The Africa Logistics-The BioPharma Landscape in Sub-Saharan Africa: What’s Next?

NOVEMBER 2020

Africa Logistics

THE

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The BioPharma Landscape in Sub-Saharan Africa

Covid-19 logistics challenges

Reaping from the blue economy

IBM report on pirates off West African Coast

EDITOR’S NOTE

Alot left to work out for the Covid-19 vaccine We’ve heard a lot about the race to develop a safe and effective COVID-19 vaccine, which hopefully will be ready for approval around the end of this year. However, just because there is a vaccine doesn’t mean it will be widely distributed right away. Most of us will not have access to a vaccine until at least the middle of next year.

There are many reasons why it will take much longer than we all hope, including the fact that much of the distribution planning can’t even begin until we know which vaccine candidates will be approved. A further complication is that the various vaccines have different handling requirements.

The CDC (Centers for Disease Control and Prevention) will coordinate U.S. distribution.

The plan is to allocate vaccines to all 50 states, with the state health departments responsible for overseeing distribution from there. So far, states have responded quite differently to the pandemic. We can expect their distribution approaches to be widely disparate as well.

While the manufacture of leading candidates is beginning even before government approval, distribution will not ramp up as quickly. Most will be handled by current medical supply chains, which will expand some, but what is required is still light-years beyond their capacities. It’s unlikely that supply chain infrastructure not already associated with established and trusted medical channels will be incorporated into the distribution of the vaccine. Few distributors will invest in infrastructure they won’t use once the pandemic subsides.

flu vaccines cannot maintain vaccines at these temperatures.

Such stringent requirements will limit the scale of distribution. And scale is a huge problem. There are 330 million Americans and 7.6 billion people in the world, all needing a vaccine. Most of the vaccines will require two doses. We don’t even know yet how long a vaccine is effective. Will we all require a yearly vaccine as with the flu shot?

These are many of the unknowns that affect supply chains.

Actual distribution will follow allocation guidelines developed by the National Academies of Sciences, Engineering, and Medicine. There will be four phases, with initial doses going to health care workers, first responders, and those with serious health issues or living in nursing facilities. The second phase targets teachers, those in prisons and homeless shelters, essential workers, and people with other underlying conditions. Most Americans will not receive a dose until Phase 3 or 4.

It’s a simple matter of demand exceeding supply and capabilities. Don’t expect much change in our lives for quite some time yet.

By David Maloney

A key factor is that at least two of the leading candidates require that vaccines remain at -70º C (-94º F) at all times. Even our current medical distribution models aren’t equipped for this. For instance, most of the doctors’ offices, pharmacies, and clinics that routinely distribute

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inside ...

COVER STORY

20 NEWS & FEATURES 6. The great digital devide 7. Toyata Starlet comeback in

Biopharma Lanscape in SubSaharan Africa

Sub-Saharan Africa’s biopharmaceutical industry has a huge amount of potential; the conditions for conducting clinical trials are ideal on many levels, notably due to the diverse populations of potential patients.

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Kenya

8. Ethiopia’s GERD dam will make Egypt’s Nile delta sink under the Med, study says 8. Kuehne+Nagel invests in

global vaccine distribution network

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9. South Africa’s Transnet

reports increase in revenue

11. The logistics nightmare that

awaits Covid-19 vaccine

12. Emirates Airlink partnership 14 Partnering to deliver

covid-19 vaccines

15. Covid-19 and Egyptian insurance

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The Africa Logistics

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OPINION

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Amadou Diallo: Africa, now is your time!

The liberation of young Africa’s energy and drive, together with the continent’s immense natural wealth and abundant environmental and cultural resources, could launch a power and

Why is AGOA better than a bilateral free trade agreement?

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Green trade key to Africa’s rebound

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24 Pirates are kidnapping more seafarers off West Africa, IMB reports

Effects of Africa climate change

Africa needs to prepare better for climate change by responding to a wide range of potential risks, a multi-agency report led by the UN World Meteorological Organization (WMO) said on Monday, the first in a series of continent-by-continent assessments. www.theafricalogistics.com

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NEWS

Study highlights the digital divide in East Africa

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astercard has released a white paper revealing how gig work across East Africa is helping to drive economic growth by facilitating economic opportunities, improving livelihoods, and acting as a buffer against unemployment.

However, for the gig economy – which is based on short-term, temporary and flexible independent contractors – to reach its potential and unlock prosperity for millions of people, the digital divide must be bridged through connected devices that power the digital economy, and value adds like access to capital and access to market.

Mastercard’s white paper, titled The Gig Economy in East Africa: A Gateway to the Financial Mainstream, explores how digital inclusion is a prime enabler of the gig economy. Connected devices, which are already proven to be vehicles of inclusion and development in Africa, can help gig workers overcome some of the biggest challenges they face, ultimately driving financial inclusion and leading to improved economic possibilities.

The paper, based on research from in-depth face-toface interviews with gig workers in Kenya, shows that the gig economy is nascent, buoyant, and continues to grow, with almost two-thirds (60%) of gig workers joining the gig economy between 2017 and 2019. However, like much of the informal sector, uncertainty is a fact of life, with the biggest challenges being around continuity of income. More than half (55%) said that not knowing when the next gig is contributes to instability.

And close to 60% of respondents said that fluctuation in

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income from week to week is a cause for frustration.

Currently, the online gig economy (the portion of gig work that is attained through digital platforms) is a tiny portion of the overall gig economy. Research-based estimates in 2019 put the total size of the online gig economy in Kenya at USD 109 million, employing 36,573, while the offline gig economy comprises 5.1 million workers, and accounts for USD 19.6 billion. Despite this, online gig economy work is preferred; Mastercard’s report found that almost 60% would prefer online gigs to offline.

This is because online gig work enables end-to-end management of projects. A third (over 35%) said that finding gig work was easier on a platform, and about 30% said platforms made faster payments possible, and helped them connect to other workers.

“Gig work is present everywhere in East Africa, but now, with the growth of digital technologies and connected devices, there is a real opportunity to help gig workers quickly connect to consumers to meet their demands for services, and overcome significant pain points such as inconsistent work, financial planning challenges and late payments. If each key player in the gig economy ecosystem comes together – from the platform, to the mobile industry and the payments provider – we can ensure that the end-to-end journey of the gig worker is both smooth and profitable, and realize the true potential of inclusive, sustainable growth across the continent,” said Jorn Lambert, Chief Digital Officer, Mastercard.

Some of the most common types of gig work in East Africa are in artisanal and general services, which includes welders, electricians, carpenters, and domestic work. “Independence” is the powerful motivator behind this movement. Being self-employed with the freedom to work at an individual pace are part of why gig work is growing. It is an inclusive space where people of different social and economic backgrounds can fit in and earn a living.

The Gig Disconnect With the digital economy as an enabler of greater prosperity and inclusion, gig platforms have proven to be a single touchpoint for many services and opportunities utilized by gig workers. But access to gig work opportunities is often not enough to keep a gig worker afloat. Loans, instant payments, and benefits such as insurance, are the top three perks desired by gig workers in Kenya, and 45% of respondents said they are willing to pay between $1 and $5 a month for such ben­efits and services.

Over 80% of respondents in Mastercard’s research said instant payments when a job is finished is the most desired feature of a gig platform. And in step with the prevalent mobile money system, about two-thirds (62%) of respondents said they prefer to receive payment through mobile money such as MPESA or Airtel Money because it is readily available, reliable, easy to manage, secure, and convenient. However, there are still barriers to internet access that need to be over­come to realize the massive opportunity that the East Africa region represents. One is the slower speed of internet data in Africa compared to other continents.

“Traditional platforms often do not adequately serve the needs of the gig worker, who is at risk from personal accident and injury, loss in revenue from any absence from work, incomplete delivery or payments, and economic volatility,” said Ngozi Megwa, Senior Vice President, Digital Partnerships, Mastercard MEA However, connected devices are bridging divides between urban and rural, rich and poor, and connecting gig workers to peers, information, opportunities and services.

NEWS

Return of Toyota Starlet in Kenya

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enya’s leading motor vehicle distributor, Toyota Kenya, today launched the allnew multi-utility hatchback model, Toyota Starlet. The model, which was discontinued in the 90’s will start selling at Kshs. 1,980,000.

The Toyota Starlet brings everything you would expect from a compact hatchback: an ideal size to drive everywhere with agility. The 1.4-litre petrol engine (K14B) delivers both power with and low fuel consumption.

The launch comes at a time when the demand for the popular 1000cc to 1600cc vehicle is on the rise with many people looking for affordable and convenient vehicles for everyday use.

Speaking at the unveiling of the stylish and ergonomically designed Starlet, Toyota Kenya Managing Director Arvinder Reel acclaimed the multi-purpose vehicle as a comfortable, reliable, and safe solution for customers looking for high-economy vehicles with exceptional drivability. “The desire to drive around in an economical car with family and friends has pushed customers to look for spacious, comfortable, and easy to drive models as they seek to make the most out of their precious moments. The all-new Toyota Starlet delivers on this and also has elegant curves and controls that add taste to our customers’ daily errands. It is built to make you feel like a star,” said Mr. Reel.

The newly launched Toyota Starlet was designed with the young motor enthusiasts and families. It measures 3 995 mm long, with a width of 1 745 mm and a wheelbase of 2 520 mm. The interior features ample headroom and legroom with a beautifully vivid instrument cluster with a center Multi-Information Display (MID). The steering wheel has also been equipped with multifunctional buttons for cruise

control. Better yet, the rear seats are foldable to create more room for packing or carrying things that could not fit in the back seat or boot.

It has a fuel-efficient petrol engine with a power output pegged at 68kW/6000 rpm with 130Nm of torque at 4200 rpm. It also has an exterior that follows a classic hatchback profile, with a short, downward-sloping nose and rounded-off rear hatch. The new exterior is specifically designed to be elegant with a strong personality that differentiates it from other vehicles.

The new Starlet comes with the latest technological features such as the smart-entry push button, a reverse-view camera with parking sensors, and a touchscreen infotainment system with Android Auto and Apple Carplay compatibility. It also offers Bluetooth hands-free telephony and audio streaming functions, all of which are linked to strategically placed buttons on the steering wheel enabling you to easily answer and end calls without letting go of the wheel.

The spec level has also been amped by the digital speedometer with color MID, leather steering wheel with telescopic adjustment, climate control, and push-start operation.

“Those who buy the new Toyota Starlet will have the advantage of enjoying Toyota’s quality service and low maintenance cost from Toyota’s dedicated and fully-fledged spare-parts and after-sales facilities which offer exemplary service. With Toyota’s expanded network that has 31 outlets of branches and dealers across the country and customer service technicians who are professionally trained, the new Toyota Starlet owners should look forward to accessible and efficient first-class service,” concluded Mr. Reel.

All the Starlet models come with a 3 year/100,000 km manufacturer warranty. www.theafricalogistics.com

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NEWS

Kuehne+Nagel invests in global vaccine distribution network The company currently has over 230 GxPcertified operations worldwide – included in the pharma & healthcare network are additional hubs offering solutions for temperature-controlled needs;

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ith the opening of airside pharma & healthcare hubs in Brussels, Belgium, and Johannesburg, South Africa, Kuehne+Nagel adds two strategic elements to its global GxP-certified network of temperature-controlled facilities for the distribution of vaccines and other pharma & healthcare products.

