Modern warehousing is critical to realising AfCFTA dream

Kenya has often been referred to as the “gateway to East Africa” as a result of the strategic importance of the port city of Mombasa, one of the busiest ports on the East African coastline, and the central political and economic roles that she plays in the region.

Since 2008, the Kenyan government has been pushing for rapid economic growth through social, structural and economic reforms under the Big 4 Agenda, which focuses on food security, affordable housing, universal health care, and manufacturing. This is all aimed at turning Kenya into a middle-income country by 2030.

We are now in the last decade of achievement of Vision 2030, with numerous goals left to hit. The onset of the Covid-19 pandemic in 2019, and its eventual circumvention of the globe by mid-2020 seriously curtailed economic growth worldwide. Kenya was no exception. Since then, however, concerted efforts are being put towards building back better and weaving resilience into economies all over the world.

The depth and breadth of interference that the pandemic has had on global economies highlights just how vulnerable we are to shocks. Across sub-Saharan Africa, the combined shocks of Covid-19, conflicts, and climate change have denied more than 190 million Africans access to the most basic of needs – food.

This year’s Africa Green Revolution Forum, which was held in Nairobi, brought stakeholders from all over Africa together to discuss how agriculture and agri-food systems can be transformed to improve food security and reduce poverty across the continent. The African Continental Free Trade Area was singled out as an opportunity to increase intra-African trade and take advantage of a marketplace of 1.3 billion people with a combined GDP of USD 3.4 trillion, to freely move farm inputs and food products across borders.

The AfCFTA not only considers the value that reduced trade friction will have on agriculture, but also on all other sectors of African economies. It is estimated that by 2035, implementing the agreement could lift more than 30 million people from extreme poverty and 68 million more from moderate poverty.

Kenya, due to large scale public investment in transport infrastructure, is poised to take advantage of the relative ease of movement of goods across borders as proposed by the AfCFTA. Landlocked countries in East and Central Africa only have to look to Mombasa and the new Lamu port as the gateway to moving their goods to the world, and Kenya’s 50 million-strong population as a market for goods that aren’t produced locally. Access to both is being significantly improved by our growing road and freight networks.

While transport infrastructure has faced rapid and significant changes over the past decade, the warehousing landscape has pretty much remained stagnant until Africa Logistics Properties (ALP) made its entry into the Kenyan market. As the first provider of Grade A warehousing and storage solutions, ALP is particularly powerful economic enabler, providing businesses with industrial facilities for storage, distribution, packing and processing capacity, all of which support business and international trade.

According to a recent report by the CDC Group on the impact of Grade A warehousing, businesses stand to make savings of between 45% and 60% on the cost of storage per pallet primarily due to the higher stacking heights allowed by Grade A warehouses of 12metres or higher. The report goes on to list the myriad savings made on turnaround time of deliveries (up to 63%) and on overheads. These are all possible because of the thought that goes into designing the warehouses which consider not only profitability but also sustainability of businesses operating from them.

According to the report, the productivity gains that tenants at Africa Logistics Properties (ALP) have made since 2017 are contributing directly and indirectly to improved livelihoods and economic opportunities across their respective value chains. ALP’s tenants have created a host of high-quality jobs, not to mention all the semi-skilled work that is created in the construction of their warehouses.

As the market stands, 22.1 million square meters of warehousing in Kenya is Grade B and C; only 65,000 sqm is estimated to be Grade A. There is potential for the impacts presented by CDC Group to be multiplied by increased uptake of Grade A warehousing in Kenya to support its position as a logistics hub for Eastern and Central Africa.

The economic and social value to be created for Kenyans is limitless. As Kenya looks to capitalise on the dream of the AfCFTA and become a vital cog in multi-sector value chains, warehousing must be part of the conversation.

Richard is the Chief Executive Officer, Africa Logistics Properties