Africa is Not the New Asia (When it Comes to Global Sourcing)

While catching up with my procurement RSS feeds last week, I came across a post on European Leaders blog suggesting that "Africa might be the next Asia" when it comes to global sourcing. While I often find myself in agreement with my British blogging colleagues, I could not disagree more in this case. Earlier this year, I had the chance to trade thoughts with a global sourcing executive with significant experience managing sourcing and supply chain operations in Africa. And what I learned was eye opening.

Perhaps the most overwhelming challenge of sourcing and managing operations in Africa in most areas is the rampant corruption and theft at all levels. At least within China and India, corruption is predictable (and improving, in some cases), accounting for only a fraction of a product's export value. But in Africa, corruption is a way of life. In one case, I heard about a company sourcing from and doing business in a region who decided to divert some its profits into installing a water pump to bring safe drinking water to villages. But they quickly found that unless the pump was guarded 24 hours a day, thieves would break it up and sell its pieces for scrap value. The mindset was that if one person passed by without stealing it, then it still would not be there for the community the next day because someone else would come along and rip it off shortly thereafter.

In other cases, African suppliers and facilities are unreliable due to the ravages of AIDs. Co-workers of diseased employees -- whose HIV positive tests often reach or exceed 25 percent in some areas -- prop up their sick colleagues to work and collect a check despite the fact that they cannot do work of consequence. And in some areas, if debilitating AIDs in the workplace cases was not enough to bring productivity to a grinding halt, then tribal attacks between groups in the workplace -- who often need to be separated in different areas based on their background -- can also make predictable supplier output a risky proposition at best.

In my view, we would all do well to invest our tourism dollars in a continent as beautiful as Africa, not to mention our charity donations for medical care, safe drinking water and nutrition programs -- among other causes -- in the region. But Africa is about as far away from becoming a leading low cost supplier as it gets, unless, of course, you take the colonization and mercantile approach that China has adopted in the area (which, fortunately, is something that Western companies and countries can no longer get away with).

Jason Busch

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