By Adekoke Oke, Nathanial Boso and John Serbe Marfo ·
January 5, 2022
Well, maybe not. If we shift the lens, we might find that emerging markets like Africa are improving their infrastructure, innovating out of necessity and positioning themselves to become an important link in global supply chains. This idea was explored more than a decade ago by C.K. Prahalad in his book: “Fortunes at the Bottom of the Pyramid.” It was developed into a concept coined “reverse innovation” in 2012 by Vijay Govindarajan and Chris Trimble in their book: “Reverse innovation: a global growth strategy that could preempt disruption at home.” According to the authors, it doesn’t make intuitive sense for knowledge to flow uphill from Africa or developing countries to the industrialized world.
Before we look at innovations coming out of Africa, let’s acknowledge the conventional wisdom and take a close look at the real barriers to doing business in Africa.
The African supply chain challenge
For many years African countries have been neglected in global supply networks because of the challenges of doing business in Africa. Although the World Bank’s Ease of Doing Business ranking shows some upward movements, only two African countries are in the top 50 in the 2020 ranking. Such a low ranking may be attributable to the following challenges.
Infrastructural challenges. The movement of goods within supply chains is facilitated by the physical and information infrastructures, including land, rail, air and sea networks and the flow of information based on connectivity. These are key to any successful supply chain. Yet, according to e-Conomy, a 2020 report from the International Finance Corporation, the shortfall in African infrastructure investments ranges between $67 billion and $107 billion annually. It is estimated that close to 600 million Africans lack access to the electricity grid and potable water. Road transportation is very poor and air travel within Africa is one the most expensive in the world. Despite its energy efficiency, reduced greenhouse gas emissions and lower cost per ton kilometer, rail transport on the continent is below 20% of total freight transport volume.
By Adekoke Oke, Nathanial Boso and John Serbe Marfo ·
January 5, 2022
Well, maybe not. If we shift the lens, we might find that emerging markets like Africa are improving their infrastructure, innovating out of necessity and positioning themselves to become an important link in global supply chains. This idea was explored more than a decade ago by C.K. Prahalad in his book: “Fortunes at the Bottom of the Pyramid.” It was developed into a concept coined “reverse innovation” in 2012 by Vijay Govindarajan and Chris Trimble in their book: “Reverse innovation: a global growth strategy that could preempt disruption at home.” According to the authors, it doesn’t make intuitive sense for knowledge to flow uphill from Africa or developing countries to the industrialized world.
Before we look at innovations coming out of Africa, let’s acknowledge the conventional wisdom and take a close look at the real barriers to doing business in Africa.
The African supply chain challenge
For many years African countries have been neglected in global supply networks because of the challenges of doing business in Africa. Although the World Bank’s Ease of Doing Business ranking shows some upward movements, only two African countries are in the top 50 in the 2020 ranking. Such a low ranking may be attributable to the following challenges.
Infrastructural challenges. The movement of goods within supply chains is facilitated by the physical and information infrastructures, including land, rail, air and sea networks and the flow of information based on connectivity. These are key to any successful supply chain. Yet, according to e-Conomy, a 2020 report from the International Finance Corporation, the shortfall in African infrastructure investments ranges between $67 billion and $107 billion annually. It is estimated that close to 600 million Africans lack access to the electricity grid and potable water. Road transportation is very poor and air travel within Africa is one the most expensive in the world. Despite its energy efficiency, reduced greenhouse gas emissions and lower cost per ton kilometer, rail transport on the continent is below 20% of total freight transport volume.
January 5, 2022
Subscribe to Supply Chain Management Review Magazine!
Subscribe today. Don’t Miss Out!
Get in-depth coverage from industry experts with proven techniques for cutting supply chain costs and case studies in supply chain best practices.
Start Your Subscription Today!
