TAP THE POTENTIAL

THE ROLE OF THE PRIVATE SECTOR IN

STEPPING UP THE PACE OF SUPPLY OF

HIV/AIDS COMMODITIESSponsored by: With co-sponsors:

The African economy is growing rapidly, creating new opportunities for the private sector.

Globally, the proportion of the world’s population living in middle income countries is on the rise, creating new consumers of goods and services, including private health services.

World Bank Data, accessed 2014.

By 2020, models indicate that more than half of African households will have discretionary income to spend.

McKinsey Global Institute. “Lions on the Move.” June 2010.

HIV/AIDS had a dramatic impact on life expectancy in sub-Saharan Africa, but also made a dramatic recovery following global investments in prevention and treatment.

Ambassador Deborah L. Birx, MD. “Delivering an AIDS-free Generation.” Kaiser Family Foundation Town Hall Forum. 23 June 2014.

Africa is demonstrating remarkable growth across sectors, including key categories for private sector growth.

McKinsey Global Institute. “Lions on the Move.” June 2010.

The financial cost of starting a new business in Africa is rapidly decreasing, but still remains high compared to wealthier countries around the world.

World Bank Data, accessed 2014.

Direct foreign investment in Africa has spiked massively in the past decade.

World Bank Data, accessed 2014.

Mobile money is booming in Africa, changing the way both individuals and businesses buy and sell goods and services.

Claire Penicaud & Arunjay Katakam. “Mobile Money for the Unbanked. “State of the Industry 2013: Mobile Financial Services for the Unbanked.” GSMA

Investments are being made to improve trade as shipping corridors throughout Africa and freight volume continue to grow.

The cost to import and export goods across borders varies widely, and remains higher within Africa than in other parts of the world, but sub-Saharan Africa continues to lead in the number of trade reforms.

Doing Business 2012. “Trading Across Borders”

Importing and exporting goods across country borders requires a number of steps, each of which have a cost associated with them.

Doing Business 2012. “Trading Across Borders”

Since 1990, more than $13 billion has been invested by the private sector in infrastructure projects across sub-Saharan Africa.

Railroads

Seaports

Roadways

Airports

World Bank Group Private Participation in Infrastruture Database, Regional Snapshots, accessed 2014.

Air freight volume also continues to grow. In the past decade alone, air freight volume through Africa has grown by 33%.

World Bank Data, accessed 2014.

(2009)

Distribution of air

freight across African

countries

World Bank, Transport Sector Board, and International Trade Department. “Air Freight: A Market Study with Implications for Landlocked Countries.” August 2009

The volume of goods shipped through other African ports is also rapidly increasing annually.

World Bank Data, accessed 2014.

Investments are being made to upgrade the infrastructure and processing systems in major ports around the continent.

Map from PriceWaterhouseCoopers. Annual container volume by port from various sources.

Largest shipping terminal in AfricaHandles 31.4 million tons of cargo each year

Durban South Africa2.6 million TEUs (2012)

Mombasa Kenya903,443 TEUs (2012)

Undergoing a $366 million upgradeWill increase handling capacity by 200,000 TEUs a year

Tema Ghana822,131 TEUs (2013)

Ghana Ports & Harbours Authority investing $2.5 billion in improvements by 2018Traffic has already risen five-fold since 2000 and will double to 2 million TEUs by 2018.

At the same time that investments are being made in infrastructure and shipment volumes increase, the cost to import a container of goods in countries with key ports continues to increase.

World Bank Data, accessed 2014.

Though the quality of the roads in Africa has continued to improve, the African Development Bank anticipates that road freight will continue to be somewhat costly and inefficient until competition in the trucking industry is increased and barriers to trade are lifted.

High road freight tariffs and administrative and border delays create additional barriers to road shipment.

African Development Bank, sourced from Teravaninthorn and Raballand, 2008.

Investment and growth in technology is also changing the business environment across the continent.

Mobile coverage continues to increase across Africa, which is now the second largest mobile market in the world after Asia.

Mobile penetration (%), 2012

For each fixed line in sub-Saharan Africa, there are 28 mobile phone connections, demonstrating the dominance of mobile as a means of communication.

Fixed lineMobile

GSMA and Deloitte “Sub-Saharan Africa Mobile Data Observatory, 2012”

The average annual cost of mobile phone ownership has decreased dramatically across the continent.In East Africa, the average monthly cost to own a mobile phone has declined by up to 72% from 2008 to 2011.

GSMA, 2013.

Increased demand for mobile communications services has sparked investment in network infrastructure, including cell towers, 3G connectivity, and more.

GSMA and Deloitte “Sub-Saharan Africa Mobile Data Observatory, 2012”

Broadband access continues to grow, including new fiber optic cable around the continent.

Steve Song, ManyPossibilities.net

Even across landlocked countries, entrepreneurs like Liquid Telecom are working to provide fast, reliable broadband access.

$350 million invested to install

17,500 km of fiber cable

across 12 countries

The Economist. “Cabling Africa’s Interior: Many Rivers to Cross.” 5 July 2014.

Access to the internet through broadband and mobile devices is rapidly increasing across sub-Saharan Africa.

GSMA and Deloitte “Sub-Saharan Africa Mobile Data Observatory, 2012”

As ICT becomes more accessible and affordable, it is increasingly being leveraged in logistics and supply chain management.

A recent landscape analysis by the mHealth Alliance identified more than 40 different electronic logistic management systems currently in use in countries around the continent and the world.

The African pharmaceutical market is rapidly expanding.

Total health expenditure in Africa has increased more than three-fold in the past decade.

African Development Bank Group. “The Africa Pharmaceutical Summit: Pharmaceutical Capacity and Finance for Results in Africa Summary Report.” September 2013.

African Pharmaceutical

Growth

African Development Bank Group. “The Africa Pharmaceutical Summit: Pharmaceutical Capacity and Finance for Results in Africa Summary Report.” September 2013.

The total annual pharmaceutical spending in Africa is expected to more than double within this decade.

2010$21 billion

2020$45 billion

IMS. “Africa: A Ripe Opportunity.” White Paper

Today$29 billion

An estimated $25-30 billion in new investments will be needed to meet demand for improved distribution and retail systems for pharmaceutical and medical supply product facilities between now and 2016.

$11-20 billion of those funds are likely to come from the private sector.

As new producers come into the market, many multinational pharmaceutical companies expect to see declines in revenue of up to 40% between 2008 and 2015.

PriceWaterhouseCoopers Pharma2020 Report

Local manufacturers are game changers in pharmaceutical procurement.

Tanzania

EthiopiaReduced

landed cost by 5.3%

Reduced lead time by more than 50%

Data from the Partnership for Supply Chain Management on local procurement in 2012

13 essential medicines procured through local suppliers

of 45 total essential medicines

Right-sizing responsibility with capacity.

HIGH VOLUME / RELIABILITY SUPPLIERS

7 X 27 = 70% Top suppliers

Major hospitals

of volumes

Determined on a

case-by-case basis

Cross-Docking – 40%

Reduce handling of b

ulk goods

and reduce th

e workload fo

r CMS

operational and administ

rative

functions

HIG

H

VO

LUM

E

SIT

ES

LOW

V

OLU

ME

SIT

ES

LOW VOLUME / RELIABILITY SUPPLIERS

HIGH VOLUME / RELIABILITY SUPPLIERS

CMS – 30%

Stock from sm

all supplie

rs

(or infre

quent deliverers)

AND to co

nsolidate st

ock

for small v

olume clinics

Direct

Delivery – 30%

Full t

ruck load

product vo

lume