Nairobi-based APA Insurance is seeking to expand its business to micro insurance, which targets low-income people and has been largely under-penetrated ... in Kenya where two-thirds of its nearly 55 million population is mired in poverty.
The company is seeing a “surge of cargo into all coasts” in west, east and southern Africa, Williams says at the Africa CEO Forum in Abidjan. He sees a “a strong outlook for the next couple of months.”
China accounts for 15% of global merchandise exports, and Shanghai handles a fifth of the country’s port volumes. The city’s latest hard lockdown as part of the country’s “zero-COVID policy” ended at the end of May. Analysts say that a return to business as usual at the port remains some way off, given restrictions on trucking in and out of the city and the backlog which built up in the previous two months.
Supply-side shocks from Covid-19 and the Russia-Ukraine war have left just-in-time supply chain models looking fragile and outmoded. Supply-chain deficiencies were first exposed by the pandemic, and the Russian war, Williams says, has had “a major impact on our customers’ ability to trade. The supply chain was never at board level before. It is now.”
In the longer term, Williams sees cause for optimism in Africa due to the desire of some of Maersk’s global customers to manufacture more on the continent. He sees strong manufacturing potential in fast-moving consumer goods in countries such as Nigeria, Kenya, Côte d’Ivoire and Senegal.
- The African Continental Free Trade Agreement is still in its “very early days” and trading volumes have yet to really take off, Williams says.
- There is an element of “chicken and egg” as it is not clear whether increased cargo volumes will trigger an increase in manufacturing capacity, or vice versa, he says.
- A breakthrough on manufacturing “requires political will, governance and collaboration.”
Russia’s invasion of Ukraine led Maersk to withdraw completely from doing business in the country and to divest all assets there. Russia and Ukraine combined together account for between 5% and 7% of Maersk’s Africa volumes, so the direct impact of the war on Maersk’s African business is limited. That 5%-7% range, Williams says, is probably a fair gauge of Russian and Ukrainian trade with Africa as a whole.
The main direct trading impact of Maersk’s decision on Russia concerns citrus exports from South Africa, Williams says. Alternative export markets exist in Europe, the Middle East and China, he says. Williams is optimistic that suppliers will be able to find new markets. Producers also have the “least preferred option” of turning the citrus produce to make concentrate for export and domestic use, he adds.
- The global inflationary shock triggered by the Russia-Ukraine war is likely to “dampen” demand for Maersk later this year and possibly into 2023, Williams says.
- “With constant disruptions to supply chains, predictions and forecasts are extremely difficult.”.
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