Kenya leaps in domestic logistics amid lackluster performance by Sub-Saharan Countries
BAAR, Switzerland – February 9, 2021 – Nigeria improved its business competiveness across three key indicators – business climate, international logistics and domestic logistics in the 2021 Agility Emerging Markets Logistics Index, while other emerging economies in Sub-Saharan Africa had a mixed performance.
Nigeria, Africa’s largest economy, climbs five spots to No. 30 in the annual 50-country Index. It jumps to No.10 for domestic logistics, up six spots from last year; moves up two spots to No. 37 in business fundamentals; and rises two places to No. 43 in strength of international logistics. The 2021 Index report notes that Nigeria has a growing and increasingly middle-class population, a vibrant and expanding online retail market, and a FinTech eco-system that is bringing formal banking services to millions in the country.
The Index, now in its 12th year, ranks 50 countries by factors that make them attractive to logistics providers, freight forwarders, shipping lines, air cargo carriers and distributors. China, India and Indonesia topped the Index. Among countries in Sub-Saharan Africa, only South Africa made the top half of the overall Index, ranking No. 24.
China, India and Indonesia top all countries for domestic logistics; China, India and Mexico are at the top for international logistics, with Kenya leaping five spots to No. 27. In the area of business fundamentals, three countries in Africa were in the top 25: South Africa at No. 22, Tanzania at No. 23 and Kenya No. 25.
“Most Sub-Saharan economies should return to positive growth in 2021, even if they will not reach pre-pandemic levels of economic activity. One factor that could slow them is large levels of debt, which could make it difficult to fund economic stimulus and public health initiatives at the same time,” said Geoffrey White, CEO of Agility Africa. “In Nigeria, Kenya and several other key countries, infrastructure improvements and streamlined customs procedures are galvanizing growth. Progress by regional leaders could accelerate the Continent’s overall recovery.”
Along with the Index, Agility surveyed more than 1,200 supply chain professionals for their views on the disruption caused by the COVID-19 pandemic. A majority, 52%, say they do not foresee a global economic recovery until 2022 or beyond, despite an expectation that Asia, North America and Europe will rebound this year. They see Sub-Saharan Africa and Latin America as the last regions to climb back to pre-pandemic GDP levels.
2021 Index and Survey Highlights
- Even when they consider easing dependence on China, few companies plan to bring manufacturing jobs back home. Only 7.8% of industry executives surveyed say relocating production from China would mean reshoring to their home countries. Vietnam (19.6%), India (17.4%) and Indonesia (12.4%) are the leading choices for relocation, followed by Thailand (10.3%) and Malaysia (9.6%), according to those surveyed.
- While total cost is driving overall shifts in production supply chains, today low-cost labor is barely a consideration for emerging markets investment — with only 2.2% of industry executives saying it’s important. Executives say the most important factors are government bureaucracy and regulation (25.8%); infrastructure quality (14.1%); and supply of skilled labor (8.0%). As companies examine new production locations, they say their biggest concerns are inadequate infrastructure (14.5%) and additional cost (13.5%).
- Of the executives surveyed, 19.1% say 2020 sales decreased as a result of the pandemic. But only 9.4% say COVID-related employee safety measures have decreased efficiency.
- The sustainability movement has momentum. More than a quarter (26.9%) of executives surveyed say their companies are boosting implementation of environmentally sustainable practices in the wake of the pandemic. Another 45.2% say their plans are unchanged, suggesting they have no intention of retreating from sustainability commitments.
- In Latin America, Mexico is the strongest emerging market, ranking 7th overall. Argentina (36) and Venezuela (50) continue to be plagued by chronic economic dysfunction. Notably, though, eight countries in Latin America improved their business fundamentals: Uruguay, Mexico, Peru, Colombia, Ecuador, Brazil, Paraguay, and Bolivia. The region’s best business climate is in Chile, which ranks 5th out of 50 countries in that category.
- The countries improving their domestic logistics strengths the most were Malaysia, Nigeria, Vietnam, Iran, Uruguay, Myanmar and Cambodia. The biggest strides in international logistics came from Morocco, Ukraine, Kenya, Myanmar and Paraguay.
Transport Intelligence (Ti), a leading analysis and research firm for the logistics industry, compiled the Index.
John Manners-Bell, Chief Executive of Ti, says: “The strength of the Agility Emerging Markets Logistics Index has always been to differentiate between those emerging markets which demonstrate resilience in the face of adversity and those which are more fragile. This year is no exception. Although some – especially China and Vietnam – have been able to rebalance around domestic industrial and consumer demand, the majority are still highly dependent on international markets and investment. A lack of global demand, combined with the breakdown of air and sea logistics networks, has had severe consequences for these economies and societies. As the COVID crisis finally unwinds over the next two years, those most resilient will bounce back the fastest. Inevitably, those which have failed to embrace market, trade, governmental and social reforms will be hardest hit by the fallout from the pandemic.”