ACI 20140807 lin

Danie Schoeman
Examining Port and Hinterland Links -
Maximising Efficiency Within the Value Chain

© 2014 Danie Schoeman & Company
Shifting Seas

An Interdependent Global Economy
• In 2010 the World Bank published the book titled:
“Global Value Chains in a Postcrisis World: A
Development Perspective”
• It stated that “the world is in the midst of a sporadic
and painful recovery from the most severe economic
crisis since the 1930s Great Depression. The
unprecedented scale of the crisis and the speed of its
transmission have revealed the interdependence of the
global economy and the increasing reliance by
businesses on global value chains (GVCs). These chains
represent the process of ever-finer specialization and
geographic fragmentation of production, with the more
labour-intensive portions transferred to developing
countries. As the recovery unfolds, it is time to take
stock of the aftereffects and to draw lessons for the
future. Have we experienced the first global crisis of the
21st century or a more structural crisis of
globalization?”
• A significant realization

The Need To Think Differently
• In 2012 the World Economic Forum published its annual The
Global Enabling Trade Report 2012 under the theme
“Reducing Supply Chain Barriers” where it explores how the
globalization of value chains impacts measurement of trade
and overall trade policies, as well as addresses logistics
investments, customs administration and state of the
merchant fleet.
• It stated that “To reflect the changing global economic
structure, our system of measuring economic activity and
our policy orientation, which are still sovereign based, must
be expanded and adjusted. This requirement does not
contradict the need to build a domestic industrial base, but
rather complements it. The world has become highly
integrated by information technology, global supply chains,
and trade and capital flow linkages—in large part because of
the ownership-based operating model. To stick strictly to a
model tailored to national boundaries is neither progressive
nor realistic.”
• Another significant realization

The Global Operating Model
Adapted from G. Linden, K.L. Kraemer, and J. Dedrick (2009), “Who Captures Value in a Global Innovation Network? The Case of Apple’s iPod”, Communications
of the ACM, March 2009, Vol. 52, No. 3, pp. 140-144.
$80
$75
$85
$19
$27
$7
$5
$1
$40
Apple (Margin)
Distribution and Retail
Major Components
Other Inputs
Japan (Margin)
USA (Margin)
Taiwan (Margin)
Korea (Margin)

Global Supply Chains Drive Trade
World Bank WDI, IAPH, Containerisation International
0,1
1
10
100
1000
1970 1975 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Container Throughput (TEU, millions) Exports (current US$, trillions) GDP (current US$, trillions) Population (billions)

Hopeless Case Or Hopeless Forecast?
“Floods in Mozambique; threats of
famine in Ethiopia (again); mass
murder in Uganda; the implosion of
Sierra Leone; and a string of wars
across the continent. The new
millennium has brought more
disaster than hope to Africa. Worse,
the few candles of hope are
flickering weakly.”
“Since The Economist regrettably
labelled Africa ‘the hopeless
continent’ a decade ago, a profound
change has taken hold.”
May 2000 December 2011

The Lions Of Africa Are Roaring
2001-2010 Actual 2011-2012 Actual 2014 Forecast
Azerbaijan 15.5% Sierra Leone 15.2% Mongolia 15.3%
Qatar 13.4% Afghanistan 14.4% Sierra Leone 11.2%
Macao SAR, China 12.8% Mongolia 12.3% Turkmenistan 9.2%
Angola 12.1% Turkmenistan 11.1% Bhutan 8.8%
Armenia 10.8% Niger 10.8% Libya 8.8%
China 10.7% Panama 10.7% Iraq 8.5%
Chad 10.6% Liberia 10.2% Lao PDR 8.5%
Equatorial Guinea 10.4% Burkina Faso 10.0% Timor-Leste 8.5%
Nigeria 9.4% Macao SAR, China 9.9% Eritrea 8.0%
Bhutan 8.7% Cote d'Ivoire 9.5% Zambia 7.9%
World’s Ten Fastest Growing Economies
Economist Intelligence Unit (2013)
Economist Intelligence Unit (2013), World Bank WDI, DS&C Analysis

