Tuesday, 15 September 2015

Defusing the Youth Unemployment Time Bomb

How about creating our own supply chains?

The frightening numbers

We are sitting on a youth unemployment time bomb With a world population of 7.36 bn, over 24% (1.76 bn) is aged between 15 and 29. Most live in developing countries and are unemployable due to lack of skills. In Africa these numbers represent an opportunity, not a threat.

Youth unemployment- threat or opportunity?

The overlooked obvious revealed

Particularly where South Africa is concerned, the logistics industry is well placed to light a fire of radical, constructive change in very much the same way as Clem Sunter’s “High Road – Low Road” addresses to business were able to in the ‘80s.

We recognise that a primary cause of youth unemployment is a lack of skills.

We also acknowledge that South Africa is not about to become a world leader in information technology (or for that many any industry which requires high levels of technological input) anytime soon. Our focus should rather be on developing or reviving primary industries where there is potential which for various reasons is not being fully realised.

3rd and 4th party logistics providers add value to the businesses of buyers and sellers of goods by ensuring that these goods are moved from supplier to buyer at the right place, right time and at a viable cost. As such this is a derivative industry which traditionally relies on the existence of buyers and sellers in local and international markets in order to provide their services. In other words 3rd and 4th party logistics providers rely on the presence of established supply chains before they can offer their services.

This is where out of the box thinking is indicated. Any visit to a downtown supermarket will show how much fruit and vegetables are imported either from elsewhere in Africa or further afield, but not South Africa. Not 15 years ago this country was a net exporter of these products.

By contrast, the Kenyan cut flower industry started growing in the 1970’s. The country’s horticultural sector currently ranks as one of the economy's fastest growing industries, the third largest foreign exchange earner after tourism and tea, a trend that saw the industry rise to approximately 40% of export earnings over the past ten years with export volumes reaching 220,000 tonnes in 2014. Imagine what that has done for the Kenyan logistics industry.

An important factor in the success of any project involving agriculture is the realisation that, relatively speaking, farming is the easy part: what is important is total control of the supply chain from the time the crop is harvested until it is sold to the consumer.

This is where the opportunity presents itself: due to various factors there is a surplus of arable land in South Africa where those who own that land are unable, through a lack of resources and business expertise, to produce crops which are marketable. By partnering with such landowners the logistics provider is able to use his network of local and overseas contacts to establish markets for products which could be produced by the farm owners in question and then establish viable businesses along that supply chain in order to serve the markets which have been established.

In developing such projects a key factor in ensuring their sustainability is training: the development not only of the means of production (the farm and the downstream processing facilities) but also the competence to manage those supply chains.

From concept to cash: how much of the supply chain does the 3- 4PL own?

It has been said that there is money to be made in unsettled times. By developing their own supply chains, 3rd and 4th party logistics providers create their own opportunities while providing real solutions to the youth unemployment time bomb.

The question is- how many 3 and 4PLs are up to this challenge?

Has this sparked some creative ideas? Please share

What other economically sustainable solutions come to your mind?

Please join the discussions on www.charlesrdey.blogspot.com.