Bruno Nalletamby – Trade Disruption in Africa: Can We Mitigate It?

Kingsly – OPTIMIZ 

My name is Kingsly and I’m your host on the Cargo Rant podcast today we’ve got with us, Bruno Nalletamby, and Bruno Nalletamby, will be talking to us today about trade disruption in Africa: can we mitigate it?. And we’ll be asking ourselves really whether or not we can mitigate this. Thank you very much, Bruno, for joining us, can you please tell us your name and a brief introduction to your background?

Bruno Nalletamby – SWAN Mauritius 

My name is Bruno Nalletamby. I come from Mauritius, I don’t know if you know, it is a small island in the Indian Ocean. We have been developing on the insurance side for over 50 years backward. And we are on the African market, most probably supplier second to South Africa, just to say on the developing of insurance, our insurance penetration out thinking we’re first in Africa. And so I’ve been doing marine insurance for 35 years now, visually cargo. And I would like to maybe share a bit about my experience more about what’s happening actually and will happen in the next year. I want to share my thoughts on our topic today trade disruption in Africa: can we mitigate it?

Kingsly – OPTIMIZ

Thank you very much for that renew. So today we are talking about three disruptions in Africa. But what really is trading disruption? Can you help break that down for the audience? And how are we experiencing this on the African continent?

Bruno Nalletamby – SWAN Mauritius

To understand trade disruption, we have to go first understand our trade, trade has been something that has been linked to humanity for centuries, a trade I’ve been we’ve been done by Greek by finishing and everything. So international trade with,  last 25 years has exploded. And today, in 20 years, China has gone from more than 20 lists on international trade to become the first in international trade. So we’ve tried now being an Asia being the most developing region in international trade to over region in the world.

Obviously, there have been many sea voyages and 90% of all trade today is by sea, and we have to go through either choice canal or fruit Cape Town the cable. And so we can say that now the international trade form part of our world is essential for everyone every country cannot live with it. I don’t think even North Korea can live without some international trade.

Well, disruption is simple now with the pandemic I think everyone now understands what is trade disruption. We have seen and experienced the changes in the pattern and the slowing condition of container ships and so products which are being exported and imported I’ve been disrupted. As a supplier, we used to supply computers machinery cause in 30 days, we’re now struggling to just export in 100 days.

So there’s been a complete disruption mainly for the developed countries. Firstly, we will let’s talk more about the pandemic because the pandemic has caused a major disruption because we’ve looked down with slowing down in production obviously the production and the supply side raw material was not being sent for manufacturing.

Because what is happening actually, is that most of the raw materials come from either Africa, Asia and goes to Europe and developing countries for the manufacturer and vice versa.

Going to auto to China, you know, and we these visual materials have been transformed to be re-exported you know, so obviously disruption in the raw materials, there will be disruption in the production of finished goods. And so this disruption, I think, has been one of the major factors of loss in GDP in most countries because they couldn’t produce they couldn’t sell the group buy and the lockdown situation, I caused, quit Terblanche in it. Okay. Thank you. Good. I agree with it.

Kingsly – OPTIMIZ

Yes, I do. Thank you very much, for breaking that down for us, Bruno. So you did mention that countries around the world, you know, we all depend in one way or the other on international trade. And you also need to mention that, you know, with the pandemic, there has been some impact on international trade. But if you can just bring that a little bit on the African continent yes, Africa is a very broad continent with many countries.

I just want to understand, from an African perspective, what has been the impact on international trade, especially in the last two years, where there has been a limitation in the movement of peoples within Africa, there has been a limitation in the movement of goods within Africa, what has been the impact?

I was speaking to some people last week, and we’re talking about the difficulty of, you know, sending goods from South Africa, to let’s say, countries like Congo and things like that, in your experience, how much has this pandemic really impacted the movement of goods on the African continent.

Bruno Nalletamby – SWAN Mauritius

But the fact is, at SWAN Mauritius, we have some trade with Africa, but it’s not very much. We bought more from China and export more in European countries, but look a bit at the figures, there has been a sharp decline in trade growth by 8%. Worldwide. And in the second quarter of 2020, this decrease was marked by at least 20%. But in Africa, it was a bit less significant for a simple reason, international trade is less significant in Africa, rather than in developed countries.

