The COVID-19 pandemic exposed the vulnerabilities of supply chains across the world, including those in Africa. The pandemic tested the effectiveness of 20 years of research, debate, and planning on supply chain resilience. As the pandemic disrupted global trade and transportation, African economies were hit hard by the resulting supply chain disruptions. Business continuity plans that companies thought were robust proved seriously deficient. The pandemic thus highlighted the need for African countries to invest in supply chain resilience and adopt new strategies to better withstand future disruptions.
Africa is a continent with great potential for economic growth, but its supply chains have been plagued by inefficiencies, limited infrastructure, and poor connectivity. According to the World Bank, African countries lose around 1.5% of their GDP each year due to poor infrastructure and inadequate supply chain systems. This is a significant drain on economic potential, and a lack of resilience in the supply chain only exacerbates the problem. The pandemic brought these issues to the forefront, as African countries struggled to secure essential medical supplies, food, and other critical goods. For instance, many African countries faced shortages of essential medical supplies such as personal protective equipment (PPE), oxygen, and testing kits. This is because many African countries rely heavily on imports of medical supplies and pharmaceuticals, making them vulnerable to disruptions in global supply chains.
China was among the first countries to face the devastating effects of the COVID-19 pandemic. In the first quarter of 2020, Chinese international exports declined by 13.3 percent, accompanied by a significant 13.5 percent reduction in industrial production during the first two months of the year. This supply-side disruption soon manifested itself in Kenya. Imports from China were severely affected, dropping by almost 60 percent in March of the same year. As a result, the manufacturing sector was nearly halted as imports dwindled and the supply of raw materials became scarce. While it was acknowledged that certain steps could have been taken at the time to salvage the situation, there was a widespread perception that the response times were unacceptably long.
The COVID-19 pandemic exacerbated the silo structure that still prevails in many businesses, inhibiting the flow of information and obstructing a coordinated response to supply chain disruptions. Experience has shown that managing supply chains during a pandemic requires a cross-functional effort. It also needs more open and regular communication with supply chain partners. Furthermore, several managers believed that their suppliers, customers, and logistics providers could have been better informed about their own company’s situation and future plans.
In response to these challenges, African countries have begun to focus on building more resilient supply chains. A resilient supply chain anticipates crises and provides solutions to improve crisis response. It also prioritizes localization and the regionalization of the supplier base as well as the manufacturing footprint and should be designed to be sustainable – to withstand environmental and regulatory disruptions and meet evolving customer expectations. Better still, it should prioritize diversification of the supplier base, manufacturing, logistical options, and flexibility in production and decision-making. Companies and importers, therefore, need to diversify material sourcing or manufacturing bases. For some, this means choosing new suppliers outside the primary sources or asking new partners and stakeholders to source them.
Some countries are now investing in domestic manufacturing capacities for essential medical supplies and pharmaceuticals. Others are improving their transportation and logistics infrastructure to facilitate faster and more reliable delivery of goods. However, a lot of work still needs to be done to improve supply chain resilience across Africa. One key area that needs attention is digital connectivity. According to the United Nations Conference on Trade and Development (UNCTAD), only 22% of African households have access to the internet. This lack of connectivity limits the ability of businesses to participate in digital supply chains, hindering their ability to adapt to disruptions.
Another area that requires attention is regional integration. African countries often operate in isolation, with limited cross-border trade and coordination. Improving regional integration can help to create more robust and diversified supply chains, reducing the impact of disruptions. Companies also need deeper knowledge of their upstream supply chains to assess their vulnerability to future global threats. The visibility of tier-one and tier-two suppliers is no longer enough given the complexity and geographical extent of modern value chains.
At a more fundamental level, the pandemic demonstrated the need for supply chain managers to factor risk management and resilience into all aspects and levels of their decision-making process.
By Michelle Nthemba
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