Africa’s Future Consumer Markets
2012 2020
Household final consumption, current US$
$25-50bn >$100bn$50-100bn
World Bank, DS&C Analysis, McKinsey Global Institute

Africa’s Retail Markets
AT Kearney ARDI (2014)
Start with the
basics
Opt out
Move quickly
Differentiate
Rwanda
Nigeria
Namibia
Tanzania
Gabon
Ghana
South Africa
Botswana
Mozambique
Ethiopia
-10
0
10
20
30
40
50
60
70
80
90
100
110
0 10 20 30 40 50 60 70 80 90 100 110
MarketSaturation(100=unsaturated,0=fully
saturated)
Market Size

Different Groups, Different Considerations
Oil Exporters
Diversified
Pre-transition
Transition
McKinsey Global Institute, World Bank WDI, DS&C Analysis
South Africa
Nigeria
Egypt
Algeria
Morocco
Libya
Angola Tunisia
Sudan Kenya
Ethiopia
Tanzania
Cameroon
Cote d'Ivoire
Ghana
Uganda
Botswana
Senegal
Zambia
Gabon
Equatorial Guinea
DRC Mozambique
Namibia
Chad
Mauritius
Congo
Burkina Faso
Mali
Madagascar
Zimbabwe
Benin
Rwanda
Gambia
10
100
1000
10000
0 10 20 30 40 50 60 70 80 90 100
Exportspercapita(constant2005US$)
Economic Diversification (Manufacturing & Services sector share of GDP, %)

Trading For Africa Is Difficult
Enabling Trade Index
WEF ETI (2014)

What Makes Trade Difficult
0 2 4 6 8 10 12 14 16 18
Rules of origin requirements aboard
Burdensome procedures and corruption at foreign borders
High cost or delays caused by domestic transportation
High cost or delays caused by international transportation
Difficulties in meeting quality/quantity requirements of buyers
Technical requirements and standards abroad
Inappropriate production technology and skills
Access to imported inputs at competitive prices
Access to trade finance
Identifying potential markets and buyers
Problematic Factors for Exporting
0 5 10 15 20 25
Inappropriate telecommunications infrastructure
Crime and theft
Domestic technical requirements and standards
High cost or delays caused by domestic transportation
Corruption at the border
High cost or delays caused by international transportation
Burdensome import procedures
Tariffs and non-tariff barriers
Problematic Factors for Importing
WEF ETI (2012)

© 2014 Danie Schoeman & Company Based on the WEF ETI framework
An Evaluation Framework

Enabling Trade
0
1
2
3
4
5
6
NorthAmerica
AsianTigers
Europe
Morocco
China
SouthAfrica
Rwanda
Tunisia
LatinAmerica
Namibia
Brazil
Botswana
Kenya
Zambia
India
Egypt
Gambia
Senegal
Uganda
Ghana
Russia
Libya
Mozambique
Ethiopia
Cameroon
Algeria
Gabon
Nigeria
Benin
Angola
Enabling Trade Index
Diversified Transition Pre-transition Oil Exporters BRIC Blocs
WEF ETI (2014)

Customs Quality
Most of the African customs and related agencies provide services of lower
quality and/or less comprehensive by world standards.
0
0,1
0,2
0,3
0,4
0,5
0,6
0,7
0,8
AsianTigers
Brazil
Russia
India
China
SouthAfrica
Morocco
Tunisia
Rwanda
Nigeria
Namibia
Tanzania
Gabon
Ghana
Botswana
Mozambique
Ethiopia
Benin
Angola
Zambia
Senegal
Uganda
Cameroon
Gambia
Kenya
Egypt
Algeria
Libya
CustomsServicesIndex
Customs Services Index World Avg
DS&C Analysis, WEF ETI (2014)

Death By Document
0
2
4
6
8
10
12
14
AsianTigers
Brazil
Russia
India
China
Morocco
Tunisia
Rwanda
Nigeria
Namibia
Tanzania
Gabon
Ghana
SouthAfrica
Botswana
Mozambique
Ethiopia
Benin
Angola
Zambia
Senegal
Uganda
Cameroon
Gambia
Kenya
Egypt
Algeria
Libya
No.ofdocuments
Import Export
DS&C Analysis, World Bank Doing Business (2014)