As many of the temperature-sensitive products have very low to no stability outside of their stated temperature ranges, direct tarmac access at Kuehne+Nagel airside facilities even further minimises the risk of temperature excursions and ensures product integrity during the logistics journey.

The new premises have dedicated areas for all ranges of temperature-sensitive products: <-20°C, +2° to +8°C and +15° to +25°C. In addition, these facilities have the ability to change or add dry ice as required for deep frozen shipment where temperatures need to be maintained below -60°C. In Brussels, the new Air Logistics hub is located in the center of Brucargo at the confinements of Brussels airport, the first airport in the world with an IATA CEIV pharma certification.

The new Kuehne+Nagel facility consists of 15,546 sqm of warehousing space and is fully connected to the recently extended Geel Contract The Africa Logistics

Logistics pharma warehousing facility, as well as the panEuropean KN PharmaChain Road Logistics Network managed from Luxembourg.

In Johannesburg, the expanded KN PharmaChain airside facility at the international airport answers all temperature-sensitive cargo handling, consolidation and storage requirements and offers a number of value-added logistics services before distribution in South Africa or into Africa.

Additionally, the new facility provides a unique temperature-controlled plane side solution through the use of state-of-the-art KN PharmaChain cool dollies.

Built to accommodate both lower deck and main deck pallet sizes, the cool dollies protect the integrity of the cargo from the aircraft directly into the airside facility’s GxP coolers.

Yngve Ruud, Member of the Management Board of Kuehne+Nagel, responsible for Air Logistics, comments: “Today, new pharma & healthcare products tend to be more valuable, more temperature-sensitive and have additional requirements for storage and transportation conditions. Such capabilities and facilities are not easily available globally.

The new hubs in Brussels and Johannesburg will ensure that our pharma & healthcare customers can fully rely on Kuehne+Nagel to handle the specific challenges of integrity as well as provide end-to-end visibility and regulatory compliance along the logistics journey of their sensitive products.

So, they can focus on the health and well-being of their patients; because this is what matters the most.”

Kuehne+Nagel’s quality-driven approach continues to set the industry benchmark for pharma and healthcare logistics.

The company currently has over 230 GxP-certified operations worldwide – included in the pharma & healthcare network are additional hubs offering solutions for temperature-controlled needs; they are located in the US, the UK, Denmark, Spain, Luxembourg, Italy, France, Singapore, India, Panama, the UAE and Australia.

NEWS

South Africa’s Transnet reports increase in revenue

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frican aviation sector experts and policymakers on Wednesday called for concerted efforts to harness the African continent’s “huge potential” in the aviation industry sector to boost continental integration.

They made the call during the fifth edition of Aviation Africa Summit, which was officially opened on Wednesday in the Ethiopian capital, Addis Ababa under the theme “Creating a Sustainable Future for Africa’s Aviation Industry.”

Opening the two-day summit, Tewolde Gebremariam, CEO of Ethiopian Airlines Group, stressed that the aviation industry in Africa, despite its many opportunities, also faces challenges that needs concerted efforts among African aviation actors in a bid to ensure a sustainable aviation future across the continent.

“African airlines also need to cooperate with each other as there is a lack of it right now. We currently only command 20 percent of the global market share, and that is painful. This means we don’t have the mass, so it is time for us to cooperate with each other,” Gebremariam told the high-level gathering.

According to Ethiopian Airlines Group chief, the major challenge facing Africa’s aviation industry includes the attitude to aviation by African governments.

“We need support from governments, taxes need to be reduced and infrastructure needs to improve.

We depend on aviation to connect ourselves and the world. For trade, business investment and tourism, other modes of transport cannot serve us well, African governments have to support aviation,” he stressed.

Noting that shortage of trained human resources as another ongoing challenge, Gebremariam also stressed that the Ethiopian flag carrier has continued

to invest in training young aviation experts so as to fill the human capacity gap.

“We currently have 1,500 students in our training academy, but this is only 50 percent of our capacity. So we are inviting more students to join to obtain the important skills that cover the aviation industry,” he added Mikail Houari, President Airbus Africa and Middle East, also echoed Gebremariam’s comments as he emphasized that the aerospace industry “is a great enabler for Africa.”

According to Houari, Africa’s growing population, the vast size of the continent, as well as the continued economic growth are all key ingredients driving aviation development.

According to Houari, with an anticipated 1,500 new aircraft joining the African fleet in the next twenty years, Airbus’s own global market forecast predicts that the continent’s rapid urbanization, trade

and tourism will contribute to driving passenger traffic to and from Africa by 5.0 percent yearly, over the next two decades.

“To make it successful we need to bring together a selection of ingredients,” Houari said, as he emphasized the crucial role of diversifying the financing as well as human capacity development, with particular emphasis on enabling young Africans in the aviation sector.

The Ethiopian Minister of Transport, Dagmawit Moges, also emphasized on the difficulties that are challenging the movement between African nations by aviation.

Moges also stressed the need to modernize the aviation infrastructure across the continent, which she said requires investment and experts and encouraged private and public investments to improve connections, create more frequent flights and lower prices.

“Aviation has great economic potential and geography shouldn’t be a problem. High ticket prices, operations and open skies are all things that can be fixed,” she argued.

Abderahmane Berthe, Secretary General of African Airlines Association (AFRAA), also stated that while Africa accounts for 16 percent of the world population, it only accounts for a small proportion of air traffic -- just 3 percent of the global market. the major reason behind Africa’s aviation industry’s low performance as compared with the rest of the world is mainly attributed to the less-affordability of air transport for many African citizens. www.theafricalogistics.com

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NEWS

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fizer Inc. and BioNTech have announced that their mRNA-based vaccine candidate, BNT162b2, against SARS-CoV-2 has demonstrated evidence of efficacy against COVID-19 in participants without prior evidence of SARS-CoV-2 infection, signaling hope that the search for Covid-19 vaccine was finally bearing fruits. The results were based on the first interim efficacy analysis conducted on November 8, 2020 by an external, independent Data Monitoring Committee (DMC) from the Phase 3 clinical study.

“Today is a great day for science and humanity. The first set of results from our Phase 3 COVID-19 vaccine trial provides the initial evidence of our vaccine’s ability to prevent COVID-19,” said Dr. Albert Bourla, Pfizer Chairman and CEO. “We are reaching this critical milestone in our vaccine development program at a time when the world needs it most with infection rates setting new records, hospitals nearing over-capacity and economies struggling to reopen. With today’s news, we are a significant step closer to providing people around the world with a much-needed breakthrough to help bring an end to this global health crisis. We look forward to sharing additional efficacy and safety data generated from thousands of participants in the coming weeks.”

But even as the the world is celebrating the good news, experts are worried that the vaccine if finally given greenlight, may not reach the people who need it most.

“Safely delivering COVID-19 vaccine will be the mission of the century for the global air cargo industry. But it won’t happen without careful advance planning,” says Alexandre de Juniac Director General and CEO of International Air Transport Association.

Vaccines must be handled and transported in line with international regulatory requirements, at controlled temperatures and without delay to ensure the quality of the product. While there are still many unknowns (number of doses, temperature sensitivities, manufacturing locations, etc.), it is clear that the scale of activity will be vast, that cold chain facilities will be required and that delivery to every corner of the planet will be needed.

Stringent temperature requirements (up to -80°C) are likely to be imposed for certain vaccines to ensure that their efficacy is maintained during transportation and warehousing, according to DHL/McKinsey & Company white paper report.

The distribution venture will also require availability of temperature-controlled facilities and equipment – maximizing the use or re-purposing of existing infrastructure and minimizing temporary builds, availability of staff trained to handle time- and temperature-sensitive vaccines and Robust monitoring capabilities to ensure the integrity of the vaccines is maintained.

Another challenge that faces the vaccine is security during the entire transport chain.

“Covid-19 vaccines will be highly valuable commodities. Arrangements must be in place to keep ensure that shipments remain secure from tampering and theft. Processes are in place to keep cargo shipments secure, but the potential volume of vaccine shipments will need early planning to ensure that they are scalable,” De Juniac observes.

In general, says Dr Seth Berkley, CEO of Gavi, the Vaccine Alliance, delivering billions of doses of vaccine to the entire world efficiently will involve hugely complex logistical and programmatic obstacles all the way along the supply chain.

The Africa Logistics

“We look forward to working together with government, vaccine manufacturers and logistical partners to ensure an efficient global roll-out of a safe and affordable COVID-19 vaccine,” 1he said.

But with few aircrafts still operating, due to a drop in passenger numbers transporting the vaccine will prove to be a real nightmare for countries.

The severe downturn in passenger traffic, airlines have downsized networks and put many aircraft into remote long-term storage. Now the global route network has been reduced dramatically from the preCOVID 24,000 city pairs.

The WHO, UNICEF and Gavi have already reported severe difficulties in maintaining their planned

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NEWS

The logistics nightmare that awaits Covid-19 vaccine

vaccine programs during the COVID-19 crisis due, in part, to limited air connectivity.

“The whole world is eagerly awaiting a safe COVID vaccine. It is incumbent on all of us to make sure that all countries have safe, fast and equitable access to the initial doses when they are available. As the lead agency for the procurement and supply of the COVID vaccine on behalf of the COVAX Facility, UNICEF will be leading what could possibly be the world’s largest and fastest operation ever. The role of airlines and international transport companies will be critical to this endeavour,” said Henrietta Fore, UNICEF Executive Director.

The potential size of the delivery is enormous.

Just providing a single dose to 7.8 billion people

would fill 8,000 747 cargo aircraft. Land transport will help, especially in developed economies with local manufacturing capacity. But vaccines cannot be delivered globally without the significant use air cargo.

“Even if we assume that half the needed vaccines can be transported by land, the air cargo industry will still face its largest single transport challenge ever. In planning their vaccine programs, particularly in the developing world, governments must take very careful consideration of the limited air cargo capacity that is available at the moment.

If borders remain closed, travel curtailed, fleets grounded and employees furloughed, the capacity to deliver life-saving vaccines will be very much compromised,” said de Juniac. www.theafricalogistics.com

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NEWS

Emirates partners with Airlink to boost Southern Africa expansion

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mirates and Airlink have announced an interline agreement, widening Emirates’ reach into Southern Africa as countries begin opening their borders for travellers.

Emirates’ agreement with Airlink will provide its customers enhanced connectivity via its gateways Johannesburg and Cape Town to more than 25 domestic destinations in South Africa and more than 20 regional destinations in Southern Africa. The unique connections enabled by this new partnership provide customers onward travel options not offered by other airlines.

Emirates and Airlink will offer the ease of single-ticket travel and one-stop baggage check-in for customers transferring from Johannesburg and Cape Town to domestic points including Bloemfontein, George, Upington, Nelspruit, Hoedspruit and Port Elizabeth, as well as points across Southern Africa like Gaborone, Kasane, Vilanculos, Maun, Victoria Falls, Maputo, Windhoek, Harare, Lusaka, Ndola, Bulawayo and Livingstone amongst many others.

Customers can book their travel with both airlines on emirates.com, through online travel agencies as well as with local travel agents.

Sir Tim Clark, President Emirates Airline commented on the newly formed partnership: “Emirates is pleased to partner with Airlink on a new interline agreement that will help us strengthen our presence and give customers more choice,

The Africa Logistics

flexibility and enhanced connections across 45 cities in Southern Africa. We are committed to our operations in South Africa, as we continue to look at ways to build our extended network for customers, and help them benefit with diverse travel options.

