Ebola: fear on the final frontier

SCM World has just published a report entitled Africa: The Last Emerging Market. In it we examine lots of data and conclude that Sub-Saharan Africa is a risky but essential growth opportunity for many global businesses, especially those in consumer industries. In keeping with the universal truth that risk and reward move together, we concurrently have a Hollywood-scale scare overshadowing the discussion in the form of an Ebola epidemic.

Now is the time for supply chain leaders pondering an Africa strategy to keep their cool.

The bad news

Ebola is a truly horrible infectious disease that is usually fatal and currently in outbreak across west Africa. The number of dead so far is at least 1,500 and cases are spreading geographically. The current epidemic is also worrying in that it is active in contagion-friendly urban areas, whereas past outbreaks have been isolated in rural locations.

Health workers from the rich world have largely been called home, while local doctors and staff soldier on despite high rates of infection among their ranks. There is no bright side here.

The good news

Ebola may be exceedingly nasty, but it is not beyond the ability of a robust healthcare system to contain and subdue. Fatality rates are 90% when the disease is untreated, but have been closer to 55% in this outbreak according to a report by the Independent newspaper.

In addition, experimental treatments in use among infected westerners who’ve flown home for care are working. The fact is that this health crisis is less about an unbeatable disease than it is shortcomings in the supply chain.

One columnist, whose thesis is that health is a “basic human right”, expounded upon the lack of infrastructure needed to battle Ebola: “The infrastructure does not exist. And infrastructure is not just masks and gowns, but rules about when to use masks and gowns, trucks to bring new supplies of masks and gowns, a stockroom guy to keep track of supplies and order when things are low, a supplier with supplies, highways that are paved and dependable so the masks and gowns can get from here to there, cash on hand to keep equipment moving and on and on – all of it is missing.”

To healthcare professionals this challenge sounds insurmountable. To a supply chain architect this is just another day at the office.

The good news is that consumer packaged goods companies worldwide are working on this right now, and not out of charity. Business opportunity drives them and the underlying economics of the region could mean that supply chain failures of this type fade into history over the coming decade. In fact, according to McKinsey, 128 million African households will qualify as “emerging” consumers or better within six years.

Eating the elephant

A common business quip applies here – the best way to eat an elephant is one bite at a time. Africa is our elephant and many supply chain leaders are ready to take a bite. In our recent CSCO survey Nigeria ranked 10th overall as the country considered “best opportunity for growth”.

Another four Sub-Saharan countries made the top 40. In fact, 100 of the 1,053 respondents to the survey listed at least one African country among their top three growth prospects. Not exactly China, but hardly a lost cause.

The effect is global. According to Dr Hau Lee of Stanford University, which has an economic development mission in Ghana, significant supply chain initiatives are under way at Li & Fung, the huge Chinese sourcing firm.

Dr Lee also cites high-quality entrepreneurs from Ghana, Ivory Coast, Nigeria and even Sierra Leone who’ve engaged with the Stanford mission as a reason for confidence. Whether borne of Chinese investment or local initiative, economic growth is clearly a reality in Sub-Saharan Africa.

Of course, risk and return move together, and our survey certainly flags Africa as awash in risk. To help sort it all out and choose where to take that first bite, our report offers a supply chain viability index that clusters countries strategically.

We may not be able to meet the Ebola threat effectively today, but 10 years from now I believe it will be a different story.