… Due To Complexity?
Ghana
Nigeria
Cape VerdeThe Gambia
Benin
Togo
Côte d’Ivoire
Niger
Burkina Faso
Guinea-Bissau Mali
Senegal
Liberia
Sierra Leone
Guinea
Chad
ECOWAS
São Tomé
& Príncipe
Cameroon
Central
African
Rep.
Gabon
Equatorial Guinea
Rep. of Congo
Egypt
Burundi
Rwanda
DR Congo
Angola
Tanzania
South Africa
Botswana
Lesotho
Namibia
Mozambique
Swaziland
Malawi
Zambia
Zimbabwe
LibyaAlgeria
Morocco
Mauritania
Tunisia
Sahrawi
Arab DR
Djibouti
Ethiopia
Eritrea
Sudan
Kenya
Uganda
Mauritius
Seychelles
Comoros
Madagascar
South Sudan
Somaliland
AFRICAN UNION
CEN-SAD
WAMZ
SADC
ECCAS
CEMAC
COMESA
IGAD
AMU
SACU
EAC
LGA
UEMOA
MRU
CEPGL
AfDB, African Union, DS&C Analysis

Too Slow …
0
10
20
30
40
50
60
AsianTigers
Brazil
Russia
India
China
Morocco
Tunisia
Rwanda
Nigeria
Namibia
Tanzania
Gabon
Ghana
SouthAfrica
Botswana
Mozambique
Ethiopia
Benin
Angola
Zambia
Senegal
Uganda
Cameroon
Gambia
Kenya
Egypt
Algeria
Libya
No.ofdays
Import Export

… And Too Expense
0
1000
2000
3000
4000
5000
6000
AsianTigers
Brazil
Russia
India
China
Morocco
Tunisia
Rwanda
Nigeria
Namibia
Tanzania
Gabon
Ghana
SouthAfrica
Botswana
Mozambique
Ethiopia
Benin
Angola
Zambia
Senegal
Uganda
Cameroon
Gambia
Kenya
Egypt
Algeria
Libya
Cost(US$percontainer)
Import Export

Efficiency Drive Predictability
0
1
2
3
4
5
6
7
0 0,5 1 1,5 2 2,5 3 3,5 4 4,5
Timepredictabilityofimportprocedures
Efficiency of the clearance process
Time predictability is core to efficient supply chains. There is a clear correlation between
the efficiency of the clearance process and time predictability of import procedures
resulting in more efficient supply chains.
DS&C Analysis, World Bank LPI (2014), WEF ETI (2014)

Efficiency Drive Predictability
For the Asian Tigers there is a high correlation between the clearance process efficiency and
time predictability – evidence of their supply chain success. The relation holds true for
most of the African economies but of lesser correlation.
0
0,5
1
1,5
2
2,5
3
3,5
4
AsianTigers
Brazil
Russia
India
China
SouthAfrica
Morocco
Tunisia
Rwanda
Nigeria
Namibia
Tanzania
Gabon
Ghana
Botswana
Mozambique
Ethiopia
Benin
Angola
Zambia
Senegal
Uganda
Cameroon
Gambia
Kenya
Egypt
Algeria
Libya
Score(1=verylow,5=veryhigh)
Clearance Process Efficiency Time predictability
DS&C Analysis, World Bank LPI (2014), WEF ETI (2014)

Customs Integrity
Irregular payments are 1.6 times more likely to occur in the Oil Exporters
grouping than in the Diversified grouping, with about 25% less transparency.
Brazil
Russia
India
China
South Africa
Morocco
Rwanda
Nigeria
Gabon
Ghana
Ethiopia
Benin
Angola
Uganda
Cameroon
Gambia
Kenya
Egypt
Hong Kong
Indonesia
Korea, Rep.
Malaysia
Philippines
Singapore
Taiwan
Thailand
0
0,2
0,4
0,6
0,8
1
1,2
0 1 2 3 4 5 6 7
CustomsTransparencyIndex
Irregular Payments (1 = common, 7 = never occurs)
Honest Joe’sHonest Crooks
AngelsDark Horses