The interline agreement that has gone into effect with Airlink is only the start of further collaboration, and we are looking forward to exploring more opportunities to widen the scope of our partnership in the future.”

Airlink CEO, Mr. Rodger Foster added: “We are proud and excited about our new interline commercial agreement with Emirates. We have a deep respect for the airline, its values and its global reach. We are confident that the relationship will deliver enhanced travel options to customers given the designed interconnectivity that will be enabled at OR Tambo International Airport and Cape Town International Airport. Airlink’s offering of connectable destinations includes most key points within Southern Africa such as; Cape Town, Durban, Port Elizabeth, East London, Bloemfontein, Harare, Lusaka, Maputo, Gaborone, Windhoek, amongst many others.”

Emirates resumed its operations into Johannesburg and Cape Town on 1 October, and Durban on 8 October, with enhanced safety measures in place across all of its onboard and on ground touchpoints. The airline continues to build market demand through connecting customers via Dubai from close to 100 destinations, as well as building more connection opportunities in South Africa and beyond through partnerships with airlines like Airlink that drive value for its customers.

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FEATURE

COVID-19 vaccine: Partnering to deliver

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lobal delivery of 10 billion doses of serum needs scaled-up medical supply chains; White paper identifies critical challenges in COVID-19 vaccine logistics; A framework is provided to tackle future health emergencies beyond COVID-19.

With first emergency use authorizations for COVID-19 vaccines expected to be effective in the last quarter of 2020, logistics providers are challenged to rapidly establish medical supply chains to deliver serums of unparalleled amounts of more than ten billion doses worldwide.

DHL working with McKinsey & Company as analytics partner, is therefore publishing a white paper on delivering stable logistics for vaccines and medical goods during COVID-19, and future health crises.

Currently, more than 250 vaccines across seven platforms are being developed and trialed. As COVID-19 vaccines have leapfrogged development phases, stringent temperature requirements (up to -80°C) are likely to be imposed for certain vaccines to ensure that their efficacy is maintained during transportation and warehousing.

This poses novel logistics challenges to the existing medical supply chain that conventionally distributes vaccines at ~2–8°C. In the paper, DHL evaluates how the transport of vaccines as highly temperature-sensitive product can be managed effectively to combat the further spread of the virus.

The scope of this task is immense: To provide global coverage of COVID-19 vaccine, up to ~200,000 pallet shipments and ~15 million deliveries in cooling boxes as well as ~15,000 flights will be required across the various supply chain set-ups.

“The COVID-19 crisis emerged with an unprecedented breadth and impact. It required governments, businesses, and the logistics industry alike to adapt quickly to new challenges. As a world leader in logistics, we want to share our experience of operating during one of the biggest health crises in recent history, in order to develop strategies in an ever-more connected world”, explains Katja Busch, Chief Commercial Officer DHL. “To protect lives against the pandemic, governments have moved towards a more active role in medical supply chains. Over the past few months, we have demonstrated that sufficient planning and appropriate partnerships within the supply chain can play a key role as governments work to secure critical medical supplies during health emergencies such as this.”

Future public health crisis management to include public-private partnerships Since the outbreak of the pandemic, demand for medical supplies has surged. For example, The Africa Logistics

UNICEF sourced 100 times more face masks and 2,000 times more medical gloves than in 2019. Bringing medical supplies from their distant sources to use at the frontline has been one of the most crucial activities in pandemic response management in the first phase of the health emergency.

For PPE specifically, inbound logistics were a major challenge due to geographically concentrated production, limited airfreight capacity and a lack of inbound quality checks. To ensure stable medical supply in a future health crisis, a comprehensive setup of public health crisis strategies and structures needs to be established by governments with partnerships from both public and private sectors.

To kick start the dialogue among the different actors and improve pandemic resilience in medical supply logistics, DHL provides a framework for the cooperation of logistics companies with authorities, politicians, NGOs as well as the life sciences industry.

The framework helps to establish measures to ensure the most stable and safe supply chains possible.

Besides an emergency response plan, this includes a partnership network, strong physical logistics infrastructure and IT-enabled supply chain transparency.

Lastly, a response unit with a clear mandate should be put in place to implement all critical activities at short notice.

FEATURE

Covid-19 and Egyptian insurance: why are insurers cautiously optimistic about the future?

The difficult economic environment caused by Covid-19 has led to a reduction in demand for insurance throughout the country, which had low penetration levels even prior to the pandemic.

According to the Insurance Federation of Egypt (IFE), the number of new insurance products sold dropped by around 10-15% year-on-year over the period between the outbreak of the virus in mid-February and mid-July.

Meanwhile, given the financial challenges facing much of the population, the rate of customers paying premiums has also been negatively impacted, as consumers prioritise essentials such as food and medicine over insurance.

In terms of specific segments, there has been a notable decline in demand for travel, automotive and life products in particular during the pandemic.

Elsewhere, takaful (Islamic insurance) providers are expected to see their profitability affected both by Covid-19 and by new agency fee regulations, implemented in February by the Financial Regulatory Authority (FRA), which include a 25% contribution fee for life insurance companies and a 30% fee for property insurance companies that use the FRA’s agency system.

Health insurance opportunities While the sector has faced a series of challenges in recent months, the country’s rollout of universal health care could provide an avenue for growth in the medium to long term.

Following the launch of the pilot programme in Port Said in July 2019, the universal health care scheme has since expanded to Ismailia, Luxor and South Sinai, and is expected to be fully implemented nationwide by 2032.

The programme, which aims to provide coverage to the entire population, will be funded by a series of employer and employee contributions: employers will contribute 3% of a worker’s monthly salary into the system, while employees themselves will pay 1%, or 3% if they are covering an unemployed spouse.

The stipulation of mandatory coverage will provide significant demand for health insurance products, potentially increasing growth opportunities for insurers.

As yet, the precise role that private health insurers will play in the system is unclear. While the government announced in April 2018 that private players would be able to provide coverage through the system – sharing service costs with the government – a total breakdown of the roles and costs is still to be provided.

To support the continued rollout of the programme

during the pandemic, which affected government revenue, the World Bank announced in June that it had provided the Egyptian government with a $400m loan.

Digitalisation and micro-insurance Aside from the expansion of health insurance, insurers are looking to digitalisation to bolster growth.

“There has been a move increasingly towards digital transformation, and insurance companies are making considerable efforts to prioritise the adoption of new technology, to the extent that the current crisis has accelerated this trend into 2021,” Mohammed Omran, the chairman of Egypt’s Financial Regulatory Authority, told OBG in an interview in July.

As in other emerging markets, insurance companies are increasingly updating their online offerings and digital platforms to facilitate access for customers – amid growing awareness of the importance of health coverage.

For instance, in May Kuwait’s Gulf Insurance Group (gig) purchased a $4.25m stake in the UAEheadquartered insurance and finance comparison website yallacompare, which has a significant presence in Egypt.

In a statement announcing the deal, gig said that the acquisition was key to the company’s digitalisation strategy, and that it had further plans to expand its digital offering.

Elsewhere, innovative products such as micro-insurance – which typically constitutes small-scale, affordable insurance products – are expected to be key drivers of insurance growth moving forward. These will go some way to closing the country’s insurance protection gap, estimated by the IFE to total $2.8bn.

“We believe that micro-insurance is the main way to boost inclusivity, alongside closing the protection gap and increasing the uptake of digital technology,” Omran told OBG. “Micro-insurance is complementary to many financial products for marginalised and underserviced populations, so it is a necessary part of the government’s efforts to achieve financial inclusion.”

Oxford Business Group www.theafricalogistics.com

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FEATURE

US-Africa trade relations: Why is AGOA better than a bilateral free trade agreement?

has created long-term, sustainable growth by stimulating the private sector and creating jobs in a region where many countries are battling high unemployment, thereby addressing structural challenges the region faces.

Additionally, in choosing a regional approach for the trade agreement, Clinton empowered both big players like South Africa and smaller players like Lesotho.

In many ways, this approach aligns with the “trade not aid” mantra.

Although AGOA has been extended twice, most recently until 2025, it has come under threats over the last four years, as tariffs were imposed on key steel and aluminum products and duty-free access was suspended for apparel imports from Rwanda.

I

n recent months, the U.S. began negotiations for a bilateral free trade agreement with Kenya. These negotiations are aligned with the current administration’s vision for trade reciprocity rather than unilateral trade preference programs.

Although these negotiations could produce the first bilateral trade agreement between the U.S. and a sub-Saharan African country, a shift from regional preferential trade agreements to bilateral free trade agreements could undermine the growth of smaller countries, who may not be of enough economic interest to the United States. Bilateral agreements could also undermine efforts to create a regional economic bloc through the African Continental Free Trade Area (AfCFTA).

When President Bill Clinton signed the African Growth and Opportunity Act (AGOA) in 2000, African countries were given a competitive edge by providing unilateral duty-free exports for 6,500 products from Africa to the United States. Twenty years after AGOA was first adopted, we see that it

Any further disruptions to AGOA could devastate the region, particularly in the medium to long term as economies seek to recover from the impact of COVID-19.

In South Africa, AGOA has contributed to substantially increasing export-led job creation in many sectors, including automobiles and agriculture ($553 million and $364 million, respectively, in 2019).

AGOA has boosted South African agricultural exports such as wine and citrus, the latter of which is one of the agriculture sector’s most laborintensive sectors. An analysis by the University of South Africa found that in 2017, the U.S. www.theafricalogistics.com

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FEATURE imported roughly $59 million—or 10 percent—of its wine from South Africa, which is a sizable share given global competition. A partial equilibrium simulation showed that in the short run, South Africa would lose a wine-products market of approximately $8.1 million if AGOA benefits were replaced with reciprocal tariffs through the Most Favored Nation (MFN) tariff system.

This would mean a loss of 14 percent of wine export revenue, which would have a direct impact on the industry that provides 300,000 direct and indirect jobs.

But small countries have benefited immensely too.

Although Lesotho’s textile and apparel industry was first established in the late 1980s, exports skyrocketed after AGOA (Figure 1). The industry grew from having a handful of factories in the 1990s to becoming the largest private-sector employer (43 percent), providing 40,000 jobs, which directly and indirectly benefit 13 percent of Lesotho’s population.

Lesotho exports approximately $250 million in garments to U.S. brands such as Levi’s, Walmart, and Old Navy.

The duty-free access afforded by AGOA is important for increasing the competitiveness of the African garment industry, which isn’t covered by the Generalized System of Preferences (GSP), another preferential trade program. Some of this competitive edge was lost in 2005 when the World Trade Organization’s Multi-Fiber Agreement expired, which ended export quotas and increased competition from China and other Asian garment producers (Figure 2).

Still the duty-free access has allowed sub-Saharan Africa to grow the textile and apparel sector, which is a large-scale employer of low-skilled labor.

The benefit of preferential trade agreements is that they can create sustainable structural changes. After 18 years of benefiting from AGOA, a computable general equilibrium analysis by the World Bank in 2018 showed that if AGOA was terminated, it would lead to a 1 percent loss in income by 2020 and a 16 percent decline in textile and apparel.

