07 October 2014 – “Africa is not the next China,” said global supply chain guru and chief content officer for SCM World, Kevin O’Marah, during a recent whistle stop visit to South Africa. While this statement may seem at odds with the recent Afro-optimism sweeping the continent, Mr O’Marah believes the Chinese model is not one which Africans should aim to emulate. SCM World is a London-based think tank serving senior supply chain executives around the globe.
Between 1981 and 2010, China lifted 680-million people out of poverty. As recently as last month, David Anthony, chief of the policy advocacy and co-ordination unit at Unicef, stated: “If you have a young, dynamic, entrepreneurial workforce with the appropriate economic models to absorb this workforce, you could see something like a China happening here.”
Not so, says Mr O’Marah. “I don’t see any African countries going the route of low-cost labour-orientated manufacturing. And, in fact, even China itself is moving away from jobs designed according to the lowest common denominator. The approach of manual labour for little pay is not the way the world is moving. The trend is towards craftsman-like jobs where well-trained workers operate highly-sophisticated, expensive equipment,” he said.
He was speaking this week at the headquarters of Centurion-based Resolve which is a consulting and outsourcing organisation that is part of the JSE-listed Imperial Holdings Group. A frequent visitor to this country where he lectures on all aspects of logistics, distribution and other elements of the supply chain, Mr O’Marah was upbeat about South Africa’s prospects and its pivotal role in Africa. “Whenever I speak to international business leaders interested in doing business in Africa, I always tell them to visit South Africa first, because South Africans understand the logistics of doing business in Africa.” He described Africa’s growing population as being full of opportunities and unique in a world of declining or stagnant populations. “It really is going to be all about Africa where enormous opportunity exists for South African firms because modern consumer supply chains still have to be built.”
Mr O’Marah even had good things to say about the global oil price which South Africans have come to accept as being volatile, always on the rise, and consumer inflation Enemy Number One. “While South African business people will have to continue to account for exchange rate volatility, at least in the short term, oil price volatility does appear to be a thing of the past with the world swimming in oil and alternative energy sources becoming viable for the first time,” he said.
With many new sources discovered, a stable oil price at around USD100 per barrel should go a long way towards reducing supply side volatility, which Mr O’Marah described as historically being one of the biggest concerns of business people globally.