Africa has been steadily increasing investments in infrastructure development and road freight planning. If you’re asking yourself, “What is road freight?” it means “transportation of goods by road.”
To enable and encourage road cargo transport, countries need to invest in roads & infrastructure. In 1998, the African continent saw R45 billion invested in road freight and infrastructure. By 2008, this investment figure had reached R180 billion. By 2019, we have seen the investment in infrastructure and road transport increase to R765 billion.
But for pan-continent road freight plans to be achieved, individual countries and companies need to know how to set-up their own road freight logistics that are efficient and conducive for both personal and industry-wide growth. To do this, you need to have insight into what the future holds for the road transport industry.
Four developments that will impact your road freight plans
Adoption of ICT in Nigeria will improve road freight operators’ ability to work more efficiently
Currently, only about 15% of Nigeria’s roads are paved. 78% of State roads and 87% of rural roads (areas which receive the highest road freights) are in terrible condition.
But for a country that is working to become one of the most powerful economies in the world, this dismal number needs to improve. According to reports, Nigeria will see a steady implementation of Information and Communications Technology (ICT) in infrastructure and road development all the way till 2040. It is expected that by this time, the density of paved, good-quality roads will increase from the current 2.1% to 3.6%. Although this figure is far below compared to some of its African neighbours, it still means good news for a relatively underdeveloped country.
In the short term, investment in road development and infrastructure projects is also expected to reduce the number of on-road accidents. According to a 2015 report, Nigeria performed the worst on an African road safety study, with over 331 road accidents in 2015 alone. Road safety will be achieved by using ICT instrumentation to monitor and communicate with trucks during their journey. ERP systems will be used to record transportation data generated in real-time and will be used for route mapping and increased safety.
Kenya will become the leading East African nation for road freight logistics
Kenya is working towards becoming the easiest country to do business in, in the East Africa region. The country has invested massively in infrastructure and road development – almost 27% of the national budget – and this is paying dividends.
In 2019, KSh180.9 billion was invested in infrastructure. The country’s Vision 2030 plans are also in full swing, and Kenya’s partnership with the World Bank for the Country Partnership Strategy is expected to bring global investments for the industry. As part of this strategy, the Kenyan Government will implement reduced taxes and levies on international investors to encourage more investments.
Additionally, numerous projects like the Mombasa-Malaba SGR, LAPSSET Corridor, and Mombasa Port have been started using these foreign investments. While they aren’t directly related to the improvement of roads, this will certainly make space for future investments in road freight for last-mile connectivity.
Finally, Kenya has also started work on an 800-km, R30 billion toll-road contract and R48 billion rural road development contracts, which will help road freight companies get greater reach into the market and develop better-quality services. Then there are the superhighways like the Nairobi-Thika, Nairobi Southern Bypass, and the Great North Trans-African Highway (Nairobi to Cape Town) that are expected to make road cargo transport across Kenya and cross-border transport hassle-free.
South Africa will continue to remain sluggish because of increasing costs
The status of road freight in South Africa is expected to remain as it is – neither too terrible, nor high-performing, because of the infrastructure and road development expenditure. This will certainly affect the road freight plans that companies may have for this market.
The South African government has allocated another R21.5 billion for 940 road development projects, further taxing the already stretched coffers of the state. While in the long run all of these projects will improve connectivity within the country and offer road freight operators greater access to remote markets, for the next few years, road logistics costs will see a steep rise.
Additionally, with South Africa looking to become the first decarbonized country in Africa, the Government will continue to levy the carbon tax R120 per ton of CO2. Only companies that qualify for tax breaks and incentives can reduce this expense. Then there is the Road Accident Fund levy, mandatory State-specified motorist insurance that all road freight logistics operators need to buy for their vehicles. Both of these will again add to expenses that road transport companies and, in turn, customers will need to bear.
The Belt and Road Initiative is expected to get bigger in scope
The African continent has benefited greatly from China’s Belt and Road Initiative. China has not only invested in the development of new urban and rural infrastructure but has also completely revamped and improved existing infrastructure too.
Recently, 40 African leaders traveled to Beijing for the second edition of the Belt and Road Initiative Forum, where they made proposals requesting for further investments in African infrastructure projects. If these investments are granted, Africa will see better interconnectivity between Kenya, the Congo, and Central Africa.
With the rail projects will come a slew of road development and express-way development projects as well. This will allow both local operators and international road freight providers to serve customers across Africa. Logistics operators can now develop road freight plans optimistically, targeting new markets.
Have a look at what currently are 6 Road Freight Challenges in South Africa.