The fleet market in Sub-Saharan Africa faces many challenges, such as insufficient availability of capital, but also a limited skills employment base and risks due to political instability.
“There are numerous challenges, such as limited capital availability, language barriers, and limited skill base of the population. There are also political risks to doing business in this area,” said said Jacqui Carr, divisional CEO for Eqstra, an integrated capital equipment and leasing provider with operations in South Africa and the UK.
The biggest challenge in Sub-Saharan Africa is funding. “The global credit crunch led to a substantial reduction in capital flow to emerging markets, such as South Africa. Also, the weakness in consumer spending caused businesses to reduce capital expenditures. The global collapse of commodities resulted in contraction within the mining and construction sectors, which had a ripple effect on the entire South African economy. Since then, banks have become excessively selective in lending and the availability of funds has become a challenge. There has also been an overall increase in the cost of funding,” Carr said. “With the shortage of liquidity, companies are reluctant to tie up working capital in non-core assets.”
Local governments insist fleet management companies use local banks, but these banks often don’t have the capacity to provide sufficient funding.
One interesting development has been the emergence of fleet request for proposals (RFPs) from Sub-Saharan countries.
--By Mike Antich
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