“Africa is Still a Growth Market” – Interview with Vishal Bundhun, Area West Africa
Vishal Bundhun is the Managing Director of the newly formed Area West Africa. We talked to him about opportunities in his area of responsibility.
How is the market in West Africa doing?
From a macro-economic level, West Africa has seen exponential growth over the past years. The economic outlook for most West African countries has been very promising. In terms of GDP growth, six of the top ten African countries are located in West Africa – Ivory Coast, Senegal, Burkina Faso, Ghana, Benin, and Guinea. The overall GDP growth in 2019 was around 3.6 percent. This despite the drop in prices for oil and cocoa – both key commodities in West Africa. For the current year, economists are predicting around 4 percent of negative growth. However, we look forward to positive economic and trade growth in 2021.
And how has the market reacted to the pandemic?
COVID-19 has impacted the West African market significantly. We have recorded a drop of about 13% in total volume. Putting it in perspective, this is even more significant considering the average year-on-year volume growth was 6% in the past couple of years. With the uncertainties of the pandemic, businesses have been disrupted. Carriers have been prudent and careful in managing capacity into the market. For us at Hapag-Lloyd, we have shown composure and foresight in managing this difficult time.
We know that West Africa is import driven, but what are the key export commodities in West Africa?
The top three commodities are cocoa, cashew, and cotton. These three make up about 50% of the total exports for West Africa. Ivory Coast and Ghana are the world’s top exporters of cocoa. Most of the cocoa exports go to Europe where the world’s best chocolate is made. Cashews are exported for processing mainly to India and Vietnam. Cotton, on the other hand, is transported mainly to Bangladesh and Pakistan, where it is used in the garment industry. Around 40% of West Africa’s total containerized exports go to Europe, followed by Asia 25% and Africa 20%. The main exports in West Africa are agricultural commodities, which are seasonal by nature. This creates a peak in demand for space and equipment for a short lapse of time usually between January to June. Reefers account for about 13% of the total West African containerized exports with mainly fruits (bananas, pineapples, avocados, mangoes) to Europe and frozen fish to Asia. Hapag-Lloyd currently has a 10% market in this segment.
Africa is a growth market for Hapag-Lloyd. How do you see the growth potential for Hapag-Lloyd in your Area?
Africa is an attractive market for Hapag-Lloyd. Though we are relatively new compared to the other established players in the West African market, we have grown substantially. By 2023, we plan to double our current volume.
Nigeria is one of the biggest countries in Africa and the economic powerhouse of your Area. What are the key challenges as well as opportunities in store for you?
Indeed, Nigeria is Africa’s biggest economy ahead of South Africa. Based on the demographic growth trend, the population is expected to more than double, to 400 million by 2050. More than the US. One of the keys and immediate challenges for Nigeria, also West Africa at large, is the road to economic recovery post-COVID-19. Other than that the long berthing delays and the congestions remain key challenges for us in Lagos. These are impacting both our equipment flow and vessel turn-around time which in turn is also posing schedule reliability challenges for us. For example, early this year, the average delay for a vessel to berth at Apapa was 60 days and has now improved to around 25 days. We are always working with our partners and stakeholders locally to further improve the situation. Opening our new office in Nigeria during a pandemic was a great experience and we can now start delivering our growth plans.
How do you feel about the African continent personally?
I am born and raised in Mauritius, which is part of Africa. My children are also born and grown in Africa – in Ivory Coast and Benin. So for them and for me, Africa is our home, this makes me an African, in Africa, and for Africa!