Rogers’ logistics sector, Velogic, is working towards establishing a new office in East Africa in the near future in order to support its strategy of expanding into the region’s market.
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Ranked by the International Monetary Fund as the second fastest growing region in the world behind Asia, Africa has solid prospects for economic development. According to EY’s Attractiveness Survey: Africa 2015, two trends define the continent’s future growth path: rising urbanisation and a growing consumer class. In line with these trends, strong FDI inflows were recorded into real estate, hospitality and construction in 2014. Technology, media and telecommunications, financial services and consumer products and retail are the consumer-facing sectors attracting the largest share of investor activity.
As far as East Africa in particular is concerned, the region’s appeal lies in the large market opportunities there, recent discoveries of natural resources and ongoing market integration through the East African Community (EAC), a regional economic bloc consisting of Kenya, Uganda, Tanzania, Rwanda and Burundi, with a combined population of approximately 210 million people. Recent investments in trade infrastructure as well as the dismantling of bureaucratic and procedural barriers to economic integration are also positioning this part of the world as a choice business destination.
East Africa is where Velogic sees its next phase of growth. The region needs a robust supply chain to realise its enormous potential. Mauritius also enjoys geographical proximity with East Africa, the legal structure of most of these countries is based on the English system and is very similar to the Mauritian system, and the ease of doing business is much better than in West Africa. Rogers’ logistics sector is the leading provider of end-to-end supply chain solutions in Mauritius and is already present in other regional markets such as Madagascar, Reunion and Mozambique. The company, whose network of offices also extends to France, India and Singapore, as well as Bangladesh through a franchise, is now looking to expand its footprint. It is able to take advantage of its extensive operational expertise coupled with the Pan-African and European network, as well as the expertise of its European private equity partner, Amethis Finance, which holds a 33% stake in Velogic.
Kenya, Tanzania and Uganda are the primary targets, mainly on account of their high sustained growth. These countries will subsequently be used as springboards to serve other EAC markets such as Rwanda, Burundi and South Sudan. This effort will be led by the Business Development Head for East and Southern Africa, Mehul Bhatt, who has had a long career in shipping and logistics. To increase the chances of success, Rogers’ logistics arm aims to partner with other companies holding captive business there, with a strong reputation and presence on the ground, as well as sound local knowledge and connections.
Although the region has substantially improved its business regulatory environment over the years, Velogic is approaching this new business venture with due caution and diligence in order to avoid the risks associated with being a new player in the market, governance issues and ongoing operational risk. Additionally, there is a need to ensure that the right control and governance systems are in place once operations are set up. Macro-economic risks have also to be assessed and managed in order to have the best chance of success.
