This is a continuation of my last article, "Sourcing from Africa, Part 1". As I outlined last time, Africa and many other developing areas around the world are full of potential. To realise this potential is challenging, but not impossible. Though plenty of people may be available to help you, that doesn’t mean you can relax. You still need to be diligent, and in addition to the normal due diligence you undertake in your dealings with suppliers, there are several steps that need to be considered when operating in Africa or any developing region. I hope the following will help you navigate those steps, and perhaps get you thinking in the right way for dealing with such countries.
1. Due diligence
This is something that one hopes would be performed in any case, yet all too often one hears stories in which a service provider or supplier is familiar, and as a result of overconfidence stemming from that familiarity, important checks are foregone. While it may be true that companies in the developed world of a certain longevity can be considered stable, I would advise questioning such assumptions, because companies in the developing world tend to be fluid and, as such, are liable to vacillate from one precarious state to the next.
Furthermore, there is often little in the way of solid history to check up on. However, the basic checks, as referenced many times on our website, can rapidly provide a level of security. The simple act of enquiring about past experience or requesting staff CVs and then verifying that information can be highly instructive.
2. What trade agreements are in place?
The African Growth and Opportunity Act (AGOA) of 2000 was signed into law with the express purpose of expanding US trade and development in Sub-Saharan Africa. In 2013, thanks to AGOA, around 91 percent of US imports from AGOA-eligible countries entered duty free or with zero rates. When costing items procured internationally, one needs to consider the final price, including duties and costs which it may be possible to obviate via international agreements.
While this is obvious in the context of developed countries, many procurement and sourcing managers are not aware of the benefits and waivers that apply in relation to developing countries. These need to be thoroughly investigated in order to ensure no hidden costs accompany any apparent benefits that might be identified, and it is crucial to thoroughly ascertain any export liabilities and requirements.
3. Capabilities
All too often in my career, I have had people come to me with urgent or desperate shipments which you take one look at and just shake your head. Certain things will never make sense, no matter how many different ways you try to wrangle them.
With any trade, whether wet or dry bulk, container or a massive breakbulk project, the very first thing one must always ask is if the shipment is physically feasible. A very small bulk parcel, for example 500mts of diesel fuel, invariably leads to problems unless there is a well-established and reliable trade in place already. Similarly, you should know immediately that a piece more than four metres wide or high will cause trouble when transported by road in most countries, owing to road widths and bridges and tunnels.
4. Check, check and recheck
The single biggest difference I have observed between the developing world and the developed world necessitates this last consideration. It boils down to the starting perspective. In the developing world, one takes what I call a ‘fire and forget’ attitude. If you initiate an order or requirement, it will be fulfilled: you can start the enquiry and then just leave it, the rest will get done and any challenges that arise will be brought to your attention and sorted out.
This is the polar opposite of the starting point you need to adopt when procuring from a developing country. In the latter case, you need to constantly check—not only during the procurement phase, but also during the execution and delivery phases—to ensure that all the ‘i’s have been dotted and ‘t’s have been crossed. If you are not on top of it, something will go wrong. The specifications will be off, or the valves may be the wrong size, or it may simply arrive much too early or late.
Check check check: that is the key to successful procurement and delivery from developing nations.
This is something that one hopes would be performed in any case, yet all too often one hears stories in which a service provider or supplier is familiar, and as a result of overconfidence stemming from that familiarity, important checks are foregone. While it may be true that companies in the developed world of a certain longevity can be considered stable, I would advise questioning such assumptions, because companies in the developing world tend to be fluid and, as such, are liable to vacillate from one precarious state to the next.
Furthermore, there is often little in the way of solid history to check up on. However, the basic checks, as referenced many times on our website, can rapidly provide a level of security. The simple act of enquiring about past experience or requesting staff CVs and then verifying that information can be highly instructive.
2. What trade agreements are in place?
The African Growth and Opportunity Act (AGOA) of 2000 was signed into law with the express purpose of expanding US trade and development in Sub-Saharan Africa. In 2013, thanks to AGOA, around 91 percent of US imports from AGOA-eligible countries entered duty free or with zero rates. When costing items procured internationally, one needs to consider the final price, including duties and costs which it may be possible to obviate via international agreements.
While this is obvious in the context of developed countries, many procurement and sourcing managers are not aware of the benefits and waivers that apply in relation to developing countries. These need to be thoroughly investigated in order to ensure no hidden costs accompany any apparent benefits that might be identified, and it is crucial to thoroughly ascertain any export liabilities and requirements.
3. Capabilities
All too often in my career, I have had people come to me with urgent or desperate shipments which you take one look at and just shake your head. Certain things will never make sense, no matter how many different ways you try to wrangle them.
With any trade, whether wet or dry bulk, container or a massive breakbulk project, the very first thing one must always ask is if the shipment is physically feasible. A very small bulk parcel, for example 500mts of diesel fuel, invariably leads to problems unless there is a well-established and reliable trade in place already. Similarly, you should know immediately that a piece more than four metres wide or high will cause trouble when transported by road in most countries, owing to road widths and bridges and tunnels.
4. Check, check and recheck
The single biggest difference I have observed between the developing world and the developed world necessitates this last consideration. It boils down to the starting perspective. In the developing world, one takes what I call a ‘fire and forget’ attitude. If you initiate an order or requirement, it will be fulfilled: you can start the enquiry and then just leave it, the rest will get done and any challenges that arise will be brought to your attention and sorted out.
This is the polar opposite of the starting point you need to adopt when procuring from a developing country. In the latter case, you need to constantly check—not only during the procurement phase, but also during the execution and delivery phases—to ensure that all the ‘i’s have been dotted and ‘t’s have been crossed. If you are not on top of it, something will go wrong. The specifications will be off, or the valves may be the wrong size, or it may simply arrive much too early or late.
Check check check: that is the key to successful procurement and delivery from developing nations.
