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Kuwaiti company Agility wants to increase its logistics parks in Africa

By Rémy Darras, in Kigali
Posted on Friday, 31 May 2019 17:53, updated on Thursday, 6 June 2019 11:38

The port at Abidjan, where Agility plans to open a logistics park in October. REUTERS/Luc Gnago

The logistics real-estate sector, dominated worldwide by the Americans Prologis and XPO, is fast expanding in Africa. Following demand for its first African logistics park, opened in 2016 near Ghana's Tema port, Agility Group plans to set up similar facilities in Mozambique, Côte d'Ivoire and Nigeria.

The Dubai- and Kuwait-listed company, which had a turnover of $5.1bn in 2018, has entered phase 5 (out of 7) of the development of its Ghana warehouses (100,000m² at the end of the project). Now it is preparing to open parks in Maputo (175,000m²) in July, in Abidjan (280,000m² on the PK24 industrial zone) in October, and in Lagos in November.

Agility’s strategy is to place its logistics parks on the outskirts of large cities on the continent, on the busiest trunk roads and outside congested port enclaves. “In Africa, containers stay too long in terminals that do not have a storage vocation,” says Paul Tourret, director of the Higher Institute of Maritime Economics.

  • Once developed, the projects will be worth $150m each, according to Geoffrey White, Agility’s CEO for Africa.
  • White wants to expand Agility’s portfolio quickly by launching projects in the DRC, Angola, Tanzania, Uganda, Ethiopia and Kenya as early as 2020.

In Kenya, other players, such as Africa Logistics Properties (ALP, in which CDC Group is a shareholder) and Improvon (supported by Actis), are already developing similar projects. According to Knight Frank Africa, the demand for storage has been stimulated by the arrival in Kenya of the distributors ShopRite and Carrefour, which had suffered from inadequate and unsophisticated storage capacities. Investors are sniffing out the opportunities. According to Toby Selman, CEO of ALP, the parks have a rate of return of 8.5% while office real estate has fallen from 11% in three years to 8%, and residential real estate has reached a ceiling of 5.6%.

A network of 50 platforms within 20 years

While ALP plans to expand into Côte d’Ivoire, Ethiopia, Morocco and Nigeria over the next five years, Agility continues to prospect in Diamniadio (Senegal) and near Lomé, promising secure and well-electrified storage up to international standards. Agility’s goal is to deploy a network of 50 parks within 20 years, an ambition bolstered by two factors:

  • the growth in intra-regional trade that will take shape with the continental free trade area;
  • and the explosion of online trade, “which will require four times more warehouses than the traditional trade model”, according to Agility.

While part of the bare leased spaces are devoted to the storage and redistribution of goods, the other part is used for small industry, such as packaging and assembly. Half of the Ghanaian platform is leased to multinationals, such as the Danish dairy giant Arla and the American agro-industrial company Heinz, while the other part goes to SMEs, to which Agility grants favourable conditions (like a deposit of only three months’ rent).

“We also target companies that do not know how to establish themselves on the continent. One of our clients wanted to invest $8m in land in Ghana to set up a factory that would have allowed it to release its first product in three years. They came to see our facilities, invested less than $1m and was able to launch a product in three months,” says White.

Bottom line: While the demand is there and Agility easily self-finances its projects, their implementation is hampered by bureaucracy and low land availability. “It takes twice as long to build a warehouse in Africa as elsewhere,” says Agility’s White.

This article first appeared in Jeune Afrique.

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