But simulations also showed that trade facilitation measures that decrease average trade costs by 2 percent per year would eliminate the adverse income effects that result from the elimination of AGOA. The infant industry protection provided by AGOA allowed the industry to develop and flourish, such that decreasing trade costs by just 2 percent would allow Lesotho to maintain its competitiveness.

While Lesotho has benefited from AGOA for two decades, other industries and sectors are just starting to benefit. Namibia has a large livestock sector with over 7.7 million cattle, sheep, and goats. In 2019, Namibia became the first country in Africa to export beef to the United States after 15 years of working

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to satisfy safety regulations and logistics, and is set to export 860 tons of beef to the U.S. in 2020, rising to 5,000 tons by 2025. Exporting to the U.S. is a big market opportunity for Namibia—the U.S. is the largest consumer of red meat with Americans consuming an average of 120 kilograms of meat per person annually, according to the U.S. Department of Agriculture.

Namibia’s Meatco benefited from duty-free access to the U.S. market through AGOA—given the infancy of the beef export relationship with the U.S., a disruption to AGOA could risk its sustainability and undermine capital investments within the sector.

U.S.-Africa trade relations are currently being reshaped—and if AGOA is further disrupted or replaced by bilateral free trade agreements, it could be a blow to a number of economies in the region.

Gracelin Baskaran is a Consultant, Equitable Growth, Finance and Institutions Group – World BankSenior Research Fellow, Development Policy Research Unit – University of Cape Town

FEATURE

Addressing supply chain disruption and compliance in the IMT sector in Africa

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ndustrials, manufacturing and transportation (IMT) companies have some of the most complex supply chains of any sector and have been particularly hard hit by quarantines, travel restrictions, and other disruptions brought about by the global COVID-19 outbreak.

Marc Yudaken, Partner and Head of the Industrials, Manufacturing and Transportation (IMT) at Baker McKenzie in Johannesburg says that African IMT companies that have operations in multiple jurisdictions, or source products from other regions, have faced intense challenges when reacting to and minimising supply chain impacts.

“The lockdowns, closed borders and travel restrictions put in place to stop the spread of the virus did not only affect people, they affected the transportation of goods, both between and within countries, and severe delays and shortages were the result. This made it difficult for IMT companies to resume and maintain operations even after the virus was brought under control in some countries,” he explains.

Yudaken explains that manufacturing products, industrial machinery and transport equipment constitute over 50% of Africa’s import needs, with the most important suppliers being Europe (35%), China (16%) and the rest of Asia including India (14%). Supply chain disruptions in these regions have therefore severely impacted Africa’s ability to access essential products and components and has led to a decrease in the availability of manufactured goods imported into Africa.

“African IMT companies with disrupted global supply chains have also found it difficult to identify where the problem areas were in their supply chains, especially since the spread of COVID-19 around the world has been unpredictable. As a result, they are having to consistently update their supply chain risk assessments with new information,” he says.

Further, IMT companies operating in South Africa,

will soon be subject to localisation targets for the sourcing of goods in the IMT sector, including when procuring industrial equipment, construction materials and transport rolling stock, with their supply chains set to become more localised as result. This was announced as part of President Cyril Ramaphosa’s Economic Recovery Plan, on 15 October 2020. He said that it had been agreed at the National Economic Development and Labour Council that both the private and public sector would have to disclose the value of goods and services they procured locally, in their annual reports.

Yudaken notes that changing manufacturing locations or suppliers, is risky, and might not be possible in areas with limited options and infrastructure. It is also difficult to assess new suppliers within tight deadlines, to ensure they are fully compliant with local and international laws.

John Bell, Partner in the Dispute Resolution Practice at Baker McKenzie notes that IMT companies must conduct full risk assessments of the impact of COVID-19 on their business operations and any changes that have to be made as a result.

“Included in these risks assessments should a study of the options available to support existing suppliers who are facing supply chains disruptions. If companies have to resource any of their products, they must assess their current contractual obligations and ways to mitigate the risks of not being in a position to fulfil these obligations. Further, any new contracts entered into should contain clear COVID-19 provisions and cover future pandemic eventualities. IMT companies also need to keep fully up-to-date with constantly changing regulations and policies, implemented to counter the effects of the pandemic, and ensure they are compliant in every country in which they operate,” says Bell.

“In the longer term, supply chain digitisation will help IMT companies in Africa to build resilience in their supply chains, assisting them to streamline their supplier selection process and help to manage relationships. This will assist IMT companies to be able to comply with localisation requirements in the procurement process as well”,

www.theafricalogistics.com

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COVER STORY

S

ub-Saharan Africaâ&#x20AC;&#x2122;s biopharmaceutical industry has a huge amount of potential; the conditions for conducting clinical trials are ideal on many levels, notably due to the diverse populations of potential patients.

This optimal study landscape, combined with the expected increase in transport and storage capacity due to COVID-19 vaccine distribution, means that biopharma manufacturers and clinical services companies will need to build robust supply chains to support the increased requirements likely to emerge from both clinical trials and approved product distribution.

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Imports and Production: Current Status Manufacturers lack incentives to promote and register their latest products on the African market, so many countries in the region use outdated drugs. But there are exceptions; in Nigeria, for example, regulations allow local drug manufacturers to also be drug importers which helps facilitate the launch of the latest products in the market1.

Imports are responsible for 80-90% of the drug consumption in sub-Saharan Africa. Given this, there is an opportunity to boost local drug production through incentives, and a growing

COVER STORY

The Logistics of COVID-19 Vaccines

The BioPharma Landscape in Sub-Saharan Africa: What’s next?

number of pharmaceutical companies are increasing their investments in the region2.

Developing a local drug industry in the region will take many years of sustained investment with positive outcomes including improved healthcare, job creation and increased market competition. There is debate as to whether locally manufactured products would ultimately be cheaper. The structure of local supply chains, which differs between regions, also plays into the affordability of drugs.

The development of supply chains to support local manufacturing, and distribution of both local and international material and products has been accelerated by the impact of COVID-19.

Ensuring Success During the Pandemic The organizations that have mitigated this impact better are those who are implementing previously developed supply chain risk management and business continuity strategies. Through diversifying their supply chains to reduce supply-side risks from any one country or region, they reduce reliance on any single supplier.

Based on World Courier’s experience of maintaining supply channels during times of public health crises and transport disruption, we’ve outlined key logistics considerations that apply to COVID-19 vaccine development and distribution – albeit on an unprecedented scale.

Adjuvant Drug Sourcing Adjuvants are commonly used in vaccines to amplify their effect. They can reduce the time to a robust immune response, and the number of doses needed to achieve it. As such, there is a strong case that adjuvants will be essential in vaccinating the world’s population at speed.

It is therefore vital that any vaccine trial – and later, distribution network – has a cast-iron supply plan in place for sourcing adjuvants.

The Correct Packaging Vaccines are commonly transported cooled (28°C), frozen (-20°C) or deep frozen (-70°C). If the vaccine is to be effective once it reaches the recipient, there must be no temperature deviations. Transit times from manufacturing facility to final destination for administration could be extended due to the global nature of distribution required.

End-to-End Cold Chain Maintenance Packaging is an important part of preventing temperature excursions, especially if there are unexpected and out of control delays. But each stage of the journey must be properly equipped for refrigerated storage and coolant replenishment as applicable – often maintaining differing temperatures between individual consignments.

Established Chain of Custody Supply chains are only as strong as their weakest link. An auditable chain of custody is the only way to ensure confidence that the shipment hasn’t been tampered with, switched with counterfeit goods, or experienced an excursion at any point.

Local Knowledge At a time when unexpected disruptions have become a feature of global supply chains, local knowledge has become a prerequisite. It is vital to have people who know which airports and depots have the necessary storage facilities if a shipment is held up or must re-route. People who can negotiate changing customs requirements in the local language.

Constant Communication When everything runs smoothly, you don’t need to talk. But when it doesn’t, constant communication is essential. The consignee should confirm time of arrival, shipment volume, and temperature at delivery – so if anything unexpected happens, it can be addressed immediately. The courier should also confirm the consignee knows how to handle the shipment to maintain its integrity once it’s left the logistics provider’s network.

Contingency Planning When border restrictions can be implemented with little warning, it is vital to have contingency plans in place if delivery timescales are to be maintained.

Alternative flights, routing and entry points should be planned for every lane.

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COVER STORY

But there are logistics challenges in the region, notably inconsistent power supply and a lack of infrastructure in some countries, so diversifying supply chains requires more upfront investment and logistics planning. The biopharma companies investing in Sub-Saharan Africa can do so when their supply channels are established and robust, with reliable logistics to ensure continuity of clinical trial material and drug supply.

commercially approved products. This represents a key milestone for biopharma organizations requiring logistics partnership from pre-clinical, through clinical trials to commercial distribution. The facility is in full compliance with local regulations and operations following GxP requirements and provides in-country storage as well as domestic and regional distribution of pharmaceutical products.

How World Courier is Supporting Growth in the Region

Looking Forward

World Courier opened a second office on the continent, in Nairobi, on 1 October 2020.

The strategic location close to the airport will ensure rapid turnaround for shipments. The set up means local evidence-based decision making with a focus on quality.The facility is GxP compliant with fridge and freezer storage capacity for packaging preconditioning.

World Courier’s storage depot license in Johannesburg was recently extended to include 1.

The impact of COVID-19 is proving that greater supplier diversity, innovative logistics solutions, and a global perspective are a necessity in future supply chains. With over twenty years of experience in the African continent and 18,000+ shipments across the territory in 2019, World Courier can provide better continuity of supply and extend healthcare solutions in the region.

contactus@worldcourier.com www.worldcourier.com

McKinsey & Company — Should Sub Saharan Africa make its own drugs: https://www.mckinsey.com/industries/public-andsocial-sector/our-insights/should-sub-saharan-africa-make-its-own-drugs

2.

News Africa Business — The Changing Face of the Pharmaceuticals Market in Africa: https://news.africa-business.com/post/ the-changing-face-of-the-pharmaceuticals-market-in-africa-

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FEATURE

UN raises concerns over food loss, waste

T

he UN has observed an increase in food loss and waste as a result of movement and transport restrictions due to the Covid-19 pandemic. A trend it says threatens food se-

curity.

Each year about 14 percent of the world’s food is lost before even reaching the market.

The loss is valued at $400 billion annually – about the GDP of Austria. On top of this comes food waste, for which new estimates are coming out early 2021.

When it comes to environmental impact, food loss and waste generate eight percent of global greenhouse gas emissions.Food loss occurs from farm up to and excluding retail, whilst food waste occurs at retail, food service and household level.

Causes range from poor handling, inadequate transport or storage, lack of cold chain capacity, extreme weather conditions to cosmetic standards, and a lack of planning and cooking skills among consumers.Simply put, reducing food lost or wasted means more food for all, less greenhouse gas emissions, less pressure on environment, and increased productivity and economic growth.Innovation, technologies and behavioral change – key to reducing food loss and waste“Food loss and waste is a big challenge of our time,” said FAO Director-General QU Dongyu, urging for stronger partnerships, more public and private investments in training for smallholder farmers, technology and innovation” to step up the fight against food loss and waste as “our planet is a small boat in the universe.”