Africa is more known to export its raw material than import because it’s slowly growing from developing, underdeveloped to developing countries. So the consumption pattern is still low. So they have not much containership they represent for example 10% of the movement of cadet containership compared to the USA, okay, about 5000 containership I think I’m really instead of 55,000 in the USA so this disruption has been less marked. And then there’ll be more resilient men in the in there have been Freeport which have been more resilient the major port, which is Legos, Durban, and tender, which is the Africa dove in Morocco, they have been able to cope.

Unfortunately, all port doesn’t have the same facilities in Africa. And if you look at the number port in the world within the 10 buttons, I’m less efficient port five come from Africa. So this disruption was already there. So it says not I don’t think we have been a big impact on the trade disruption in many countries, but we have to understand what as 1/3 of African countries are landlocked, there are not only a need for sea transport, for motorway import, but also a major factor of land import, but is a cross border and with the pandemic be impacting differently in several countries, which has impacted the inland transport the trek took longer time to return to their departure point due to resolution imposed to contain the pandemic bio, for example.

Mumbasaport in Mozambique, there been some delivery delays in return of empty containers to report you to know, so and also we have to understand that with the pandemic of this has led to more reliance on digitalization. And However, in Africa, there is still there’s still a real what we call a readiness gap in the maritime sector automation and technology. So they need to up their game.

Kingsly – OPTIMIZ 

So if we can just park the topic of technology maritime as we will come to that in a moment, and really just focus on, you know, the impact, or let me put it this way. Do you see a trend in the types of losses during this, let’s say the last two years, particularly for perishable cargo, an increase in road accidents may be coming as a result of fatigue? You know, with the drivers that are few and far between now and the consequences result of the restriction in the movement of people? Is this something that you’re seeing on the continent? Is this something that you can speak to?

Bruno Nalletamby – SWAN Mauritius 

I would tend to say, but it’s my personal view of what I’ve seen on the professional aspect. It depends on the countries. Okay. And as I said, the landlocked countries were more susceptible to up with more losses on the land transit, let’s say okay, but see transit, I think, today, we can say safely that there was not much problem and less delay for disruption. But if we look at the length of transit, it depended on countries, if you look at, for example, Uganda, I’ve got a loss record of 20 to 22% loss ratio, but we are not suffering that much. But if you look at Zambia, Zambia has been known to have some problem with cross border with many losses in the cross border with all yours, inland transit.

It depends on the country and if you look, it’s difficult to have statistics, for example, for RDC, or this is one of the biggest countries in Africa, and one of the biggest in raw material also for producing raw materials. So I think the pattern of losses during the pandemic will be not bad, but deteriorating and less on the perishables that perishables normally comes more on-air and air have been also disrupted, as you know, by with regards the airlines, but I don’t think that Africa which normally import fewer perishables, but export more perishable, maybe on the export side, but on this site, I think Kingsly you should have more experienced than me, regarding these cases.

With your company StilFresh which deals with these recoveries, I think, I have not encountered many problems on the persons involve because there are fewer insurance services here which are taken, and maybe it’s more taken from the buyer side, in Europe and everything maybe you can talk a bit more on this rubber God me?

Kingsly – OPTIMIZ 

Yes, so from our perspective, we have I mean, we speak a lot with exporters on the African continent, so from avocado exporters in Kenya to banana exporters from Ghana, and also, apple traders with citrus in South Africa, and then also in Egypt as well. And one thing that kept coming up during this time was today as a result of shipping lines, either not, skipping a port rolling over, or things like that. And, you know, our customers have been facing challenges from that perspective.

We have not seen particular rice in these delay claims. I mean, they’re always there. I think this is something that export as an African continent are always subjected to, but we haven’t seen that particular rice, and I thought it would be interesting to see from your perspective, you know, with over 35 years that you bring to the table, you’ve been working in the insurance industry. I just wanted to follow up with a short question about your domain of expertise. How far does insurance go to mitigate this risk leading to treat disruption? Do you think there are some classes of insurances on types of insurance that, you know, traders on the African continent could attend to help them to mitigate these risks?

