The Future is Now: Digitalisation of African Supply Chain Management Systems

Africa is embracing digital transformation as a key enabler of economic growth and development. The African Union (AU) recognizes digital technology as a critical tool for driving socioeconomic growth and development across the continent. The AU outlined its vision for cross-cutting digital transformation in Africa in the Digital Transformation Strategy for Africa 2020-2030. The strategy aims to use digital technology to create a digitally driven, knowledge-based economy that is innovative, competitive, and inclusive.

Given the importance of the logistics sector in supporting businesses, digital transformation will be critical to enabling increased economic growth and development. However, the sector has faced challenges such as poor infrastructure, a lack of end-to-end visibility, and inefficient processes, which have slowed its progress.

The continent has nevertheless recorded considerable progress in internet usage, which is one of the indicators of Africa's digital growth . According to the World Bank, the continent has grown from a reported penetration of 1% in 2000 to 29% of the population actively using the internet today.

It is however important to note that internet penetration has not increased uniformly across the continent. For example, only 1% of Eritrea's population uses the internet on a regular basis, whereas Seychelles and South Africa have penetration rates of more than 70%. This provides an opportunity for countries with limited internet access to build the most advanced systems possible while others revamp existing infrastructure.

For the logistics industry, regions with high internet penetration and broadband access are primed for the incorporation of emerging internet-based technologies such as cloud computing to support supply chain management. Countries that are just beginning to strengthen their internet access, on the other hand, present an opportunity for logistics players to build relevant solutions as critical infrastructure is laid out.

Digital supply chain management: Cloud computing and AI

Cloud computing is one of the emerging technologies that is being used to improve the efficiency of the logistics industry. The on-demand services, computer networks, storage, applications, and resources made available by cloud-based solutions via the internet enable scalability, capacity, and functionality in previously unimaginable ways.

According to Intelligent CIO reports, Africa accounts for only 1% of the global public cloud market, with a cloud penetration of only 15%. However, the market was expected to more than double between 2020 and 2023, with a compound annual growth rate (CAGR) of 17%-20%.

Cloud computing enables real-time data collection, collation, and analysis, which assists businesses in making better decisions. When combined with artificial intelligence, cloud computing creates a new world of end-to-end visibility on supply chains. Logistics providers can use the real-time reporting capabilities to track and locate products throughout the supply chain.

Although the future is promising, Africa still has a lot of room to grow in the artificial intelligence space. According to Oxford Insights, Africa had the lowest average score in AI readiness. Agility will thus be the name of the game for logistics providers looking to capitalize on the tech trends that are expected to shape Africa's supply chain environment in the future.