“Innovative postharvest treatment, digital agriculture and food systems and re-modelling market channels offer huge potential to tackle the challenges of food loss and waste. We have just built a partnership with

IBM, Microsoft and the Vatican to empower Artificial Intelligence in all these areas,” added Qu. Inger Andersen, Executive Director of UNEP, encouraged governments to make food loss and waste part of national climate strategies.“Only 11 countries have so far included food loss in their Nationally Determined Contributions. None of them included food waste. By including food loss and waste and sustainable diets in revised climate plans, policymakers can improve their mitigation and adaptation from food systems by as much as 25 percent,” said Andersen.

Calling food loss and waste “an ethical outrage” given that so many people go hungry, António Guterres, United Nations Secretary-General, in a message sent in support of the Day, urged everyone to play their part in tackling this issue – from countries setting a reduction target and measuring their food loss and waste and policy action in this area being included in climate plans under the Paris Agreement to businesses taking a similar approach and individuals shopping carefully, storing food correctly, and using leftovers.

The need for everyone to come together and step up efforts to reduce food loss and waste, including through innovation, technologies and education, to shift behavioural norms away from waste, to measure and track progress, as well as work towards increasing the availability of food and reducing the environmental footprint of agricultural production – topics to be explored in depth at the 2021 Food System Summit – were echoed by speakers and panel discussion participants from the UN, European Commission, private and public sectors, agriculture ministries of developing and developed countries, farmers’, markets’ and consumers’ organisations and associations, academia and chefs.

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FEATURE Solutions to reduce food loss and waste Solutions to stem food loss and waste include: good data to know where in the value chain the major hot spots of food loss and waste are; applying innovation – for example, e-commerce platforms for marketing or retractable mobile food processing systems; government incentives to bolster private sector food loss and waste action and collaboration across supply chains; investments in training, technology and innovation, including for small-scale producers; better food packaging and relaxing on regulations and standards on aesthetic requirements for fruit and vegetables; behaviours that value and make the most of food at home; redistributing safe surplus food to those in need through food banks; facilitating farmer’s access to consumers and shorter value chains through farmers markets and rural urban linkages; and investing more to strengthen infrastructure and logistics, including sustainable cold chains and cooling technologies.

In many countries a large proportion of produce is lost during transportation. To address this, FAO has introduced improved, sustainable bulk packaging (in the form of stackable and nestable plastic crates), along with good post-harvest management practice, to transport fresh produce in a number of Southern and South-eastern Asian countries. The use of crates during transport has reduced losses of vegetables and fruits by up to 87 percent. Where crates replaced single-use plastic bags, this has also brought environmental benefits. (Source SOFA 2019, p. 36) UNEP, together with high-level coalition Champions 12.3, has developed a Target-Measure-Act approach to food loss and waste reduction.

The United Kingdom, a pioneer of this approach, has achieved a 27 percent reduction in post-farm gate food loss and waste per capita by 2018 relative to its 2007 baseline, making it the first country in the world to have advanced more than halfway towards the achievement of SDG 12.3.

Good data has helped the UK to make the case for action, together with an effective public-private

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The Africa Logiistics

partnership to facilitate cross supply chain collaboration, leveraging innovation in food promotion, labeling, and design, and a long-standing public behaviour change campaign, with re-doubled efforts and impacts on household food behaviours during the global pandemic.

Several companies including Tesco (Central Europe), Campbell, and Arla Foods have achieved food loss and waste reductions of more than 25 percent— suggesting that achieving the target is possible for companies, too.

A new African Centre of Excellence for sustainable cooling and cold chain based in Rwanda is helping get farmers’ produce to market quickly and efficiently – reducing food waste, boosting profits and creating jobs.

Elsewhere, young entrepreneurs like Isaac Sesi – who spoke at the event – also fight food loss with innovation. Sesi and the Feed the Future Innovation Lab for the Reduction of Post-Harvest Loss at Kansas State University are providing farmers in Ghana – Isaac’s home country – with an affordable moisture meter called GrainMate, which measures the moisture content of maize and other grains, helping farmers ensure the grains are sufficiently dried and tackle the main cause of post-harvest loss in grain – insufficient drying before storage, which creates conditions for fungal growth, contamination and insect infestation.

Elsewhere, young entrepreneurs like Isaac Sesi – who spoke at the event – also fight food loss with innovation.

Sesi and the Feed the Future Innovation Lab for the Reduction of Post-Harvest Loss at Kansas State University are providing farmers in Ghana – Isaac’s home country – with an affordable moisture meter called GrainMate, which measures the moisture content of maize and other grains, helping farmers ensure the grains are sufficiently dried and tackle the main cause of post-harvest loss in grain – insufficient drying before storage, which creates conditions for fungal growth, contamination and insect infestation.

Pirates are kidnapping more seafarers off West Africa, IMB reports

I

CC International Maritime Bureau (IMB) figures show a rise in piracy and armed robbery on the world’s seas in the first nine months of 2020, with a 40% increase in the number of kidnappings reported in the Gulf of Guinea, compared with the same period in 2019. Pirates armed with guns and knives are abducting bigger groups of seafarers at further distances off the West African coast.

London and Kuala Lumpur, 14 October 2020 – ICC International Maritime Bureau (IMB) figures show a rise in piracy and armed robbery on the world’s seas in the first nine months of 2020, with a 40% increase in the number of kidnappings reported in the Gulf of Guinea, compared with the same period in 2019. Pirates armed with guns and knives are abducting bigger groups of seafarers at further distances off the West African coast.

IMB’s latest global piracy report details 132 attacks since the start of 2020, up from 119 incidents in the same period last year. Of the 85 seafarers kidnapped from their vessels and held for ransom, 80 were taken in the Gulf of Guinea – in 14 attacks reported off Nigeria, Benin, Gabon, Equatorial Guinea and Ghana.

In the first nine months of 2020, seafarers reported 134 cases of assault, injury and threats, including 85 crewmembers being kidnapped and 31 held hostage onboard their ships. A total of 112 vessels were board-

ed and six were fired upon, while 12 reported attempted attacks. Two fishing vessels were hijacked, both in the Gulf of Guinea.

“Crews are facing exceptional pressures due to Covid-19, and the risk of violent piracy or armed robbery is an extra stress,” said Michael Howlett, Director of IMB, whose Piracy Reporting Centre (IMB PRC) has responded to reports and shared data since 1991, supporting seafarers and fishers worldwide. “While IMB liaises with authorities swiftly in case of a pirate attack, we encourage all Coastal states and Regional Cooperations to take responsibility for ensuring maritime security within their EEZ to achieve safer seas and secure trade.”

Gulf of Guinea the world’s piracy hotspot With approximately 95% of global kidnappings reported from within Gulf of Guinea waters, IMB warns that pirate gangs in the area are “well organized and targeting all vessel types over a wide range”.

The furthest attack from shore also involved the most crew kidnapped from a single vessel in 2020. On 17 July 2020, eight pirates armed with machine guns boarded a product tanker underway around 196 nautical miles southwest of Bayelsa, Nigeria. They held all 19 crewmembers hostage, stole ship’s documents and valuable items, and escaped with 13 kidnapped crew. The tanker was left drifting with limited and unqualified navigational www.theafricalogistics.com

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FEATURE and engine crew onboard. A nearby merchant vessel later helped the tanker to sail to a safe port.

Regional Authorities were notified and the 13 kidnapped crewmembers were released safely one month later.

A more recent example was on 8 September 2020, when armed pirates attacked a refrigerated cargo ship underway around 33nm southsouthwest of Lagos, Nigeria. Two crewmembers were kidnapped, but the rest of the crew managed to retreat into the citadel – one of the industry’s recommended best practices endorsed by IMB. A Nigerian naval team was dispatched, who boarded, conducted a search, and then escorted the ship to a safe anchorage for investigations.

The IMB piracy report includes a special thanks to the Nigerian Authorities, particularly the Nigerian Navy and Nigerian Maritime Administration and Safety Agency NIMASA who “continue to provide timely information, actions and valuable cooperation between Agencies”.

Knife attacks in Singapore Straits The piracy centre recorded 15 attacks to ships underway in the Singapore Straits. While most are considered low level crimes, two crew were threatened, one injured and another taken hostage, indicating a continued risk to the crew. Knives were reported

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The Africa Logiistics

in at least ten of the incidents.

Indonesia brighter There has been a sharp quarterly decrease in the number of incidents within the Indonesian archipelagic, with four reported in Q3, down from 14 in Q2. These are viewed as low level opportunistic thefts with most reported on anchored vessels.

Call for more reporting All vessel types in in the Caribbean, Central and South America – including Brazil, Colombia, Ecuador, Haiti, Mexico and Peru are being targeted at anchor as well as underway, and during river passages under pilotage. On 26 September 2020, a container vessel was boarded by armed perpetrators during its river passage at Guayaquil. The attackers fired their weapons towards the accommodation and bridge, then opened containers and stole the contents before leaving.

However, as many more cases go unreported, IMB is urging all ship masters and operators to inform, in a timely manner, the 24-hour IMB Piracy Reporting Centre of any attacks to their vessels or crew.

Howlett said the IMB PRC

has always believed in the power of sharing and exchanging information: “Understanding the true risk in the area is an important step towards improving safety for all seafarers. IMB PRC not only relays reports to appropriate response agencies and broadcasts incident information to ships via GMDSS, but we also use the reported statistics to raise awareness of these crimes and be a catalyst of change.”

Somali piracy remains under control No incidents of piracy have been reported around Somalia since 2018. In August 2020, pirates freed the last three of the thousands of hostages who have been held captive in the region over the years since ship hijackings peaked in 2011.

Despite this, as Somali pirates are still capable of carrying out further attacks, IMB urges vessels to continue implementing the industry’s best management practices (BMP5), and encourages the continued, stabilising presence of navies in the region.

“Special thanks to the Nigerian Authorities, particularly the Nigerian Navy and Nigerian Maritime Administration and Safety Agency NIMASA who “continue to provide timely information, actions and valuable cooperation between Agencies”.

FEATURE

Pharmaceutical manufacturing companies must handle returned drugs better In my research I looked at the challenges of reverse logistics facing pharmaceutical companies in the city of Tshwane. The city houses nearly half of the 187 pharmaceutical manufacturing companies in the Gauteng province.

P

harmaceutical manufacturers should focus on reducing faults and working closely with pharmacies to manage medicine stocks better. But the return of medicine can’t be avoided. It’s inevitable that some products would be returned because of faults or when they have expired.

Most drug returns are caused by recalls. A recall is typically done by the manufacturer. It’s different from a return of pharmaceutical products by customers.

Whatever the reason for the return, manufacturers, importers, retailers, exporters and end-users must follow strict requirements for the removal of waste. In the normal process, a product is manufactured to move through the supply chain route to be sold to a retailer, or to the final consumer for consumption; but when it comes to reverse logistics, things work vice versa.

There are countries, such as India, that have effective reverse logistics practices in place. Reverse logistics is the process that manages the collection, inspection and sorting, depot or repair services, recycling, and disposal of goods after the delivery to the consumer or customer.

But in South Africa, the concept of reverse logistics is misinterpreted by consumers. It’s also viewed as a cost drain that doesn’t add any value to the supply chain.

South Africa’s national consumer commission requires suppliers to contact it when deciding on the most appropriate strategy to deal with prospective recalls.

National consumer commission recall guidelines

stipulate that suppliers notify the commission when taking steps to avoid a product safety-related hazard. Reverse logistics and recalls might still be a problem for pharmaceutical manufacturing companies because of quality checks not being performed as required.

