Global logistics giant, DHL, says seizing the untapped intra-regional trade opportunities could be key in boosting African economies such as Malawi.
Despite an average annual growth in exports of 8.5 percent since 2010, trade between African regions remains low when compared to other parts of the world.
Managing Director for DHL Express Malawi, Femi Olaiya, said in the context of Malawi, which is mainly an importing country impacted by relatively high import costs, a shift towards intra-regional trade will be key in growing its export base.
“Exploring these untapped opportunities within Africa will reap great economic benefit for the country,” Olaiya said.
DHL Express sub-Saharan Africa Chief Executive Officer, Hennie Heymans, said there are multiple opportunities to increase intra-regional trade, especially in line with the Tripartite Free Trade Agreement.
“If used properly, this agreement has the potential to significantly boost economic growth in the region,” said Heymans. According to the Africa Economic Outlook Report 2016, intra-regional trade accounted for 16 percent of Africa’s total trade in 2014 mainly stimulated by manufactured goods, accounting for 60 percent of total regional trade.
The report also forecasts that the Gross Domestic Product (GDP) of major sub-Saharan African cities, including Johannesburg, Cape Town, Lagos and Luanda, are expected to increase, citing the quality of infrastructure and logistics as the key contributing factors.
Heymans says these findings demonstrate the important role that effective logistics play in boosting a country’s economic growth by enabling trade.
He also pointed out that if intra-regional trade in Africa is to be boosted, it is crucial to put in place effective logistics infrastructure to facilitate the movement of goods across borders, and ultimately reduce the cost and time of trade.
For countries looking to boost inter-regional trade, Heymans said it is vital to consider the time and costs associated with transporting goods.
“It is important to take a holistic approach when it comes to managing supply chain risk, in order to achieve greater visibility, flexibility, and control. Businesses in Africa are under increasing pressure in the current economic climate to remain competitive, both locally and globally, and sometimes lack the ability to build resilient supply chains,” Heymans said.
According to Heymans, making strategic decisions to outsource logistics can make a significant contribution to a business’s profitability.
“With operations across 51 markets in Sub-Saharan Africa, servicing over 40,000 customers, efficient delivery is an important factor for DHL. With our strategic investments in technology and retail touch points across the region, we seek to leverage the huge potential in Africa, to ensure that citizens and businesses have access to the opportunities and services available in the region,” Heymans said.
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