While the Ebola outbreak currently ravaging parts of West Africa garners the majority of media attention on Africa, the long-term narrative of the continent is one of youth, urbanisation, rising income levels and optimism.

This is the contention of Kevin O’Marah, a US-based and internationally renowned thought leader on supply chain management. He shared his latest report on how Africa’s potential can best be harnessed at a presentation hosted by Imperial Logistics.

As chief content officer of SCM World, a global community of senior supply chain professionals, he is well placed to offer unrivalled insights into cutting-edge supply chain practices, and informed his audience that many of Africa’s challenges are supply chain related and can be solved with good supply chain engineers – who should come out of the continent’s rapidly burgeoning “youth bulge”.

O’Marah says, “In 15 years, 25% of the world’s population below the age of 25 will reside in sub-Saharan Africa. This is the oft-cited ‘demographic dividend’ that Africa expects to cash in on for its future development. However, this dividend will only bear fruit if there are enough good jobs to support and sustain these young people and their families, and if there are sufficient supply chain training and development opportunities. It is up to the companies who focus on sub-Saharan Africa as a key growth opportunity to make this a reality.”

In addition to addressing the continent’s shortage of supply chain talent, O’Marah asserts that multi-nationals with their sights set on success in sub-Saharan Africa must also rise to numerous other challenges.

“Sub-Saharan Africa is home to some of the fastest growing economies in the world, but building a successful consumer supply chain in the region depends on a host of other issues. A prime consideration must be the viability of local supply sources for raw and packaging materials. Currently, some companies are importing 60% of packaging and raw materials into sub-Saharan Africa due to the lack of quality and reliability from local supply sources.”

A company’s ability to scale production within the market could also determine its success in sub-Saharan Africa.

“Companies need to be close to customer demand in sub-Saharan Africa, since the demand profile is often frequent replenishment of small quantity stock keeping units. In order for the local production investments to make sense, the volumes need to be there.”

Further challenges in sub-Saharan Africa include route to market channel differences, the competency of logistics and distribution providers, varying trade and tariff policies and the viability of outsourcing,

“In terms of route to market, the two primary trade channels in sub-Saharan Africa are the modern trade channel, which is not very different from modern retail trade anywhere in the world, and the general trade channel, which is like nowhere else in the world. Are you willing to take the time to ‘learn’ and invest in general trade in the markets you want to access?”

Elaborating on the viability of outsourcing value chain elements like sales and support in sub-Saharan Africa, he cautions that this strategy may be unrealistic in places like Nigeria, where a “hands-on, boots-on-the-ground approach” has a greater chance of success.

O’Marah says that there are several steps that an organisation should consider as it develops workable supply chain strategies for sub-Saharan African markets.

“Start with some serious due diligence on the cost of production in sub-Saharan Africa. Logistics and power issues resulting from poor infrastructure can add significantly to cost profiles.

“Since good supply chain talent is scarce in the region, organisations must make the necessary long-term investments in finding and developing the supply chain talent of the future in sub-Saharan Africa. In countries with extensive general trade channels companies should acquire or invest in joint ventures with firms that understand and have the connections with the local wholesalers operating there.”

O’Marah also advises companies to understand the ratio of volume to margin and the price points that these African markets can support.

“Most fast-moving consumer products need to move at high velocity in order for the requisite business model to make sense.”

Flexibility in any supply chain process with a global template is a must for success in sub-Saharan Africa.

“Many markets in sub-Saharan Africa cannot support strict process adherence – such as insisting that every partner uses your distribution resource planning system.”

Big value may also be found in small places, O’Marah says, and suggests that companies explore the opportunity that micro or container factories provide in certain categories to be developed.

“These offer a great way to develop a local presence quickly and test the demand conditions for a product. However, it will be challenging to achieve the volumes required to succeed in these markets through micro factories alone.”

O’Marah notes that while Africa has its share of pessimists who feel that its challenges will continually outrun the continent and the world’s ability to address them, it also has optimists, including Unilever’s CEO.

Concluding, “Paul Polman was on Kenyan TV last year right after the Westgate Mall terrorist attack, discussing Unilever’s future development plans for Kenya. This long-term commitment is what any successful strategy in sub-Saharan African depends upon.