From selling shoes to unlocking Africa’s trade routes

By the time he was 25, an energetic Amadou Diallo had tasted more life than many have in their three score and ten years.

Diallo was born into struggle in a packed family home in southern Senegal, the eldest of nine children.

At the tender age of six, when most were playing after school, a young Diallo had to help his father run a shoe store in the middle of the capital Dakar. Life was hard with little money to go round.

“If you are the elder son, you do whatever it takes,” he says.

When he was 12 years old life got even harder. By this time Diallo would be left to manage the store as his father travelled the country to grow the business. When he left school, Diallo worked night shifts in hotels while he studied to pass two undergraduate degrees and an MBA before he was 25.

Since then, Diallo has walked the road less travelled that took him from Europe to the Middle East. It was rarely dull. In one job, in Tunisia, he worked by day as a financial controller at a resort. At night he would put down his calculator and pick up a microphone to belt out Bob Marley tunes to the guests to earn a few bob more.

“It was called ‘guest appreciation’. After you have done your finance work you have to do something in the evening. I used to sing…and I love Bob Marley.”

Wherever he went, like Marley, he was always trying to answer the question “could you be loved”.

Whatever people thought of him he learned seven languages and when he joined a freight company in Germany, he learnt to drive a truck to prove himself.

“I came into the job with an MBA and the people used to think that maybe I was brainy, that I didn’t understand how a truck works. So, I went and got my trucking licence and learnt how to drive the trucks.”

Diallo worked his way up the corporate ladder like a truck grinding uphill. At the top of the hill was one of the toughest jobs in Africa: the CEO of DHL’s Global Forwarding in Middle East and Africa. In charge of 4,000 employees delivering goods via air, road and sea.

DHL is part of the Deutsche Post DHL Group which is the world’s largest logistic company employing some 400,000 people in 220 countries across the globe. In 2020, it generated revenues of more than $80 billion.  As of 2018, Deutsche Post DHL had 39% of the international parcel market, the largest in the world delivering thousands of goods from flowers to frozen food, to Covid-19 vaccines.

It’s part of a growing industry in Africa that costs $359 billion in 2019, according to Statista. This is part of a global market worth $919 billion in 2020 and projected to be as much as $1.7 trillion by 2027.

In 2021, Diallo sits in a powerful position at the centre of what is likely to be a surge in trade thanks to the opening of the African Continental Free Trade Area (AfCFTA).

The AfCFTA brings together 54 countries, a combined GDP of $3.4 trillion, with a set of rules regulating trade and investment.

Intra-Africa trade currently is a mere 15% of Africa’s total trade, indicating a very weak intra-regional value chain as compared to Asia, where it is at 80%, according to MordoIntellignce.

It means an open African trading block, with all the same rules, applying to a huge domestic market expected to be 1.4 billion people strong by 2025. According to an estimate from the U.N. Economic Commission for Africa this could boost intra-African trade by 52% by 2022.

Bringing down trade barriers and cutting out red tape is likely to create vast opportunities for entrepreneurs.

“Whilst the overall notion of the free trade agreement makes fantastic sense and creates huge opportunities, the actual implementation of it becomes problematic. As we know there are many countries in Africa, those different countries have different economic exposures and are dependant on different economic sectors and different levels of technological enhancement,” says Mark Paper, Chief Operating Officer of Business Partners Limited, a risk financier for small and medium-sized businesses from South Africa, Kenya, Malawi, Namibia, Rwanda, Uganda and Zambia.

 

According to Paper, what is key to the AfCFTA is an agreement to drop trade tariffs on 90% of goods and services.

 

“From a cash flow point of view, transactions relying on stock from afar bring a huge burden to the business. This is where we see the opportunity coming through in equalizing the opportunities between different countries to start trading with each other: reducing the time taken to purchase goods and supplies from each other; reducing the stock cycles businesses owners have to carry; or either helping businesses source stock at a more competitive rate.”

 

Implementation to ensure it spreads across the continent universally will be a tough challenge, says Paper.

