MARKET OVERVIEW
Africa’s warehousing and logistics sector is undergoing significant transformation, driven by infrastructure development, increasing demand for e-commerce, and the adoption of digital technologies.
The African logistics market has experienced steady growth over the past decade, with a compound annual growth rate (CAGR) in the single digits from 2013 to 2019. The onset of the COVID-19 pandemic 2019 triggered a surge in e-commerce, which significantly increased the demand for warehouses to support last-mile deliveries. The market is estimated to be valued at approximately US$ 344 bn.
The region’s key trading partners include the United States, China, and Japan, and major industries such as mining and manufacturing rely heavily on logistical infrastructure.
However, the cost of moving goods in Africa remains one of the highest globally, with logistics costs in some areas accounting for up to 75% of retail prices—three times higher than in developed economies. This high cost is primarily due to underdeveloped infrastructure, where roads dominate as the preferred mode of transportation, particularly in the 16 landlocked countries on the continent.
WAREHOUSING MARKET DYNAMICS
The warehousing market in Africa is experiencing robust growth, driven by increased demand in key sectors such as food and beverages, consumer goods, and pharmaceuticals.
The overall warehousing demand across the continent is expected to grow by 6% annually. East Africa remains a crucial player in this growth, with industrial space demand in Ethiopia rising by 6% annually.
In comparison, Uganda and Kenya see growth rates of 5.1% and 3.6%, respectively. Despite this, North Africa, led by Egypt and Morocco, still holds the largest warehouse market by size, though growing slower than East Africa.
The market is also witnessing a diversification in warehouse types. Open storage continues to dominate, while closed storage facilities, including cold chain solutions, are becoming more common due to the expansion of the pharmaceutical and food processing industries.
SUPPLY AND DEMAND DYNAMICS
Demand for warehousing space is primarily being fuelled by the following:
- Growth in E-commerce: With e-commerce expected to reach over 500 million active users by 2025 (According to CIO Africa), the need for storage and distribution centres is critical. Africa’s e-commerce market is growing at a CAGR of 17.9%, leading to heightened demand for warehousing solutions that cater to last-mile delivery and omnichannel retailing.
- Food and Beverage Sector: This sector remains the dominant user of warehousing space, particularly for open storage solutions. Increased urbanization has led to higher consumption rates, further driving the need for storage facilities.
- Pharmaceuticals and Cold Storage: The pharmaceutical sector’s growth, driven by population expansion and health sector reforms, has triggered a rise in cold chain facilities. Cold storage space demand has grown by 10% y-o-y in markets such as Egypt and South Africa.
- Infrastructure Development: China’s investment in African infrastructure has been pivotal. By Q3 2024, China has completed 30% of its African Belt and Road projects, significantly improving road, port, and railway networks. These developments have boosted logistical efficiency, especially in high-demand regions such as West and East Africa.
On the supply side, warehouse space across the continent has been constrained by inadequate infrastructure and high land prices, particularly in urban areas.
The limited supply of Grade A warehousing (modern, high-spec warehouses) in many African cities has pushed up rental rates. In Nairobi, for instance, the average monthly rental cost for industrial space rose 7% y-o-y to reach US$ 5.50 per square meter in Q3 2024.
AUTOMATION AND DIGITAL TRANSFORMATION
Automation is playing a pivotal role in reshaping warehousing and logistics in Africa. By Q3 2024, approximately 15% of all warehouses in Africa have adopted some form of automation, ranging from conveyor belts to automated storage and retrieval systems (AS/RS). Additionally, drones are increasingly used for inventory management, improving productivity by 20% on average in automated facilities.
Another critical driver is the digitalization of supply chains. Companies leverage digital technologies such as IoT (Internet of Things), blockchain, and AI (Artificial Intelligence) to improve operational efficiency. These technologies enable real-time tracking, predictive demand forecasting, and dynamic route optimization, cutting delivery times and reducing operational costs by up to 30%.
With the increasing digitization of supply chains comes the necessity for enhanced cybersecurity. In 2023, cyberattacks targeting the logistics sector in Africa increased by 12%, leading to heightened investment in cybersecurity infrastructure in 2024.
SUSTAINABILITY TRENDS
As African countries commit to reducing their carbon footprints, sustainability is becoming a core focus for logistics providers. Green logistics practices, such as decarbonizing urban fleets and using renewable energy in warehouses, have gained traction. For instance, in Q3 2024, over 30% of all new warehouses in South Africa and Kenya are powered by solar energy.
Governments and organizations are increasingly pushing for greener practices. Logistics companies are optimizing route planning to reduce emissions, while green supply chain certifications are becoming a competitive advantage, particularly for businesses aiming to export to Europe and North America.
FUTURE OUTLOOK AND TRENDS
Looking ahead, Africa’s logistics and warehousing sector will continue to grow rapidly.
Some of the key trends shaping the future include:
1. Expansion of Modern Warehousing: The demand for Grade A warehousing will drive investment in modern, high-spec facilities. Over the next five years, investments in industrial real estate are expected to exceed $1.2 billion across East and North Africa.
2. Last-Mile Delivery Innovations: As e-commerce penetration increases, companies invest in last-mile delivery solutions, including autonomous vehicles and drone deliveries, to overcome infrastructure challenges.
3. Public-Private Partnerships (PPPs): Governments actively collaborate with private sector players to address infrastructure gaps. In Q3 2024, PPPs accounted for 45% of Africa’s new logistics infrastructure investments.
4. Resilience and Risk Management: Given the volatility in global supply chains, more African companies are focusing on building resilient, diversified supply chains. This includes investments in local manufacturing and regional trade networks to reduce dependency on global suppliers.
Africa’s logistics and warehousing market is on an accelerated growth path, fuelled by rising demand from e-commerce, digital transformation, and infrastructure improvements.
Technology, sustainability, and collaboration between governments and private actors increasingly shape the sector’s future.
As the market expands, businesses that invest in modern, resilient supply chain solutions will be well-positioned to capture the opportunities in this dynamic and evolving landscape.