Getting To The Continent
Liner Shipping Connectivity
UNCTAD (2013)

Connecting To Trade
Liner Shipping Connectivity Index for Diversified Economies is significantly
higher than any other grouping.
0
20
40
60
80
100
120
140
160
180
AsianTigers
Brazil
Russia
India
China
SouthAfrica
Morocco
Tunisia
Rwanda
Nigeria
Namibia
Tanzania
Gabon
Ghana
Botswana
Mozambique
Ethiopia
Benin
Angola
Zambia
Senegal
Uganda
Cameroon
Gambia
Kenya
Egypt
Algeria
Libya
Liner Shipping Connectivity Index
DS&C Analysis, UNCTAD (2014)

No Field Of Dreams
0
20
40
60
80
100
120
140
160
180
0 1 2 3 4 5 6 7 8
LinerShippingConnectivityIndex
Quality of port infrastructure
Improved port quality does not necessarily guarantee in increased liner
shipping connectivity. It means maintaining the current services.
“If You Build It, He Will Come”
- Field of Dreams (1989)
DS&C Analysis, UNCTAD (2014), WEF ETI (2014)

Port Infrastructure Outpaces
For Asian Tigers and BRIC countries port infrastructure and intermodal change are well
balanced, making for efficient supply chains. For most of Africa though, port infrastructure
outpaces the hinterland links resulting in inefficient supply chains.
0
1
2
3
4
5
6
AsianTigers
Brazil
Russia
India
China
SouthAfrica
Morocco
Tunisia
Rwanda
Nigeria
Namibia
Tanzania
Gabon
Ghana
Botswana
Mozambique
Ethiopia
Benin
Angola
Zambia
Senegal
Uganda
Cameroon
Gambia
Kenya
Egypt
Algeria
Libya
Score(1=extremelyunderdeveloped,7=well-developed
andefficientbyinternationalstandards;
1=notefficientatall,7=extremelyefficient)
Quality of port infrastructure Efficiency of transport mode change

Physical Infrastructure
Generally roads are considered of better quality and more reliable than rail,
except for Russia, India and China in the BRICS Bloc.
0
1
2
3
4
5
6
AsianTigers
Brazil
Russia
India
China
SouthAfrica
Morocco
Tunisia
Rwanda
Nigeria
Namibia
Tanzania
Gabon
Ghana
Botswana
Mozambique
Ethiopia
Benin
Angola
Zambia
Senegal
Uganda
Cameroon
Gambia
Kenya
Egypt
Algeria
Libya
Score(1=extremelyunderdeveloped,7=
extensiveandefficientbyinternationalstandards)
Quality of railroad infrastructure Quality of roads

Roads – Connecting The Dots
AfdB

Roads - The Burden Of Maintenance
Corridor Length (km)
Roads in good
condition (%)
Trade density
(US$
million/km)
Implicit speed
(km/hour)
Freight tariff
(US$/tonne-
km)
Western 2050 72 8.2 6 0.08
Central 3280 49 4.2 6.1 0.13
Eastern 2845 82 5.7 8.1 0.07
Southern 5000 100 27.9 11.6 0.05
Teravaninthom and Rablland (2008)

Then There’s African Road Rage!

Railways - Not Pulling Their Weight
AfdB

Electricity – Still The Dark Continent?
88
28
40
52
43
Northern Africa
Eastern Africa
Middle Africa
Southern Africa
Western Africa
Access to electricity
(% of population)
International Energy Agency, World Energy Outlook

© 2014 Danie Schoeman & Company DS&C Analysis, World Bank LPI (2014)
Moving Stuff On The Continent
Logistics Performance Index

Ease and Affordability
Ease and affordability of shipments are largely driven by local logistics competence
although more so by international logistics competence in some countries.
0
0,5
1
1,5
2
2,5
3
3,5
4
AsianTigers
Brazil
Russia
India
China
Morocco
Tunisia
Rwanda
Nigeria
Namibia
Tanzania
Gabon
Ghana
SouthAfrica
Botswana
Mozambique
Ethiopia
Benin
Angola
Zambia
Senegal
Uganda
Cameroon
Gambia
Kenya
Egypt
Algeria
Libya
Ease and affordability of shipment Logistics competence
DS&C Analysis, World Bank LPI (2014)

