Growing network connectivity—literally!—in Africa

BUSINESS: “Logistics in Africa: Newtwork effects; Connectivity and commitment pay dividends in African transport,” The Economist, 18 October 2008.

Piece starts out by noting that, except for cut flowers, the logistical nets that connect Africa to the global economy aren’t much different today from what they were during the colonial period. And the trade is basically the same: unprocessed raw materials go out and finished goods come back in. It’s so unbalanced still that Asian companies have to send ships to collect all the empty containers.

Then there’s the bad infrastructure: creaky old railroads here and there and nothing close to an interstate freeway system. So moving stuff inside Africa costs a lot more than getting it there from just about anywhere in the world.

Who works the situation today?

Companies cited include DHL, Dubai World and Maersk, plus a slew of Chinese companies, mostly working to supply oil projects in the Congo and Angola.

The acknowledged leader is a French company, Bollore Africa Logistics, which hopes to gin up a 26,000-km net of existing infrastructure to move a lot of consumer goods and commodities, which means—for now—relying on a lot of barges and river systems—very 1820s America.

The best upside is the one I always preach: connectivity breeds rules.

The biggest impact of improved logistics in Africa may be on good governance. Prompt payment of customs dues by logistics companies on behalf of their clients and paperless transit have increased tax revenues and reduced government corruption. It is harder for a customs official to hold out for a bribe when the system is computerized and tracked by a logistics company’s bar code—although not impossible: in grubbier ports, officials sometimes hold cargo to ransom by refusing to press the return key on the keyboard.

Ah well, piece by piece.