The African Continental Free Trade Area (AfCFTA) agreement connects 1.3 billion people across the continent with a combined GDP estimated at US$3.4 trillion and includes most of Africa’s largest economies, including South Africa, Kenya, and Egypt. The African continent has plenty of resources backed by a young population which provides opportunities for international brands seeking growth in emerging markets.

According to a report from the World Bank: The African Continental Free Trade Area: Economic and Distributional Effects, implementing AfCFTA would lift 30 million Africans out of extreme poverty and boost the incomes of nearly 68 million others who live on less than $5.50 a day; boost Africa’s income by $450 billion by 2035 (a gain of 7%) while adding $76 billion to the income of the rest of the world. This economic uplift will require stabilization in the continent’s electricity supply and other key utilities like water, to reduce cost burden of sourcing own utilities for those businesses willing to invest in Africa.

The groundswell in cross-border trade from AfCFTA is expected to be further amplified by global economic recovery in a post-Covid-19-era. The 2008/2009 Global Financial Crisis has shown that capital to emerging markets usually increase after global recessions. This means that demand for A-Grade, fit-for-purpose modern logistics and warehouse facilities is expected to increase dramatically, as FMCG retailers, specialist pharmaceutical manufacturers, third party logistics providers and light industrial manufacturing companies stand to benefit significantly from increased trade.

Structural shifts in consumer behaviour as a result of the pandemic – like increased online sales – is also expected to continue, further bolstering demand for quality logistics. Kenya in particular stands to benefit with its high internet penetration and as gateway to East Africa.

Route to market is the cornerstone of AfCFTA as it allows all membership countries to reach untapped destinations through partnering with providers of high-quality, cost-effective logistics and warehousing facilities.

A-Grade warehouses are designed with wider column grids and a high underside to eaves (typically around 12 – 15 meters) to allow for greater volumetric capacity. To ensure safe stacking, floors are reinforced and perfectly level. Other standard features include loading solutions at dock height, allowing for quick and easy loading of trucks, and wide roads and yards to accommodate multiple trucks at a time and quicker turn-around times.

East Africa has for many years struggled with efficient distribution, although recent efforts to increase turn-around times at ports have resulted in a marked improvement. In Kenya, the lack of modern, well-located storage solutions has created a bottleneck in efficiencies. This challenge is being overcome through the private sector’s development of a number of international standard logistics parks in strategic nodes around the capital city, which are vital in promoting regional integration and improving intra-Africa trade.

With emphasis on regional integration, African governments continue to think beyond development within border lines. This has placed the focus on the development of regional economic corridors, interlinking highways, railways, and ports in the region, hence providing connectivity between international, national, and rural networks.

Nairobi Gate Industrial Park, a 103-acre state-of-the-art logistics and warehouse park developed by Improvon in conjunction with Actis, for example, is strategically located on the Eastern Bypass within 15 minutes’ drive from Thika Road and 15 minutes from Mombasa Road. Jomo Kenyatta International Airport, the Inland Container Depot and the Southern Bypass are all only 30 minutes’ drive away.

These modern facilities are characterised by access to good road networks with multiple routes to avoid traffic and circumvent inner city congestion. Access to transport hubs including rail networks as well as air- and seaports and container depots are also crucial.

Underutilized manufacturing and logistics capabilities has been unmasked by the Covid-19 pandemic where the continent had to rely on foreign aid to access vaccines. Amidst current and future pandemics, specialist pharmaceutical manufacturers should partner with logistics providers specialists with the ability to construct built-to-suit solutions according to client specifications that would cater for effective manufacturing and storage of vaccines.

Intra-Africa trade currently accounts for about 12% of trade – significantly lower than in many other regions. This limits foreign investments within the continent, while increasing trade dependence on foreign markets.  AfCFTA is the most exciting moment for the continent in this regard, and for Africa’s post Covid-19 recovery. The agreement enhances collaborative opportunities with modern logistics and warehousing providers, allowing Africans to do business with each other and strengthening the continent’s resilience.

Modern A-grade facilities support the long-term sustainability of tenant businesses and lowers the long-term occupation costs. Logistics landlords such as Nairobi Gate understand the importance of entering into long-term partnerships with its tenants and welcome innovative transactions as well as discussions around built-to-suit or flexible renting solutions.