There is inadequate research in the field of reverse logistics – that is how goods are sent back from the retailer or consumer back to the manufacturer – in South Africa. This is a problem because research is necessary to implement the right policies when it comes to returning pharmaceutical products. Drugs can be returned due to defects, damages or expiration. But drugs can’t be resold or re-furbished and must be disposed in an environmentally accountable way.

In my research I looked at the challenges of reverse logistics facing pharmaceutical companies in the city of Tshwane. The city houses nearly half of the 187 pharmaceutical manufacturing companies in the Gauteng province.

I found that the disposal of reverse logistics for drugs is not easy. Pharmaceutical manufacturing companies and retail pharmacies need to ensure that the correct processes are in place to handle the return of medication.

Returns and recalls Drugs that are returned or recalled can’t be repaired, resold or even donated. These must be destroyed. Returns within the pharmaceutical industry are worth billions. The fundamental complexities of reverse logistic operations, such as uncertainty in quality, quantity, and the timing of returns, make the product-return process complicated.

When drugs are returned due to defects or damages, they must be destroyed. But drugs can’t be disposed of like other consumer products. They are harmful to the environment. Their disposal must be done in terms of specific environmental regulations and laws. www.theafricalogistics.com

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FEATURE I surveyed logistics, operations, buying, manufacturing and sales personnel and managers in 50 pharmaceutical companies. The survey included questions about strategies implemented to manage reverse logistics in their companies.

Most (67%) of the respondents said their companies didn’t anticipate the return of drugs and had no plans in place to handle these.

This is problematic because manufacturers are expected by customers – retail pharmacies and end users – to have systems and policies in place for handling product recalls.

Organisations must consistently improve reverse logistics processes and procedures.

Two thirds (66.67%) of the respondents said their companies had challenges when it comes to reverse logistics.

These challenges included gatekeeping – that is the entry point of the reverse flow of, where returned goods are screened. Other challenges identified included; the lack of technology, waste elimination and transportation of product recalls within the pharmaceutical industry. The absence of information systems and inadequate investments in information technology were the most important obstructions in effective management.

Many companies are faced with an inefficient and undisciplined returns-management process and waste elimination; because they focus their supply chain-related investments on forward logistics.

Returns in the manufacturing pharmaceutical industry are worth a lot of money. My research aimed to find better ways of dealing with the challenges of reverse logistics.

In this research, I noted from the respondents that reverse logistics was a challenge for staff since most of them indicated that there are limited development opportunities and innovations in their companies.

Management must therefore must take this into consideration and implement training for staff and employ qualified personnel who are more confident in handling reverse logistics problems and challenges.

Recommendations Manufacturing pharmaceutical companies must develop their current strategies to be more sustainable due to factors such as the firm’s green image, political, social responsibility, the economy and also follow the guidelines for recall or withdrawal of medicine and medical devices in South Africa.

Organisations must consistently improve reverse logistics processes and procedures.

Research is also needed into consumers’ experiences in returning products; and the challenges they face. Additionally, more research should be done on the reverse logistics of different pharmaceutical products such as pills, capsules and syrups.The Conversation

Mpho Sharon Makaleng, Lecturer, University of South Africa This article is republished from The Conversation under a Creative Commons license. Read the original article.

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FEATURE

Addressing supply chain disruption and compliance in the IMT sector in Africa

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ndustrials, manufacturing and transportation (IMT) companies have some of the most complex supply chains of any sector and have been particularly hard hit by quarantines, travel restrictions, and other disruptions brought about by the global COVID-19 outbreak.

Marc Yudaken, Partner and Head of the Industrials, Manufacturing and Transportation (IMT) at Baker McKenzie in Johannesburg says that African IMT companies that have operations in multiple jurisdictions, or source products from other regions, have faced intense challenges when reacting to and minimising supply chain impacts.

“The lockdowns, closed borders and travel restrictions put in place to stop the spread of the virus did not only affect people, they affected the transportation of goods, both between and within countries, and severe delays and shortages were the result. This made it difficult for IMT companies to resume and maintain operations even after the virus was brought under control in some countries,” he explains.

Yudaken explains that manufacturing products, industrial machinery and transport equipment constitute over 50% of Africa’s import needs, with the most important suppliers being Europe (35%), China (16%) and the rest of Asia including India (14%). Supply chain disruptions in these regions have therefore severely impacted Africa’s ability to access essential products and components and has led to a decrease in the availability of manufactured goods imported into Africa.

“African IMT companies with disrupted global supply chains have also found it difficult to identify where the problem areas were in their supply chains, especially since the spread of COVID-19 around the world has been unpredictable. As a result, they are having to consistently update their supply chain risk assessments with new information,” he says.

Further, IMT companies operating in South Africa, will soon be subject to localisation targets for the sourcing of goods in the IMT sector, including when procuring

industrial equipment, construction materials and transport rolling stock, with their supply chains set to become more localised as result. This was announced as part of President Cyril Ramaphosa’s Economic Recovery Plan, on 15 October 2020. He said that it had been agreed at the National Economic Development and Labour Council that both the private and public sector would have to disclose the value of goods and services they procured locally, in their annual reports.

Yudaken notes that changing manufacturing locations or suppliers, is risky, and might not be possible in areas with limited options and infrastructure. It is also difficult to assess new suppliers within tight deadlines, to ensure they are fully compliant with local and international laws.

John Bell, Partner in the Dispute Resolution Practice at Baker McKenzie notes that IMT companies must conduct full risk assessments of the impact of COVID-19 on their business operations and any changes that have to be made as a result.

“Included in these risks assessments should a study of the options available to support existing suppliers who are facing supply chains disruptions. If companies have to re-source any of their products, they must assess their current contractual obligations and ways to mitigate the risks of not being in a position to fulfil these obligations. Further, any new contracts entered into should contain clear COVID-19 provisions and cover future pandemic eventualities. IMT companies also need to keep fully up-to-date with constantly changing regulations and policies, implemented to counter the effects of the pandemic, and ensure they are compliant in every country in which they operate,” says Bell.

“In the longer term, supply chain digitisation will help IMT companies in Africa to build resilience in their supply chains, assisting them to streamline their supplier selection process and help to manage relationships. This will assist IMT companies to be able to comply with localisation requirements in the procurement process as well.”

www.theafricalogistics.com

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OPINION

Amadou Diallo: Africa, now is your time!

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he liberation of young Africa’s energy and drive, together with the continent’s immense natural wealth and abundant environmental and cultural resources, could launch a power and passion as potent and transformational as the time when the first humans left Africa about 1.5 million years ago to spread across and prevail over the world, believes Amadou Diallo, CEO, DHL Global Forwarding Middle East and Africa.

A couple of years ago, McKinsey published a survey about growth in Africa. I can’t say I was surprised to discover that two-thirds of all respondents thought that the continent’s combined GDP will be among the fastest-growing in the world over the next 20 years, because I think so too.

When a country has immense wealth – in terms of both natural resources and passionate, bright and talented people – it should do well. In the case of Africa, this holds true for the entire continent. And yet, to date, only some of Africa’s countries do well, while the great majority of them lag behind the rest of the world.

Much potential is wasted, as poverty and deprivation resulting from corruption and post-colonial exploitation are still the order of the day in many places.

Nevertheless, things are changing, and post-Covid-19 Africa is on track to emerge as the one of the world’s fastest-growing continents. Anyone can see that Africa is ripe with potential and fizzing with energy.

It was, however, gratifying to know that other people agreed with me. What I find truly fascinating is where all this potential and energy springs from – and, more importantly, how it can be harnessed and where it’s going.

Africa is lucky to be both resource-rich and resourceful. First, this is a continent that has youth on its side. It’s blessed with a young population – the youngest on the planet, in fact – that is hungry for knowledge, democracy, growth and quality of life. The people are impressively dynamic, unceasingly creative and keen to make their mark on their respective countries and the world. It’s reassuring to know that the future is in their hands.

Then there’s Africa’s geological good fortune. One study found that the continent has around 600 million hectares of uncultivated arable land, roughly 60 percent of the unexploited global total. This opens up the tantalising possibility of Africa feeding the world, although it is an opportunity that has yet to be unleashed. And while it’s true that Africa still needs to build its own food self-sufficiency, change is in the air. Take Senegal, which used to be one of the biggest importers of food, particularly rice from Vietnam, Thailand and India. Now the country is increasing rice production within its own borders, thus allowing investment that would have been spent on food imports to be made in other areas.

Africa also has approximately 30 percent of the planet’s mineral reserves, many of which are used in battery development, making it a huge draw for

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companies in the technology sector that create connected innovations to power the world. Indeed, there were, at the last count, more than 600 tech hubs distributed across the continent, in countries as diverse as South Africa, Nigeria, Morocco, Ethiopia and Rwanda. In fact, Rwanda – where Mara smartphones are manufactured – recently partnered with China’s Alibaba to establish Africa’s first electronic world trade platform.

Lastly, but no less importantly, Africa is replete with “traditional” energy resources. Mozambique, for example, holds 100 trillion cubic feet (Tcf) of proved natural gas reserves – which, incredibly, is more than Qatar. Nations such as Nigeria, Angola, South Africa, Senegal, Morocco, Egypt, Libya and Gabon are oilrich; but Africa is also a popular location for renewable energy companies that are keen to harness its limitless solar and hydro power potential.

A growing manufacturing center Mix all of this together, and the result is affordable energy on a vast scale – which, combined with the young population, makes the continent an extremely attractive location for manufacturing firms. An added bonus is the geographical advantage of being close

OPINION

to huge consumer markets in Europe, the Americas and Asia. In fact, I believe Africa is reaching a turning point because it currently displays the same dynamics that were seen in Asian manufacturing centers such as China, Vietnam and Pakistan before their exponential growth.

For instance, industrial zones are growing in locations such as Kenya, Ghana, Rwanda, and Morocco. Currently, Morocco’s industrial zones annually produce 600,000 cars – which would otherwise have to be imported. That is a promising development, because when most of the vehicles driven in Africa are made in Africa, it will be a catalyst for more jobs and more investment. Then there is Ethiopia, which has grown as a center for apparel manufacturing and was recently called “Africa’s new growth engine” by the World Economic Forum.

Of course, more – much more – needs to happen in order for Africa’s manufacturing potential to be unharnessed. Major steps forward will be African autonomy; efficient, low-cost energy; and intra-African free trade.

Benefits of Africa’s common market

The borders in Africa have been stifling its development for decades. The irony is that these are not natural borders. They were set during the Berlin Conference of 1884, when Europeans and the U.S. carved up the continent into chunks, designing regional maps in a completely arbitrary way with little or no thought for local cultures, ethnicities and languages. That’s why it is today as complicated for an Algerian to visit Morocco, or for a Kenyan to visit Senegal, as it would be for a European or a U.S. citizen. That can’t be right.

The administrative burden at these inherited borders has long needed to be simplified so that Africans can easily access each other’s markets, allowing people, capital and goods to move around freely.

