Perhaps no other part of the world more clearly exemplifies both the rewards and hardships of doing business with developing countries than southern Africa does. The region, which is composed of South Africa, Lesotho, Swaziland, Namibia, Botswana, Zimbabwe, Mozambique, Angola, Zambia, and Malawi, has a combined population of 100 million and a gross domestic product (GDP) of $380 billion. But as these nations endeavor to improve their national economies, they also are struggling to overcome the effects of civil war, financial hardships, and the negative perceptions held by many in the outside world.

Although southern Africa is not an easy place to do business, the region nevertheless deserves attention from international traders. The good news is that despite the significant differences in logistics infrastructure from country to country, logistics practices that meet the standards of more industrialized countries are gradually emerging.

The dominant economy in southern Africa is that of the Republic of South Africa. Many South African companies engage in logistics practices that are on par with those of more developed countries. That's one reason why the country often serves as a gateway to neighboring countries, according to Mike Johnston, director of Logistics Management Inc., a consultant based in Johannesburg, South Africa. Today, he says, the landlocked nations of Zimbabwe and Botswana are served primarily through the South African ports of Cape Town, Port Elizabeth, Richard's Bay, and Durban, as are both Malawi and Zambia, which were served by ports in Angola and Mozambique until civil war curtailed transportation activity.

South Africans' ability to operate in two worlds—conducting business according to standards expected by industrialized countries while understanding the traditional African approach to business—is behind the country's success as a transportation and logistics facilitator. "Africa operates on a philosophy that time is not an issue and placidly accepts all of the hurdles that crop up in doing business in a Third World environment," observes Johnston, "but South Africa is able to make things happen."

There are other reasons why South Africa is the logistics leader in the region as well, Johnston observes. "First, its business environment is more orderly and structured than that of its neighbors," he notes. "By and large, it works and logistics companies are concerned about customer service, productivity, and minimizing red tape. The same cannot be said about the rest of Africa."

Second is that technologically, South Africa is in the First World.

"E-mail, EDI, and the like all function very well here," he explains.

Other countries in the region are far behind South Africa when it comes to technology, adds Angelo Rincon, operations manager of Intercargo, a logistics service provider based in Johannesburg. "Although the telephone is still a primary form of communication here, there is a great difference between South Africa and its neighbors," he says. "Many countries are not up to standard when it comes to information technology. In fact, Malawi is still trying to get into the telephone age."

South Africans also are able to deal with such problems as bribery and corruption, which pose severe ethical problems for people who are not used to that way of doing business, Johnston observes. "Bribery and corruption are a major problem in Africa," he says, "particularly north of the Zambezi River, where systems are all manual and open to abuse."

Financing international trade in Africa can be problematic, too. "Payment by debt-ridden countries can involve major risks, particularly in Africa where the banking system is not strong and is often abused," Johnston says. South Africa, by contrast, has long had a European-style banking system that is more stable than those of its neighbors.

A lack of funds, widespread destruction caused by war, and inadequate maintenance have compromised the infrastructure required to maintain good logistics service in most countries in southern Africa. Although both Namibia and Botswana offer an adequate transportation infrastructure, once again South Africa leads the way. "The infrastructure is of higher quality and transportation is more effective" there, says Rincon. Although it is true that some inefficiency is created when an intermediary is involved, neighboring countries couldn't begin to compete without the infrastructure that South Africa provides.

In the meantime, privatization has reached the port industry in South Africa. Coega, a major new port that is being built near East London, will be the first port in the country that will not be operated by Portnet, the national port authority. Other recent changes in South Africa's maritime industry include more frequent sailings from the United States, a more competitive pricing structure, and more reliable transit times. In addition to South African ports, there are also well-developed ports in Namibia at Walvis Bay and Luderitz, both of which have recently expanded.

As for surface transportation, says Johnston, highways remain the arteries of regional trade flows. Transnational highways include the Trans-Kalahari Highway, which crosses Namibia, Botswana, and South Africa, and the Trans-Caprivi Highway, which passes through Namibia, Angola, Zambia, and Zimbabwe. Namibia, with its favorable location relative to Western Europe and the Americas, is focusing on its combination of highways and ports as one way to seek a competitive advantage over South Africa. South Africa's railways, meanwhile, are experiencing some problems due to deregulation and privatization.

In air transport, wide differences exist in handling capabilities among countries. "Botswana's airports can handle only up to a 727 aircraft," notes Rincon. "Namibia's facilities are more updated and can handle larger planes, so air freight is more of an option." Airfreight shipments to South Africa, meanwhile, work smoothly because of the effective communication systems that are available there. Logistics providers in South Africa can clear high-priority goods within two or three hours and other types of freight within eight to 10 hours, he reorts.

A major change in the region's trading patterns came about in the 1990s with the ending of apartheid. "International trade with South Africa has increased substantially since the lifting of sanctions in 1994," says Johnston. "To some extent, this has freed up the movement of goods through South Africa to countries north of us. Prior to that, companies either didn't trade with them or they used alternative routes if they were prepared to take the risk."

The increase in trade has been beneficial, says Rincon, but with that growth has come the need for new regulations to keep the system flowing efficiently. For example, new regulations have reduced the incidence of vehicle overloading, which has been a major problem for South African authorities. "Fines have increased," he notes, "and the confiscation of cargo and trucks has also led to a decrease in overloading."

Regulations in some neighboring countries often are heavy-handed because levies on transportation, imports, and fuel provide a significant source of revenues. As a result, says Rincon, these countries are effectively chasing away business. "For example," he says, "unrealistically high taxes on vehicles entering Zimbabwe have reduced the movement of cargo through its borders."

Other logistics trends in southern Africa include an increase in logistics outsourcing and more integration of systems, although inter-company collaboration is somewhat limited. A third trend is the development of more centralized and sophisticated storage facilities.

As for shippers who do business in this part of the world, Johnston recommends that they find out as much as they can about the parties with whom they are doing business. "It is important to have a presence here to be effective, and many good companies would be happy to act as honest brokers for U.S. suppliers," he says. He also notes that shippers should be prepared to develop those relationships over time rather than rush into them, because the politics of Africa can be complicated and confusing for the uninitiated.

Shippers should also be careful to secure their merchandise and be able to track it. "Crime is a serious problem here at the moment, and theft is a common practice at many distribution facilities," Johnston observes. "Packaging and securing of consignments needs to be done carefully." Rachele Kunz, a Caterpillar spokeswoman, notes that her company requires that all cargo be shipped in closed, sealed containers and demands that the transporter accept liability for in-transit material from door to door.

Clearly, southern Africa offers plenty of untapped markets, but the issues of payments, cargo security, and infrastructure make the sales and delivery processes challenging. Having reliable agents, including South African logistics providers that have a thorough knowledge of the cultural as well as the geographical terrain, can be invaluable.