Timeliness
Timeliness of shipments are determined by local logistics competence as well
as the ability to track and trace consignments.
0
0,5
1
1,5
2
2,5
3
3,5
4
4,5
AsianTigers
Brazil
Russia
India
China
Morocco
Tunisia
Rwanda
Nigeria
Namibia
Tanzania
Gabon
Ghana
SouthAfrica
Botswana
Mozambique
Ethiopia
Benin
Angola
Zambia
Senegal
Uganda
Cameroon
Gambia
Kenya
Egypt
Algeria
Libya
Logistics competence Tracking and tracing ability Timeliness of shipments in reaching destination
DS&C Analysis, World Bank LPI (2014)

A Mobile Continent
Mobile is dominant and as such Africa has leap frogged fixed broadband
internet to active mobile broadband instead.
0
20
40
60
80
100
120
140
160
180
200
AsianTigers
Brazil
Russia
India
China
Morocco
Tunisia
Rwanda
Nigeria
Namibia
Tanzania
Gabon
Ghana
SouthAfrica
Botswana
Mozambique
Ethiopia
Benin
Angola
Zambia
Senegal
Uganda
Cameroon
Gambia
Kenya
Egypt
Algeria
Libya
World
Subscriptions/100pop.
Mobile phone Fixed broadband Internet Active mobile broadband Internet
DS&C Analysis, ITU World Telecommunication (2013)

Business Technology
Use of ICT and the Internet for B2B and B2C transactions is prolific but it
seems that the number of users drives the success of these technologies.
0
10
20
30
40
50
60
0
1
2
3
4
5
6
AsianTigers
Brazil
Russia
India
China
Morocco
Tunisia
Rwanda
Nigeria
Namibia
Tanzania
Gabon
Ghana
SouthAfrica
Botswana
Mozambique
Ethiopia
Benin
Angola
Zambia
Senegal
Uganda
Cameroon
Gambia
Kenya
Egypt
Algeria
Libya
Percentage
Score(1=notatall,7=toagreatextent)
ICT use for business-to-business transactions Internet use for business-to-consumer transactions
Individuals using Internet (%)

Conclusions
• The Asian Tigers still outstrip the sample field by far.
• Diversified economies are comparative to BRIC countries except for
Infrastructure and Technology.
• Diversified economies outstrip the other African economic
groupings, probably due to higher levels of complexity and the
requirements in their supply chains. They are also more globally
connected.
• The Oil Exporters generally lag the field in logistics infrastructure
and services, mainly due to the fact that the resource nature of
their exports is pipeline orientated rather than container.
• The Transition and Pre-transition economies general find
themselves in 2nd and 3rd place in the African groupings across
categories, signifying the need of their supply chains as they move
to the diversification.
• The framework sets an agenda for the development of efficient
supply chains that can integrate into the larger global value chains.

In 2012 A Man Fell From Space*
It was a fall that caught the
imagination of all humanity.
But it was a thousand years
of human imagination that
caught him.
*Ok, the actual border of “space” is much higher than the altitude Felix’s capsule attained, the lowest point being the Kármán line, recognized by aeronautic agencies at 100 km (62 miles) up.
Still, Felix was above 99% of Earth’s atmosphere, where air pressure is virtually non-existent and the sky above is black. I don’t know about you, but that’s good enough for me!

Disclaimer
This document has been prepared by Danie Schoeman and Company
to provide background information on the subjects mentioned herein,
the forecasts, opinions and expectations are entirely those of Danie
Schoeman and Company. This presentation was prepared with the
utmost due care and consideration for accuracy and factual
information; the forecasts, opinions and expectations are deemed to
be fair and reasonable. However there can be no assurance that
future results or events will be consistent with any such forecasts,
opinions and expectations. Therefore the authors will not incur any
liability for any loss arising from any use of this presentation or its
contents or otherwise arising in connection herewith. Neither will the
sources of information or any other related parties be held responsible
for any form of action that is taken as a result of the proliferation of
this document.

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