That’s why the African Continental Free Trade Area (AfCFTA) is such a gamechanging moment. Created by 54 of the 55 nations recognized by the African Union, AfCFTA’s launch has been delayed due to Covid-19. But when it finally comes into force – hopefully in 2021 – it will make it easier for local and international companies to set up manufacturing platforms, while simultaneously opening up a huge domestic market (an expected 1.4 billion people by 2025). It will also – according to an estimate from the U.N. Economic Commission for Africa – boost intra-African trade by 52% by 2022. Dismantling red tape and dispensing with tariffs will create opportunities for entrepreneurs, bring huge economic power and influence, and help rid Africa of its damaging colonial and post-colonial thinking.

In this last regard, Africa’s liberated young people are already one step ahead.

They’re simply not interested in looking back to how things used to be or politely maintaining the damaging colonial status quo. Instead, their aspiration is to run their own lives, make change happen and generate new business opportunities inside their own markets. It’s why so many small companies are currently rising up

across Africa.

Jettisoning old ways of thinking It’s crucial that African leaders and politicians adopt the same modern mindset. For example, Abiy Ahmed Ali, the Ethiopian prime minister, and Édouard Ngirente, the Rwandan prime minister, are in their mid-40s and possess youthful outlooks that have rejuvenated their respective countries. This is how it should be, because Africa’s young people now expect and demand a revitalized and efficient leadership and a high level of transparency that consigns corruption to the dustbin of history. They want governments that are accountable for their actions and leaders who will invest in tangible projects that make a real difference to the lives of their citizens.

And they want high-caliber education systems that guarantee free and equal access to learning for boys and girls so that they can go on to become the innovation drivers and wealth creators of tomorrow.

While there is still a lot more to do – like anywhere else – the excitement, energy, passion and determination across the continent is palpable because there’s a feeling that, by shaping its own destiny, Africa is on the threshold of an enormous change – one that could entirely transform its standing in the world. Now we need to step up a gear, capitalize on that incredible potential, and make it happen.

We are now shaping our destiny by ourselves and should reap the benefits for our own people – and thereby, for the world. That’s why I shout out loud and clear: Africa, your time is NOW! Amadou Diallo has been CEO of DHL Global Forwarding Middle East & Africa since June 2017. He is the founder of Saloodo!. He was previously CEO of DHL Freight, CEO Africa and South Asia Pacific, DHL Global Forwarding, prior to which he was chief financial officer of Deutsche Post DHL Logistics Divisions and managing director for the integration of Exel and DHL. Source: DHL

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31

OPINION

Green trade key to Africa’s rebound

David Luke

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limate change – and demand for greener products – threaten Africa, but smart decisions now can set it up for future success Broad consensus is emerging around the silver-lining opportunity to “build back better” from the COVID-19 crisis by creating more sustainable, resilient and inclusive societies.

But in the broader context of climate change, what does this mean for Africa, which produces just two to three percent of global carbon dioxide emissions from energy and industrial processes?

In building back better, Africa can take strategic advantage of the landmark African Continental Free Trade Area (AfCFTA) agreement to advance the green transition agenda. Covering goods, services, investment, competition policy, intellectual property rights and e-commerce, AfCFTA offers several pathways forward for Africa.

The United Nations Economic Commission for Africa (UNECA) projects that the AfCFTA could boost intra-African trade by 52 percent by eliminating import duties, and double this trade by reducing non-tariff barriers.

However, such benefits are threatened by climate change and variability which are set to hit Africa hard, raising temperatures more than global averages and producing extreme weather events.

Climate effects can reduce agricultural production and yields, damage physical infrastructure, disrupt supply, transport and distribution chains and also harm the biodiversity and natural attractions on which tourism in Africa depends.

The green agenda aims to avoid, halt and reverse the adverse impact of climate change. AfCFTA intersects the green agenda through specific provisions in its protocols, and the strategies adopted to drive implementation.

First, AfCFTA protocols can be designed and made operational in support of green growth.

Phase I protocols on trade in goods and trade in services, though finalised, can be operationalised with environmental considerations at their core.

In finalisng their tariff schedules, member states should not put environment-friendly technology

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(such as wind turbines or photovoltaic systems) on sensitive or exclusion lists. Two of the five priority sectors for services liberalisation – transport and tourism – offer natural entry points for environmental considerations. And whenever more sectors are added, environmental services must be top priority.

Phase II negotiations on investment, competition policy and intellectual property rights, and phase III negotiations on e-commerce, are yet to start, presenting an opportunity to embed environmental considerations within these protocols. Indeed, climate change is closely intertwined with phase II and III issues.

Incentives can be crafted to facilitate investment in green-friendly infrastructure, energy and research and development. A fine balance is needed to ensure competition regulations promote green innovation without environmental regulations harming competition. Appropriate IPRs are critical to incentivise the development and diffusion of green technologies as well as the protection of biodiversity and traditional knowledge.

E-commerce rules will in turn be required to ensure extensive “last-mile” services with short delivery frames that do not exacerbate emissions, and to fast-track the use of efficient, digitalised logistics.

Second, with the green transition agenda gaining momentum, AfCFTA will be implemented in an irreversibly changed international trade landscape, notably with the European Union (EU) commitment to a “Green Deal” which aims to halve its carbon emissions by 2030 and achieve net-zero emissions by 2050.

Regional and global supply chains will be increasingly required to respond to consumer preferences for climate-friendly and sustainable production processes. As penalties increase, non-compliance will not be a viable option.

Similarly, AfCFTA reforms will have to be environmentally friendly to ensure Africa can produce and trade in a new green world. This means enforcing environmental standards throughout the economy, from building robust infrastructure to producing droughtresistant crops.

The ECA and the African Union Commission are

With the green transition agenda gaining momentum, AfCFTA will be implemented in an irreversibly changed international trade landscape, notably with the European Union (EU) commitment to a “Green Deal” which aims to halve its carbon emissions by 2030 and achieve net-zero emissions by 2050.

OPINION working jointly with countries on AfCFTA implementation strategies that guide how natural resources can be used to develop green and blue economy value chains.

The EU has also committed to a new Africa strategy with the African Union (AU). In making drastic changes to its own climate policy, the EU will now bring climate considerations to the forefront of discussions with the AU on a mutually beneficial partnership.

This will require action on the old slogan of “trade, not aid” to support climate-conscious conditions for trade and investment and facilitate sustainable and resilient growth and decent job-creation for Africans.

It will also require a radical change in the partnership, with the EU working with Africa as one entity rather than as a collection of sub-regional arrangements.

This is critical for coherent support of Africa’s integration agenda.

E-commerce rules will in turn be required to ensure extensive “last-mile” services with short delivery frames that do not exacerbate emissions, and to fast-track the use of efficient, digitalized logistics.

Second, with the green transition agenda gaining momentum, AfCFTA will be implemented in an irreversibly changed international trade landscape, notably with the European Union (EU) commitment to a “Green Deal” which aims to halve its carbon emissions by 2030 and achieve net-zero emissions by 2050.

Regional and global supply chains will be increasingly required to respond to consumer preferences for climate-friendly and sustainable production processes. As penalties increase, non-compliance will

not be a viable option.

Similarly, AfCFTA reforms will have to be environmentally friendly to ensure Africa can produce and trade in a new green world. This means enforcing environmental standards throughout the economy, from building robust infrastructure to producing droughtresistant crops.

The ECA and the African Union Commission are working jointly with countries on AfCFTA implementation strategies that guide how natural resources can be used to develop green and blue economy value chains.

The EU has also committed to a new Africa strategy with the African Union (AU). In making drastic changes to its own climate policy, the EU will now bring climate considerations to the forefront of discussions with the AU on a mutually beneficial partnership.

This will require action on the old slogan of “trade, not aid” to support climate-conscious conditions for trade and investment and facilitate sustainable and resilient growth and decent job-creation for Africans.

It will also require a radical change in the partnership, with the EU working with Africa as one entity rather than as a collection of sub-regional arrangements.

This is critical for coherent support of Africa’s integration agenda.

David Luke is coordinator of the African Trade Policy Centre at the UN Economic Commission for Africa and Lily Sommer is a trade policy expert at the centre. This article was originally published by the Thomson Reuters Foundation and can be accessed at https://news.trust.org/ item/20201005102659-85oyc/

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35 2016/07/05 2:27 PM

OPINION

The African Continental Free Trade Area has been established; what now?

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he agreement establishing the African Continental Free Trade Area (“AfCFTA”) came into force on 30 May 2019, after being ratified by 22 African countries.

The operational phase commenced in July 2019.

The AfCFTA was intended to start operating in terms of the agreement in July 2020, but as a result of the Covid-19 pandemic, the start is now planned for January 2021.

The inauguration of the AfCFTA headquarters in Accra, Ghana, took place in August 2020. The Ghanaian Government had decided to provide the office premises as well as the official residence for the Secretary-General. WamkeleKeabetsweMene, was elected to fill this post at the African Union Heads of State and Government meeting of February 2020. He is South African, having served as South Africa’s head of mission to the World Trade Organisation and as South Africa’s chief negotiator in the AfCFTA negotiations.

According to press reports, he only emerged as the first head of the AfCFTA’s secretariat after seven rounds of voting by African heads of state and government, having defeated the Nigerian and DRC’s candidates in the final round.

The Agreement Establishing the African Continental Free Trade Area[2] includes amongst its general objectives, the creation of a liberalised market for goods and services and laying the foundation for the establishment of a continental customs union at a later stage.

The specific objectives of this agreement are to boost intra-African trade in goods through the progressive elimination of tariffs and non-trade

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barriers, progressively liberalise the trade in services, cooperate on investment, intellectual property rights and competition policy, cooperate on trade-related issues, establish a mechanism for the settlement of disputes concerning rights and obligations and establish and maintain an institutional framework for the implementation and administration of the AfCFTA. ECONOMIC IMPORTANCE OF THE AFCFTA AND THE CHALLENGES IT FACES The importance of the AfCFTAhas to be assessed against the background of the current intra-African trade environment.

What are the basic hurdles to intra-African trade?

UNCTAD puts it as follows: and limited economic diversification, which constricts the range of intermediate and final goods that can be traded and potentially inhibits the fuller development of regional value chains; tariff-related trade costs, associated with the slow implementation of the tariff liberalization schedules underpinning free trade agreements; and high non-tariff-related trade costs that hamper the competitiveness of firms and economies in Africa. Such high trade costs, related to business and trade facilitation, can be explained in terms of the hard and soft infrastructure deficits in Africa that have an impact on transport and transit costs and at-the-border and behind-the-border costs.”[3] The UNCTAD report stresses the importance of the rules of origin[4] which are to be implemented by the AfCFTA. The rules of origin will directly affect the size and distribution of economic benefits among member countries and, ultimately, the political will of members to advance regional integration to create an African eco-

OPINION nomic community. UNCTAD’s position is that the degree of complexity and restrictiveness in rules of origin should consider the levels of product diversification, sophistication and competitiveness in member countries; too restrictive and complex rules of origin at low levels of regional productive capacities can provide incentives to member countries to trade outside the African Continental Free Trade Area rather than within.

The World Bank’s detailed analysis of the AfCFTA, makes the following points:[5] The African Continental Free Trade Area (AfCFTA) agreement will create the largest free trade area in the world measured by the number of countries participating. The pact connects 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at USD3.4 trillion. It has the potential to lift 30 million people out of extreme poverty, but achieving its full potential will depend on putting in place significant policy reforms and trade facilitation measures.

