Sourcing In Africa
Jason over at Spend Matters yesterday posted a thought-provoking blurb entitled "Africa is Not the New Asia (When it Comes to Global Sourcing)."
I agree with Jason that Africa is not going to be a global sourcing hot spot in the immediate future. Some of these reasons I've already addressed in the comments to an earlier post of mine.
But another issue is the electricity crisis in Africa that not even Jason's astute commenters have addressed to this point. I've heard quite a bit about the electricity situation there from our students as well as one of Next Level Purchasing's employees, whose brother was recently in Africa.
According to this article on Yahoo! News:
- Fewer than 25 percent of Africans have access to electricity
- In Nigeria, the energy demands are nearly twice what the country's creaking power plants can produce
- Insufficient power is one of the continent's biggest obstacles to development and a big turnoff for foreign investors
- Building enough hydropower dams to meet the need would take decades
- Power cuts are quite common and even colder temperatures that cause people to use electric heaters can exacerbate the power cuts significantly
- There doesn't seem to be any one interested in investing in building more power plants
And who knows if suppliers in Africa use lead paint...LOL.
To Your Career,
Charles Dominick, SPSM
President and Chief Procurement Officer
Next Level Purchasing, Inc.
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posted by Charles Dominick, SPSM @ 8:52 AM
2 comments
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2 Comments:
Electricity is an issue, but is improving. In 10 years, % of households on the grid has increased 44% to 23% of total. But almost 50% of firms maintain their own generation equipment. The loss in productivity due to outages is 6,1% of turnover in sub saharan africa compared to 4,4% for other developing economies. So there is a risk premium ceratinly that has to be factored in but still these economies are growing. These infrastructural wekanesses are a clear characteristic of 'developing' markets. Higher risk, high rewards, great growth potential. Not for the faint hearted.
Thanks for the great comment, James!
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