 

“Many countries are dependent on the customs tariffs to support their country’s budgets. Whether there is going to be a complete buy-in is going to be a waiting look to see to what extent they can benefit from it and see what they understand by eliminating the trade tariffs their business in their country can grow,” says Paper.

 

Diallo also remains cautious that the new trading block is not a panacea.

“Between signing papers and having it physically implemented in every single country takes quite a bit of time. All of us must be patient to see what gets put into plan and then into practice,” says Diallo.

“The challenge that you face is you tend to have semi-mini political problems at borders. For example, challenges like getting across the borders from South Africa and into Zimbabwe. Other challenges like when a country like Nigeria suddenly decides to close its borders from Togo.”

Right in the middle of it all is Diallo. It may be a far cry from selling shoes in Senegal, but it is just as tough.

It is hard to keep your customers happy. Any border post from Beitbridge to Burundi will tell you trucking goods across African is no joke. While the trade agreement does not promise to improve bottlenecks at customs, the AfCFTA could go a long way toward improving the situation.

“Where it will improve is a lot of the bottlenecks in the logistics is the administrative requirements taking products across borders. The moment you start eliminating the tariff requirement, so too will you eliminate the administrative burden, the oversight and customs inspection,” says Paper.

Not only do you risk losing millions while your goods are out on potholed roads and you are left marshalling piles of paperwork, you also face the threat of closed borders through the pandemic.

Yet Africa, according to Diallo, has potential by the truck load: 600 million hectares of uncultivated arable land, roughly 60% of the unexploited global total; 30% of the planet’s mineral reserves, many of which are used in battery development, making it a huge draw for companies; and more than 600 tech hubs distributed across the continent, in countries including South Africa, Nigeria, Morocco, Ethiopia and Rwanda.

“Most of Africa is young, you cannot develop in Africa if you are not yet walking with the younger generation that is very entrepreneurial and hungry for success.”

But the question is with all this wealth and entrepreneurial youth, how are so many countries struggling?

First problem – roads. Diallo says the African Union has been hard at work building some 56,000km of African corridor highways.

“The global market is such that logistically 70% of goods are moved on the roads. When you are talking about enabling African trade. It will not happen without trucks. It will not happen without trade. Which is why we are so focused with having this platform across all countries.”

“You have a lot of trading happening across borders, much more than is statically recorded…We don’t have proper statistics, but we believe we have over 700,000 trucking companies in Africa.”

The second hurdle, he says, is corruption, politics, and the reams of red tape – something that’s stifled cross border trade for decades.

“I’ve been operating road freight in many different markets. We tend to have a lot of red tapes. We have an open market, but the customs officers stop trucks every now and then as they feel. This is something particularly bad for us especially when we are moving perishable goods and they can’t stand long in the sun at the borders with no infrastructure,” he says.

One of the keys to Africa’s success is going to be digitization. Already thanks to Covid-19 e-commerce has boomed. DHL is planning to go fully digital by 2025.

“We have to digitize the processes in the customs across the internal borders so that people can move goods. These are physical challenges that I see that makes us less competitive from places that I’ve seen like in Asia and Europe.”

In response DHL has SALOODO, a digital marketplace that connects truck drivers to shippers. It centralizes paperwork easing the journey through customs.

However, in order for it to be universally accepted in Africa, you need to build up the infrastructure universally as well, says Paper.

 

“There is going to be a lot of education required at a government level. There is going to have to be a lot of infrastructural upgrades. Where that cost is going to be carried by the African union for such a thing to be implemented time will tell.”

“People may be a little naïve about the opportunities beyond their trade region. While I see it happening in certain countries almost immediately. I think it will be a long journey for the entire collective African continent to be onboard. My advice for those looking to source or sell their products, they should look to these countries and see if they have fully subscribed and implemented the trade agreements and what their position is.”

For Diallo and his team freighting goods on the roads and airways of Africa, it is a calculated risk they are willing to take.