Real income gains from full implementation of AfCFTA could increase by 7 percent by 2035, or nearly USD 450 billion (in 2014 prices and market exchange rates). However, the aggregate numbers mask the heterogeneity of impacts across countries and sectors. At the very high end are Côte d’Ivoire and Zimbabwe with income gains of 14 percent each. At the low end, a few countries would see real income gains of around 2 percent—including Madagascar, Malawi, and Mozambique.

AfCFTA offers big opportunities for development in Africa, but implementation will be a significant challenge. Lowering and eliminating tariffs will be the relatively easy part, even if it comes, in some cases, with the challenge of how to replace tariff revenues. The hard part will be enacting the non-tariff and trade facilitation measures, which is where the largest potential economic gains are predicted. Such measures will require substantial policy reforms at the national level, indicating a long road ahead. Achieving AfCFTA’s full potential depends on agreeing to ambitious liberalization and implementing it in full. Partial reforms would lead to smaller effects.

Although deeper regional integration is one of the key trade policy objectives for countries in Africa, a large part of intra-Africa trade currently goes unrecorded. Cross-border transactions often take place on a small scale, and such consignments are not captured by the standard statistical recording of trade through customs declarations. Because the number of small shipments can be very large, the total unrecorded volume and value of trade can be substantial. Official trade statistics are incomplete and possibly misleading.

Amongst the challenges identified by AfCFTA’s newly appointed Secretary-General, in his inaugural speech of 17 August 2020, are the following:[6] over reliance on the export of primary commodities to traditional markets; narrow export bases, caused by shallow manufacturing capacity; a lack of export specialisation; under-developed industrial regional value chains; and high regulatory and tariff barriers to intra-Africa trade.

He also referred to the very low percentage of intra-Africa trade of 18%. (This contrasts with intraregional trade in Europe and Asia of over 50%).

In his words: “Africa continues to be trapped in a colonial economic model, which requires that we aggressively implement the AfCFTA as one of the tools for effecting a fundamental structural transformation of Africa’s economy. We have to take action now, to dismantle this colonial economic model.”

Other analyses point to the fact that African businesses face higher tariffs when they export within Africa that when they export outside it.[7] An IMF analysis[8] refers to the one of the main challenges as that of reducing Africa’s large infrastructure deficit

in roads and ports. It states that with relatively low road density, African countries need to extend their road network and upgrade existing roads to improve access to African and global markets. It points out that this effort could be particularly important for reducing trade costs in landlocked countries. Improving ports and their efficiency would also help reduce trade costs.

The IMF analysis also makes the following points: Port development should be part of a coordinated African transportation strategy to ensure efficient use of resources and reduce costs and time at customs.

At the same time, regulatory frameworks and institutional capacity should be strengthened to attract private sector participation in the construction, operation, and maintenance of transportation infrastructure. Improving trade facilitation is another priority area for reform.

Addressing onerous customs procedures and boosting efficiency could reduce costs and facilitate trade. This will require pressing forward with modernization processes, intensifying training, and implementing quality-based management.

African countries need to reduce the high costs of trading within the continent. The highest costs stem from non-tariff barriers, which must be substantially and strategically reduced. Among those that ought to be tackled first are inefficient customs and entry requirement procedures and technical barriers to trade. The reduction in the infrastructure deficit and the improvement of the low quality of trade logistics are also crucial to deepening continental free trade and integration.

CONCLUSION The establishment of the AfCFTA is to be welcomed, as it addresses a very important issue which hampers intra-African trade: the lack of co-ordination of tariffs and official trade policy measures. However, putting in place a workable tariff system and deciding on sensible rules of origin are on their own, not going to solve the problem by themselves. The way in which analyses of the AfCFTA are worded tend to obscure the magnitude of the task, and often do not directly address one of the major problems which hinder intra-African trade: non-tariff aspects, especially those of transport infrastructure (especially roads and ports) and the general make-up of the economies (which continue to concentrate on raw material exports).

In considering the transport infrastructure issue from a continental perspective, it is clear that it requires a massive concerted effort by governments and the private sector. The significant financing required for such action is a huge challenge on its own, not to speak of the time and effort required to put in place an improved infrastructure. At the same time, one should not lose sight of the continuing African focus on raw material exports. Such exports, by their nature, often have little use in other African countries and unless the focus shifts at some stage to the production of products of increasing complexity and diversity which could have a market within the continent, the current situation will not change substantially.

The rules of origin, sensibly defined, could encourage an intra-African market for goods of increasing complexity or beneficiation. But in the end, we need to be realistic: the AfCFTA is not a quick fix and it will take many years (or decades) of concerted efforts in several different spheres to see an appreciable rise in intra-African trade.

By Anton van Dalsen, Legal Counsellor, HSF, 12 November 2020, www.theafricalogistics.com

37

OPINION

The Ocean Economy: ‘Enormous Opportunity For Africa’

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Canada is.

ecently invited by the Canadian government on a media tour showcasing its ocean economy, I was curious to find what Africa could learn from the maritime powerhouse

example of a global trend. After a century of overfishing and climate change, there could be a crisis looming over the ocean economy, including trade, tourism and fisheries, which the World Wildlife Fund (WWF) estimates to be at $24 trillion.

Our tour started in St John’s, Newfoundland and Labrador. Larry Hann, our guide, explained that the cod fishing industry began in Newfoundland in the late 15th century, when Italian navigator, John Cabot, received funding by King Henry VII to do some exploring.

It’s not all doom and gloom in Canada’s ocean economy, though. Corporate and government bodies are working together in many areas to combat this.

Institutions specializing in the ocean sector are driving the growth and innovation of Canada’s blue economy.

“The cod was so plentiful at that point that [Cabot]…thought his ship, the Matthew, was striking the bottom of the ocean when it was in fact striking cod,” said Hann.

One such is the Marine Institute of Memorial University of Newfoundland, a center of marine learning and applied research. Glenn Blackwood, Vice-President of the institute, who has been involved in training in Namibia and Tanzania, said it’s necessary to start at entry-level jobs. “You can’t be captain the first day on the ships,” he explained, “but you train them to a very high level.”

It eventually made Newfoundland famous. By the 1980s, though, the waters teeming with cod seemed a distant myth. Overfishing by foreign vessels within their Exclusive Economic Zone had all but dried up the cod population.

In 1992, the Canadian government imposed a moratorium on cod fisheries in the northwest Atlantic, as cod stocks had fallen below 1% of earlier noted biomass, marking the largest industrial closure in the country’s history.

The collapse of the area’s cod fisheries is just one

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“There is work to be done,” Blackwood continues, “because Africa has always been looked at as landbased.” This is despite the fact that “there’s enormous opportunity for Africa in the blue economy”, though Africa can only take advantage of this through investing in people.

Nova Scotia is one of eastern Canada’s maritime provinces.

OPINION

The commercial fishing industry here also has a history spanning centuries, and the ocean lapping its shores still shapes the local economy. Nova Scotia has in excess of 300 ocean companies, together employing over 35,000.

Explains Mayor Mike Savage of Nova Scotia’s capital Halifax: “Be it through ocean tech, fisheries, aquaculture, ship-building, ocean observation, marine-centered defence or transportation… [the ocean economy] runs deeply through our economy and culture.”

This is evidently the case, as Nova Scotia, and more broadly, Canada’s Atlantic regions, have consistently been leading ocean technology advancements for over a century. Some of these include industry-shifting inventions such as the variable pitch propeller and kerosene, which became the lighting source for ships in 1846.

It is on the back this history that they have developed institutions such as the Centre for Ocean Ventures and Entrepreneurship (COVE), an ocean technology business park that brings together people, ideas, industry and research. Their tenants include big corporations, such as IBM and Lockheed Martin, as well as startups and small entrepreneurs.

But Jim Hanlon, CEO of COVE, says one of the biggest obstacles relates to collaboration.

“There are three levels of government involved… one of the biggest challenges is getting them all to move at the same time.” Undoubtedly, this will also hold true for the African context. Cooperation will

be vital in taking full advantage of our blue economy. He posits that, “you need a champion; you need someone who believes in this very strongly”.

One of their champions is Canada’s Ocean Supercluster, an industry-led collaboration focused on building ocean-related business activities, research capacity and technological expertise. One of their mandates is building a stronger ocean network, creating an ecosystem where all players achieve economic and sustainable prosperity.

Kendra MacDonald, CEO of Canada’s Ocean Supercluster, saw the many industries such as “shipping, defence, aquaculture, fisheries, natural health products”, share similar challenges, as they all do business in the ocean in silos. These shared challenges are around cost and risk. “The communication costs on water is still greater than on land,” she says.

Given that 38 of 54 countries are coastal, there’s potential for Africa to harness its vast coastline. My takeaway from Canada was that innovation can only be born from a foundation of skills and knowledge. Creating a network between the private sector, government and academia is vital.

There aren’t cookie-cutter solutions we can lift from Canada. We can, however, look at the methods they used to create a more efficient ocean economy sector, and investigate how it can be applied to Africa’s maritime context.

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OPINION

Effects of Africa climate change

A

frica needs to prepare better for climate change by responding to a wide range of potential risks, a multi-agency report led by the UN World Meteorological Organization (WMO) said on Monday, the first in a series of continent-by-continent assessments.

“In recent months we have seen devastating floods, an invasion of desert locusts and now face the looming spectre of drought because of a La Niña event. The human and economic toll has been aggravated by the COVID-19 pandemic,” WMO Secretary-General Petteri Taalas said in a statement.

Filling the gap The report aims to fill a gap in reliable and timely climate information for Africa, which translates into a lack of climaterelated development planning, said Vera Songwe, Under-Secretary-General, and Executive Secretary of the United Nations Economic Commission for Africa (UNECA).

Africa has been warming progressively since the start of the last century, and in the next five years, northern and southern Africa are set to get drier and hotter, while the Sahel region of Western Africa will get wetter, WMO’s Regional Strategic Office Director, Filipe Lucio, told a press conference.

“Overall, Africa needs to take action. Action is needed today in terms of adaptation, but also is needed tomorrow in terms of mitigation”, Lucio said.

The agricultural sector is key to building climate resistance, since it is the dominant employer and it relies on the use of water and energy – both heavily implicated in climate change, he said.

Northern and southern areas under threat of aridity and desertification would benefit from reforestation, which helps to prevent water runoff and creates vegetation which supports the hydrological cycle.

Policy recommendations Policy changes are also recommended in transport, energy, infrastructure and industry. Financing has improved with the establishment of a UN-backed Green Climate Fund but there are still limitations in terms of the continent’s ability to tap into such funds, he added.

Climate change has contributed to a jump in food insecurity, mosquito-borne disease and mass displacement in the past decade, and the rise in sea levels has led to unusual weather patterns such as Tropical Cyclone Idai, which hit Mozambique, Malawi and Zimbabwe in 2019.

It showed the need for communities to learn about the risks and for impact-based warnings about the appropriate actions to take.

Cautionary tale A day after the cyclone made landfall, it appeared to have dissipated and people thought the worst was over. But then disaster struck when flooding followed, overwhelming Mozambique’s major port city of Beira, Lucio said.

“People were asked to find refuge in appropriate places but the city of Beira was never built to withstand a category-5 tropical cyclone. So that means the building codes need to be changed, but the building codes cannot be changed using what tropical cyclones used to be like in the past.

“They need to have forward looking analysis to anticipate the trends into the future and start designing infrastructure and other systems taking into account the changing nature of these tropical cyclones.”

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