Kenya trails Ethiopia, Tanzania in new ranking of logistics services demand

What you need to know:

Kenya’s poor ranking was mainly as a result of the numerous barriers faced by businesses entering the local market, low potential for businesses and challenging market environment.
The index report contradicts the World Bank’s ease of doing business report covering the year ended June that placed Kenya at position 108 globally after jumping 28 places.

Kenya has been ranked behind Ethiopia and Tanzania in a new global ranking which tracks the demand for logistics services, market accessibility, security and transport infrastructure.

The Agility Emerging Markets Logistics Index 2015 shows that Kenya is placed third-last at position 43 compared to Ethiopia (37) and Tanzania at number 39. Forty-five countries were surveyed.

The ranking is significant as it helps to gauge the competitiveness of economies to facilitate flow of goods and services based on market size, business conditions, infrastructure and other factors that make them attractive for investment.

Such surveys are important to logistics companies, air cargo carriers, shipping lines, freight forwarders and distributors.

Kenya moved one place up but posted a lower score of 3.47 points out of 10, compared to 3.52 points last year. Uganda, a land-locked economy that depends on the port of Mombasa for her exports, was ranked last with a score of 3.31 points.

The performance of the East Africa states was mainly strained by poor connectivity due to bad roads network.

Doing-business report

Kenya’s poor ranking, according to the logistics index, was mainly as a result of the numerous barriers faced by businesses entering the local market, low potential for businesses and challenging market environment.

The index report contradicts the World Bank’s ease of doing business report covering the year ended June that placed Kenya at position 108 globally after jumping 28 places.

Against last year, the World Bank reported that Kenya had made more progress on various issues like ease on starting a business, getting credit, paying bills, registering property and acquiring construction permits.

According to the report Huduma centres which have brought different government services under one shop across the country improved Kenya’s likeability by removing bureaucracies that investors face.

Despite the poor ranking, Kenya’s trade with the European Union (EU) grew, placing the country at position five among the air freight top ten trade lanes.

“Kenya to EU trade, 63.9 per cent of tonnage was down to exports of flowers in 2013. For January-August 2014, exports of flowers to the EU were up by 3,133 tonnes (5.1 per cent) on the corresponding period in the previous year,” the report stated.

The Agility Emerging Markets Logistics Index termed mining and humanitarian aid as the sectors with the greatest potential for future growth in the sub-Sahara.

Most attractive

Placed at position 15, South Africa remained the most attractive market and among the emerging markets with most potential in the Sub-Sahara because of its “high market potential and few barriers to market entry.”

According to the report “a total of 225 investments are planned in sub-Saharan Africa, with South Africa accounting for 98. Survey respondents’ least attractive market, Ethiopia, has 24 planned investments.”