DHL is investing about $50M in Sub-Saharan Africa to tap emerging middle class

Deutsche Post AG’s DHL unit is investing about $50 million in sub-Saharan Africa as rising household incomes help spur demand for express and freight deliveries.

DHL is focusing spending on gateway facilities, warehouses, vehicles and information technology, Deutsche Post Chief Executive Officer Frank Appel said in a Johannesburg interview. The figure includes 30.5 million euros ($35 million) for forwarding and supply-chain units announced in October and more than 17 million euros earmarked for the express arm this year.

Africa’s emerging middle class, increased political stability and productivity gains through digitalization will fuel growth and lifting demand for DHL services as businesses order and distribute more products, according to Appel.

“Africa is definitely a sleeping giant,” he said Monday. “New technology will drive productivity and productivity will drive economic growth. Overall the trend is positive.”

DHL, present in sub-Saharan countries spanning South Sudan to the island of Saint Helena, anticipates growth of at least 10 percent in cross-border express sales this year, Appel said.

The Bonn-based company is seeking to lift revenue from emerging markets to 30 percent of the group total from 22 percent. Growth remains achievable even with the current turmoil in global markets, the executive said.

Sub-Saharan nations are expected to post growth averaging 5 percent in 2016, the International Monetary Fund has said, up from 4.5 percent this year.

Source: Bloomberg Business