‘Africa must present an attractive investment value proposition’

With Africa’s economic
growth in 2010 likely to
overtake the global average,
companies should be developing
the opportunities presented by this
sizeable under-developed market, says
Safmarine’s Africa region executive,
Jonathan Horn.
“Doing business in Africa presents
a different set of challenges, but the
rewards are there if you take the
time to understand the market,
have a long-term commitment and
a very clear idea of what you want
to achieve.”
Horn believes that the continent
should be pulling out all the stops
to encourage investment, with a
particular emphasis on job creation,
by improving tax and labour regimes
and quality levels.
“The reality is that there are
emerging economies across other
continents competing for the same
investment, and as Africans, we need
to instil confidence and ensure the
investment package we present is the
most attractive.”
On the shipping front, Horn
forecasts increased demand for vessel
space on all services to Africa as
cargo volumes, both in and out of
Africa, start to pick up. “But there
is still a degree of uncertainty as to
when the recovery signs emerging
will gain substantial momentum,”
he says.
He believes it is likely to take some
time for cargo volume growth levels
to return to the highs experienced in
the years up to mid 2008.
“The current global economic crisis
has been significant and its impact
widely felt. This has led to a dramatic
change in consumer behaviour and
consumer confidence. The purchasing
and consumption patterns – which
drive commodity demand, a key
component of current Africa trade
– of the future are likely to be very
different from those of the past.”
Although demand for space
has improved, Horn foresees no
significant change in the available
capacity picture in the near term.
“An increase in capacity will only
be justified by sustainable demand
at freight rates which justify
additional deployment.”
In line with the Safmarine approach
of growing its business in tandem
with that of its customers, the line
recently introduced a new fully
containerised service (225 service)
which provides a quick, direct
link between South Africa and the
West African markets of the Ivory
Coast, Nigeria and Ghana and the
Safari 3 service which links the
Far East, Indian Ocean Islands and
Mozambique (Maputo).
Horn says that while Safmarine
has experienced modest growth in
the intra-Africa, West and East Africa
trades, the general picture for the
South African trades has not been
as rosy.
“2009 to date has been a very tough
year for South African importers and
exporters. Volumes have been down
by 20% on 2008 levels and we’re
hoping to see an improved picture in
2010. We’ve already seen demand
for space firming and an increase in
cargo volumes in and out of South
Africa in what has traditionally
been our peak period, which is an
encouraging sign.”
Another area starting to show
signs of improvement is that of
freight rates.
“Freight rates, across all of our
African trades are very – in fact
unsustainably – low and have been
for most of 2009. We are confident
however that the situation will
improve in the balance of 2009 and
into 2010 as demand strengthens
and GRIs (general rate increases) are
accepted by the market.”