Bruno Nalletamby – SWAN Mauritius

In fact, before going to mitigate, we have to speak of it. Are we taking the insurance, there is the insurance penetration in Africa is very low. Okay? And even more in the maritime sector. Okay, as I said 1/3 of African countries are landlocked, and they are still convinced that they don’t need marine insurance because they are treated as being sea transport only, because instead what the cargo insurance is about from the warehouse of a supplier to a warehouse for the buyer parties, including the land transit, there are huge opportunities to do business in Africa because they are not insured. So, so you can look at either the battle between being off empty or full, you see, for my part, I think there is a huge opportunity to do business in Africa.

The loss ratio shouldn’t be what partners shy and the rate of still very conservative, unfortunately, they are, there has been and they are still and there will be, unfortunately, a perception of Africa, Africa being, you know, the continent of Africa is a bad risk for your insurance and arrangers gave we were talking about international insurance. And these last year, where the marine sector has been, a marine cargo sector has been impacted internationally, by losses, principally due to fires, storage, storage claims dungeon, Durbin, fire, the big players have tended to get out of African risk, rather than when looking at over opportunities. And as I say, many carriers and risk-free all these big players have gone out of Africa most are less or less willing to do business in Africa. And I think that’s the opportunity for African reinsurance and insurance to step up and try and do business in Africa.

Fortunately, for me, there are not many, many skills in Africa, in the world, on the marine sector, there are few people having more than 15 years experience even 10-year experience in marine but we need to train them, to train African underwriters to become more knowledgeable about marine so that they can do more and more business. And I’m sure more profit and secondly, they something which we would end up with.

Africa is huge, when we talk about Africa, we are talking about 5556 countries. So, the transports section is very huge when you speak and we need to find ways to be able to have control on the transit. And as there are few marine insurers in the world, we are still pure marine surveyors in the world, they are aging and it’s difficult to find them and to have them readily everywhere. So, I think we will have to go more in digitalization find ways to be able, to follow the track.

Any shipment, you know, and I think in this sense when I returned the question to you I think we’ve got good news from you on this site because I know you’re working on something which is more about surveying and everything is something which will help to be able to track the transport of many inland many lands, but even at the departure of the risk, what is our advisory board? side? Could you talk a bit more about it? Because I know you are

Kingsly – OPTIMIZ 

Thank you very much for mentioning that Bruno. So what we are doing at optimum is really is to try and solve some of the pressing problems that we have encountered in you know, saying my 14 years of experience working in this industry. What we noticed was that often shippers on the African continent would inform us that they have exported their goods to Europe or other parts of the world and the receiver claims that they have been 15 to 20% damage on their carbon transit.

As such, they would want to reduce or deduct from the sales price because the shippers you know, kind of dependent on these buyers, they tend to either show that there are losses, because, you know, they don’t want to spend more money to appoint a qualified surveyor in Europe or something like that.

African exporters have been shouldering these losses for a while. And we thought there must be a way that we could use technology to solve this problem not just from an African perspective, but from a global perspective and kind thinking about it. As you move cargo around the world, one of the major challenges when it comes to cargo claims against shipping rights is being able to prove the cost of, first of all, to prove the quality of your cargo unloading.

Before it was entrusted, to the custody of the shipping line. But also, once the container has been living outside to completely show that there was damage and the extent of the damage as well. So what we did was to build this web-based and mobile application where a shipper or an export on the African continent will be able to document some of the processes that they have gone through to ensure the safe handling and loading of the consignment of their goods on the African continent. And all of this qualitative information is then automated into a survey report.

Now, we did a study with one of the largest airlines in the world. And what we found was that often if you go through a survey report, I mean, standard survey reports are usually statements of fact. So they will tell you who are the parties involved, where were the country and the country of shipment or contract moody country of discharge, a port of discharge, to tell you the number of cargo, the type of cargo, the loading pattern and things like that. And it is perishable.

They also tell you, what was the set temperature, what was the actual temperature, and things like so all of these states, all of these statements are statements of fact. So we started asking ourselves, how can we connect and provide similar objective evidence, but at a lesser cost and that is why we turned to this web-based mobile application where food exporters, for example, will be able to use to document that critical process.

All of this is that automated and submitted to the shipping like as a report which you know, can conclusively say what the process was at the beginning or before the cargo was entrusted to the shipping line in the event of damage to the Calgary transit. Again, they’ll use this mission to collect evidence, starting from the external conditions of the container, then they will look at the stopping patterns, they will look at where the data logger was within the container, and things like this. So why don’t we understand that this may not solve all the problems or you know, I mean, our intention is not to seek to replace surveyors!

