Zurich and we want the same sort of logistics capability in Africa to address that market. So our focus is to replicate what we do for them elsewhere.
Where are your plants being built?
They’re being built next to major urban areas, so on the outskirts on major route networks. Some will be by parks, some by ports, some by airports and some are just on what we see as major transport hubs, modes of transport where you’ve got cross connectivity, which basically just provides the access to everywhere. We’re not going into the centre of towns because the cities in Africa are getting more and more congested and I don’t think there’s any easy solution to that.
What do you see the constraints in terms of logistics from your end?
Logistics remain; everybody’s planning a new port and it’s about execution and building the first one that actually gets to market. If you look in Angola there’s 20 new shopping malls being built around Luanda – the shopping malls are leasing space to retailers easily; but when you speak to those malls and those retailers none of them have got an efficient route to market, to actually take the goods from the port and deliver them to the actual store. The missing link is the infrastructure which is roads, railways and capability but an integral part of that is actually the handling mechanism and the warehousing to be able to bring goods in, store them and feed them into the FMCG market.
But you’re ultimately also reliant on government doing their bit in terms of building infrastructure?
As everybody knows there’s a huge requirement for infrastructure, for power and all the other elements in that. What we’re doing will hopefully strengthen that chain. Within an Agility distribution park we’ll give you a Service Level Agreement that the power won’t go off, the IT connectivity won’t go off. It’s amazing how many big multinational corporations we speak to where they actually say just solving power insecurity and IT connectivity will be a huge step forward.
Are you worried that government bureaucracy may slow the process down?
I think again, you work with the government run as an efficient a system as possible, there’s an onus on governments to improve those systems and get logistics working and that’s beneficial for everybody. Everybody needs to focus from the beginning to the end of that logistics chain. I mean it’s ridiculous, I was in Maputo last week and it costs more to send a container from Beira to Harare than it does from Singapore to Beira.
And in terms of your own challenges has it been quite easy in terms of securing everything that you need to make it happen?
It’s a process; I think pushing any project forward in Africa is just about knocking on the door, it’s explaining the opportunity and it’s about execution. There’s no lack of investment opportunity, there’s no lack of investment capital anymore – it’s about good quality people. We’re putting in a very extensive training programme to take Africans out into the Agility network globally, and train them as to how we do things. We’ll bring that management team back into Africa to actually run the operations.
Expanding over five years across a number of jurisdictions is quite ambitious; will you be able to secure all the authorisations?
We think it’s doable, we set it at 70, it’s obviously challenging to execute anything in Africa on time and on budget but we believe that it’s very much a template model, so the first one’s the hardest, the fifth one’s getting easier, the 20th one is getting real easy, by the time we’re doing the 60th I wouldn’t say it’s a walk in the park but it’ll be much, much easier.
This is a four billion dollar investment, so are you financing this yourselves?
We’re certainly financing the initial rollout ourselves so I went to the board in December, we signed off on the strategic plan, we committed an initial budget allocation that probably pays for the first ten facilities internally and then we’ll review that as we go. We do five billion a year in revenue, we’re growing as a company, Q1 profits were up so I think we need to get the model up, established, working and then we’ll see how we develop the fuller rollout plan.
So next year, January 2016 we should be able to visit Ghana and see your first distribution park.
Before Christmas, yes absolutely. We’ll be cutting the ribbon.