Most food and pharmaceuticals require numerous cold chain interventions before reaching consumers. Sub-Saharan Africa lacks
in this respect but there are some solutions.
Cold chain solutions comprising both storage and logistics are an integral part of all developed economies and most people are not aware of how extensively they are utilized within businesses and products. A significant portion of all food and pharmaceuticals require numerous cold chain interventions before reaching consumers. These interventions occur in a variety of sectors, ranging from agriculture, dairy, meat and poultry, pharmaceuticals, food manufacturing, supermarkets and HORECA (hotels, restaurants and café services).
The effects of the Covid-19 pandemic have highlighted the role that cold chain solutions play in global food and pharmaceutical security. Sub-Saharan Africa is a case in point. There is a prevalent lack of cold chain solutions, exacerbating these two topics.
For a long time, food manufacturing and distribution lines in Europe and the United States have solved product seasonality problems through utilizing global supply lines and temperature-controlled storage to ensure year-round product availability. However, as a result of Covid-19, we see examples of food supply lines breaking down or cold storage facilities being overstretched. This has resulted in price inflation or some food items not being available. In some cases, these breakdowns have resulted in products being dumped or food producers temporarily ceasing operations.
In Africa, a significant portion of fresh produce reaches consumers via air freight, as many countries do not have third-party solutions for products to be chilled or frozen and transported by cheaper means via sea, road and rail. Additionally, lack of cold chain solutions has resulted in a significant portion of these countries having lower levels of food manufacturing and therefore, they export lower-value raw products and import higher-value finished goods.
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ARCH has been researching the lack of investment into cold chain solutions in Africa for some time. This stems mostly from commercial operators continuing investments in their home markets or in markets perceived to be less risky, like Asia. We therefore developed a specialist fund with relevant experts that allows for patient and development-focused capital as a means to rapidly deploy investment to meet the immediate need in Africa. In November 2019, we launched the first fully-dedicated fund, the Cold Chain Solutions East Africa Fund, with an expectation to launch additional African regional funds shortly.
The first fund aims to create a third-party cold chain solution provider on a regional basis in East Africa, by building and operating eight to 10 cold storage facilities. The fund will develop businesses in Ethiopia, Kenya, Tanzania, Uganda and Rwanda with integrated end-to-end logistics.
The funds also aim to target development issues. Food security has been a critically-consistent issue in Africa for many decades. This issue has been further highlighted as a result of Covid-19 and other current regional concerns such as the potential locust plague in East Africa. However, it should be noted that many staple food crops like potato and other root vegetables can be stored in temperature-controlled environments for up to 12 months. Due to a lack of cold chain solutions in many of these regions of Africa, most crops are only seasonally available with price variations between peak harvest and low season reaching up to 500% under normal conditions.
Another highlighted issue as a result of the Covid-19 pandemic has been in the area of pharmaceuticals and in particular, vaccines. There are several studies undertaken in Africa which suggest that a lack of or inappropriate use of cold chain solutions results in vaccine waste that reaches up to 50%. This is even more important in an era where everyone is watching daily news headlines for signs of a potential Covid-19 vaccine.
Unlike the developed world where temperature-controlled storage and logistics are generally operated separately, our offering in Africa will integrate storage and logistics solutions, ensuring customers have an end-to-end temperature-controlled environment for their products. In each country, we are undertaking operations with local partners who have extensive experience in logistics operations, ensuring we have relevant local knowledge and expertise.
Our first facility is to be based in Nairobi, where we are about to secure land at the industrial park, Tatu City. Concept designs are completed for a 12,000sqm facility that will commence operations in mid-2021 with the full roll-out of facilities in all countries envisaged within three to four years.
– By Jared Irving, Managing Director, Africa, for ARCH Emerging Markets Partners Limited, based in London.
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