Lack of diversification a concern

The global commodities boom has been very good for Africa's resource-rich countries and in the medium to long term there appears to be no end to the East's appetite for African mineral, metal and agricultural commodities. And while growth in the major commodity-consuming economies in the East and South Asia is anticipated to slow down somewhat in the short term from the high levels of recent years, the longterm supply and demand picture is not expected to drop off to any meaningful extent, in the view of Safmarine Africa regional executive Jonathan Horn. But there is a down side to the commodities boom – the lack of diversification of many of these African economies is, from a longer-term perspective, somewhat concerning as it increases their vulnerability to commodity price fluctuations, says Horn. “It remains one of Africa's biggest challenges to diversify its economies to house greater manufacturing and service industry capability.” Shipping has, however, benefited from the trend. “Not only are large volumes of commodities being exported – earning valuable foreign exchange for African countries – but investment in Africa coupled with the employment and earning capacity this generates has also increased domestic demand for a variety of goods such as motor vehicles and associated industries, food and beverages, electronics and white goods.” Investment in West Africa's oil and gas sector, on the other hand, has resulted in overall economic upliftment of the region. “This has had a direct knock-on effect on consumer spending and the demand for goods and services. “Supplementary investments in infrastructure – like road, rail, electricity, housing and telecoms – which are aligned to both oil and gas and commodity investments, have also supported Africa's overall economic growth,” he added. Safmarine is particularly active in the transport of project cargo and the line sees great potential in its MPV (multicargo) services into West Africa. “The bulk of cargo shipped to West Africa on our multi-cargo service is destined for infrastructural development (road, railways, etc), production facilities (primarily oil and gas and mining related at this point) and associated services. Much of the cargo is out-of-gauge, cannot be containerised and is therefore ideally suited to this niche service of Safmarine.