Risks associated with logistical services in Africa

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Following the identified sectors in which possible clients are trading, risks need to be acknowledged.

A logistical company being heavily dependent on its assets to deliver the services, most risks can be located around this aspect. That being said, the risks are even higher because of trading in Africa. Going through news topics, one will easily see the number of countries in Africa where unrest is a day to day thing (Libya, Kenya, CAR, Cote D’Ivoire, etc) http://goafrica.about.com/od/healthandsafety/a/travelwarnings.htm

So obviously, asset damage is a huge risk. Traveling through countries where civil wars are taking place can be avoided to a certain extent, but the chance is still there that a truck could be stolen or damaged. A parallel risk is damage to customer property. Luckily both risks can be covered by insurance. What can’t be undone is the damage to reputation and the relationship between you as company and the customer.

Then there is the risk of your employees health and safety when driving through these countries. From another side, there is also risk of strikes in the labour sector. Especially the last few years in South Africa, the tendency for strikes have been on the rise.

The above bring about an extra risk which is keeping up with delivery schedules. If the truck experiences any resistance, be it from locals of border crossings, the ETA is drastically affected.

Another risk identified are fluctuations in fuel prices. This makes it difficult from an accounting aspect to accurately budget for these cost, which could cause other problems in the future. In the same boat, there is the compliance with other countries taxation laws and legislation. Not being up to date in these areas could lead to over paying tax or even fraudulent activities which could cause damage to the company, if not close it down. Trading in foreign currencies is also a risk that needs to be tended to. Companies are at serious risk of being underpaid if foreign transactions aren’t done with precision and proper knowledge.

Before any progress is made in establishing the company, there should firstly be looked at how all the above risks can be cancelled out or lowered to an acceptable level.

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