But we are saying that we can be complementary, we can help insurance companies to be able to make a quick decision to decide as to whether or not they need to send out a physical survey, or will the evidence the objective evidence that has been presented in real-time to them sufficient for them to make a policy coverage decision. But I think we shouldn’t spend too much time talking about our solution, as we are today focused on trade disruption in Africa.

The final question which I’d like to ask you today is with the global current crisis, what are some of the opportunities that exist in Africa trade today? Talking about Africa trade Recently, there has been the passage of the Africa Free Trade Agreement, or the free trade area where, you know, we expect to see an increased movement of goods on the African continent. Do you think this is his theory? Well, this forum all forms just like many other attempts in the past to bring such a convention to laws on the African continent, or do you see this as a new opportunity where foreign companies, local players can tap into and increase the overall event insurance penetration on the African continent? Or the continent GDP as well?

Bruno Nalletamby – SWAN Mauritius 

Yeah, sure. In fact, if you look at most of the East African countries, you will see and Chiron you will see what most of them have adopted legislation where marine insurance imports are compulsory. These have to be done locally, not compulsory but have to be done locally. And if we look at the west on West Africa, which is where you have many French African countries, francophones, if I recall, Mali, Burkina Faso and everything you will see also that they are they have adopted most of them for what we call the code Sema, they are adopted convention each of them by a way where they are to ensure not locally but from what we call the code Sema framework for rigid bodies.

I’m not a specialist in it, but what I know you could, for example, be in Ivory Coast and be able to ensure something from Burkina Faso, by being part of all the Sima region. The problem is that traders, African traders 100% do not trust African insurance on the Marine side.

So we continue to insure with a promise for suppliers perspective if a supplier takes the insurance up to the port and when they took they take another insurance to cater for the legislation where the local legislation so there is no way there is a need for formation for training and development. And I know that but for example, you’ve got some Rangers, African Rangers, the big ones were step up they’re doing in marine courses. But it’s going more, more than only doing courses you have to somehow take them and show them how to do marine insurance, how to market it to clients how to convince the African traders but you know, even on the export.

If you look at the export side, Africa is one of the biggest grand granaries of the world with cobalt with all the minerals that they are. And I’m not saying about the perishable, which you use banana cocoa and everything well we are world leaders. But they reap only a small portion of this aware labor on visual materials, they should at least ensure the export, keep the control. I know it’s a long shot, it will take time. But I’m sure that we’ve trained, developing the training.

Also, as you said with you do, with your app, which is more for me not about insurance, but above keeping the control of what’s happening, unity what’s happening of your product, okay, insurance, marine insurance I’ve been for decades I’ve been I know that they have lost control, they don’t know where it claims to come, you know. So all of this, I think is going to help.

Technologically even if African countries are not that may be as murder in their port and everything. But if we look at attack the phone, on the mobile phone, they are well, they are at par with anyone but everyone has a mobile phone in Africa, every trader or two or preferred so if they have some fast internet, you know, they will be able to do it, you know, so we have to work on it, we have to work on it.

I think the opportunity will come from within but it’s within the African countries not from the big players. That is what I call mini crates, which we Lloyd syndicate and everything, I think it will come from Africa. And I am trying and I hope I’ll be able to help a bit to form to train these guys with these people in Africa. So that they can develop themselves and be able to gather more insurance, more premium, and more profit eventually. And even knowledge learn I want to my dream is, for example, to have a Marine Academy in Africa, you know, in insurance. So you see what’s going on in my dream.

Kingsly – OPTIMIZ

I can testify. I remember a few years ago, both of us were in Kenya, we were invited by the OSI for the marine training in Kenya and the feedback was quite encouraging. I hope that, as you develop further in your career, you’ll be able to transfer some of the knowledge that you’ve had in the past 35 years with some of the rising stars that we have on the continent. And I think you have summarized or you have beautifully brought our conversation to a close by saying that it all has to come from within. And I agree with you. So thank you very much Bruno for spending time with us today

And thank you our audience for staying with us on this podcast with Bruno Nalletamby – Trade Disruption in Africa: Can We Mitigate It?