South Africa turns to private sector for upgrading logistics framework

South Africa turns to private sector for upgrading logistics framework

The South African subcontinent is known for its poor logistics, caused by potholed roads, aging equipment, frequent strikes, and shakedowns at military checkpoints.

To counter this issue, the government is reportedly investing USD 6.55 billion towards the development of port systems through partial privatization of state-owned infrastructure. The efforts are aimed at enhancing logistics operations and improving the flow of goods to reduce soaring transport costs.

For the record, South Africa has a very low credit rating, and its container ports are ranked at the bottom of a World Bank global index of 351 container ports in terms of efficiency. Even though the Durban port contributes to almost 60% of the regional trade, it is among the worst-performing ports across the world.

Private sector partnerships and tie-ups are the continent’s only viable alternative for infrastructure development. Dubai-based multinational logistics company DP World has reportedly acquired Imperial Logistics for USD 890 million.

Mohammed Akoojee, the Chief Executive Officer of Imperial Logistics was quoted saying that the tie-up will decrease the cost of logistics in Africa by combining the company’s road freight expertise with DP World’s prowess in global port and rail infrastructure.

He further added that the deal will raise the flow of goods and make it more efficient, thus enabling people to purchase products at lower prices. It is also worth noting here that road transport costs in Africa are almost double as compared to Southeast Asian counties.

However, the cost is not the only factor affecting Africa’s logistics chain. Shippers are now trying to reduce their reliance on South Africa.

The July riots led to the destruction of hundreds of warehouses in KwaZulu Natal province and the closure of Durban port. Burning and looting of lorries by outlaws is also influencing African logistics.

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