Ugandan milk processor this week shipped a 50-tonne consignment of powdered milk to Zambia, under a $740,000 a year deal with Coca-Cola Beverages Africa. Although it was not quite new, the underlying agreement between the two manufacturers having been signed in 2019, coming in the shadows of a two-year dispute that has seen Kenya restrict imports of dairy products from Uganda, is still a major breakthrough for Kampala, and a possible opener to more African markets.
Kampala cannot be denied its moment in the sun. Unlike Kenya who have not released reports of their verification missions to Uganda, the Zambian inspectors ratified both the process and origins of Pearl Dairies milk. While that removes a major obstacle for one of sub-Saharan Africa’s largest vertically integrated milk processors, market restrictions are perhaps the lesser challenge.
It is simply too difficult and very expensive to get around Africa. Logistical shortfalls, even within the same country, mean that businesses will not maximise the market opportunity. That raises the cost of doing business and expensive goods stunt demand. That also creates stranded markets in huge territories such as the DR Congo, where traders have to contend with some of the most challenging conditions in the world.
Africa has one of the longest logistics cycles in the world because markets are not connected by infrastructure. The Pearl Dairies consignment will perhaps take four weeks to get to Lusaka, thanks to the absence of efficient surface transport between origin and destination. The shipper will also rack up costs, as the crew negotiate different obstacles along the way. That is why the tiffs between Kenya and Uganda take away attention from the more pressing issues of logistics and infrastructure development.
In Kenya’s northwest region of Turkana, government officials and traders depend on the northeastern Ugandan region of Moroto for supplies of basic goods. Even those manufactured in Kenya. They drive for more than 40 kilometres into Uganda, on a treacherous mountain road, before they make official contact with the Ugandan state. Under such a scenario, trade restrictions make little difference where more efficient cross-border infrastructure would.
Africa has the least volumes of trade among member countries of any bloc in the world. Economies fuelled by consumption offer more potential and would probably create more internal resilience than the current predatory posture, which is heavily biased towards import duties.
Thinking through what needs to be done to address the constraints to trade is what the continent’s political leaders should be doing as the African Continental Free Trade Area gets underway. Africa needs not only efficient rail and air connections, but even better road infrastructure. A functional rail system would deliver Uganda’s milk to Lusaka not only more securely and faster but at a significantly lower cost.
Uganda and the DRC have taken a leap of faith, launching the construction of some 233 kilometres of highway that will provide vital connections between the two countries. Yet, as leaders try to break the connectivity logjam, it will be necessary to keep a sharp eye on the cost of infrastructure, as expensive, poorly negotiated projects will come back as a cost to business.