Uganda’s capital Kampala, pictured here, is heavily reliant on Kenya’s ports and the east-west road corridor. Agility is creating a distribution Park in Busia, just inside the Uganda-Kenya border, to provide much needed additional warehousing and customs management.
To connect better to the world, African countries have to improve connections to one another. Intra-African trade accounts for only about 11% of Africa’s total trade. Agility, which has built world-class logistics and distribution parks in China, India, UAE, Kuwait, Iraq, and Jordan, believes the same idea will spur trade between African countries.
Industrial parks dedicated to distribution and logistics are “one of the most important infrastructure investments these countries can make,” says Ajay James, CEO of Agility Real Estate. “You need intra-African connections between major hubs. Look at Tanzania, as an example. It’s a large country bordered by eight others, and six of those are landlocked. So its border is a vital conduit for other countries.”
Even now, transport costs in landlocked African countries are as much as 75% of the value of exports. Poor roads alone add an estimated 40% to transport costs in coastal countries and 60% in landlocked countries. The cost of shipping a 40-foot container from Dubai to Mombasa, Kenya is $1,400 to $1,700. But it costs about $3,800 to move that same container inland from Mombasa to the Ugandan capital of Kampala.
Agility broke ground in June 2014 on a multi-purpose transport park near the Kenya-Uganda border and has plans for distribution parks elsewhere in East Africa, West Africa and southern Africa. “You can speed the flow of goods and traffic, enhance border security, improve fee and revenue collection, and create jobs,” James says. “There is substantial time lost at the border due to poor infrastructure in these interior countries.”
Existing logistics infrastructure is being overwhelmed by the pace of urbanization and population growth in Africa. That trend will continue: Africans number roughly one billion today but will be 2.4 billion by 2050. By 2030, half the population will live in cities, and a decade from now, the number of African cities with more than a million residents is expected to increase from 52 to 68.
Urbanization, population growth and growing investor interest are the main factors behind rising property prices across Africa. The best ground for logistics parks is at major trade gateways like ports and border crossings, along main highway hubs and near existing logistics clusters. Complicating the search for good sites is competition from real estate speculators, difficulty obtaining clear titles and, in some cases, a lack of government mapping of plots and tracts.
Agility “knows how to overcome challenges in frontier markets, how to be flexible,” James says. “The work we did in the Middle East and South Asia and other emerging markets trained us well for getting into Africa.”
An Agility Distribution Park: What’s Inside?
The logistics parks developed by Agility vary, depending on local needs and requirements. In many, Agility provides 3PL and 4PL logistics services. Features available:
- Bonded, unbonded warehousing
- Container, lay-down yards
- Customs inspections area
- Customs, police, border, tax, management offices
- Fuel, maintenance facilities
- Material handling equipment
- Business center
- Firefighting station
- Overnight accommodations
- Cold storage and cold chain storage
- Facilities for handling chemicals, agricultural goods
- Training centers