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Tap the potential The role of the private sector in stepping up the pace of supply of HIV/AIDS commodities. Sponsored by:. With co-sponsors:. Agenda. Hour 1 Introductions Overview presentation Audience reactions and questions Hour 2 D iscussion Audience reactions and questions After

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  1. Tap the potential The role of the private sector instepping up the pace of supply ofHIV/AIDS commodities • Sponsored by: • With co-sponsors:

  2. Agenda Hour 1 • Introductions • Overview presentation • Audience reactions and questions Hour 2 • Discussion • Audience reactions and questions After • Networking reception The session and the presentations and opinions expressed are those of the sponsors and do not necessarily reflect the views or policies of the US government.

  3. Overview Presentation Gordon Comstock Director of Global Supply Chain, PFSCM Gordon has over 30 years of consulting and management experience with the University of Illinois College of Medicine, LifeScience Partners, Deloitte & Touche, Opinion Research Corporation, The Hay Group, MAP International and Management Sciences for Health.

  4. The African economy is growing rapidly, creating new opportunities for the private sector.

  5. Globally, the proportion of the world’s population living in middle income countries is on the rise, creating new consumers of goods and services, including private health services. • World Bank Data, accessed 2014.

  6. By 2020, models indicate that more than half of African households will have discretionary income to spend. • McKinsey Global Institute. “Lions on the Move.” June 2010.

  7. HIV/AIDS had a dramatic impact on life expectancy in sub-Saharan Africa, but also made a dramatic recovery following global investments in prevention and treatment. • Ambassador Deborah L. Birx, MD. “Delivering an AIDS-free Generation.” Kaiser Family Foundation Town Hall Forum. 23 June 2014.

  8. Africa is demonstrating remarkable growth across sectors, including key categories for private sector growth. • McKinsey Global Institute. “Lions on the Move.” June 2010.

  9. The financial cost of starting a new business in Africa is rapidly decreasing, but still remains high compared to wealthier countries around the world. • World Bank Data, accessed 2014.

  10. Direct foreign investment in Africa has spiked massively in the past decade. • World Bank Data, accessed 2014.

  11. Mobile money is booming in Africa, changing the way both individuals and businesses buy and sell goods and services. • Claire Penicaud & Arunjay Katakam. “Mobile Money for the Unbanked. “State of the Industry 2013: Mobile Financial Services for the Unbanked.” GSMA

  12. Investments are being made to improve trade as shipping corridors throughout Africa and freight volume continue to grow.

  13. The cost to import and export goods across borders varies widely, and remains higher within Africa than in other parts of the world, but sub-Saharan Africa continues to lead in the number of trade reforms. • Doing Business 2012. “Trading Across Borders”

  14. Importing and exporting goods across country borders requires a number of steps, each of which have a cost associated with them. • Doing Business 2012. “Trading Across Borders”

  15. Since 1990, more than $13 billion has been invested by the private sector in infrastructure projects across sub-Saharan Africa. Railroads Seaports Roadways Airports • World Bank Group Private Participation in Infrastruture Database, Regional Snapshots, accessed 2014.

  16. Air freight volume also continues to grow. In the past decade alone, air freight volume through Africa has grown by 33%. • World Bank Data, accessed 2014.

  17. (2009) Distribution of air freight across African countries • World Bank, Transport Sector Board, and International Trade Department. “Air Freight: A Market Study with Implications for Landlocked Countries.” August 2009

  18. The volume of goods shipped through other African ports is also rapidly increasing annually. • World Bank Data, accessed 2014.

  19. Investments are being made to upgrade the infrastructure and processing systems in major ports around the continent.

  20. Map from PriceWaterhouseCoopers. Annual container volume by port from various sources.

  21. Durban South Africa 2.6 million TEUs (2012) Largest shipping terminal in Africa Handles 31.4 million tons of cargo each year

  22. Mombasa Kenya 903,443 TEUs (2012) Undergoing a $366 million upgrade Will increase handling capacity by 200,000 TEUs a year

  23. TemaGhana 822,131 TEUs (2013) Ghana Ports & Harbours Authority investing $2.5 billion in improvements by 2018 Traffic has already risen five-fold since 2000 and will double to 2 million TEUs by 2018.

  24. At the same time that investments are being made in infrastructure and shipment volumes increase, the cost to import a container of goods in countries with key ports continues to increase. • World Bank Data, accessed 2014.

  25. Though the quality of the roads in Africa has • continued to improve, the African Development Bank • anticipates that road freight will continue to be • somewhat costly and inefficient until competition • in the trucking industry is increased • and barriers to trade are lifted.

  26. High road freight tariffs and administrative and border delays create additional barriers to road shipment. • African Development Bank, sourced from Teravaninthorn and Raballand, 2008.

  27. Investment and growth in technology is also changing the business environment across the continent.

  28. Mobile coverage continues to increase across Africa, which is now the second largest mobile market in the world after Asia. • Mobile penetration (%), 2012

  29. For each fixed line in sub-Saharan Africa, there are 28 mobile phone connections, demonstrating the dominance of mobile as a means of communication. • Fixed line • Mobile • GSMA and Deloitte “Sub-Saharan Africa Mobile Data Observatory, 2012”

  30. The average annual cost of mobile phone ownership has decreased dramatically across the continent.In East Africa, the average monthly cost to own a mobile phone has declined by up to 72% from 2008 to 2011. • GSMA, 2013.

  31. Increased demand for mobile communications services has sparked investment in network infrastructure, including cell towers, 3G connectivity, and more. • GSMA and Deloitte “Sub-Saharan Africa Mobile Data Observatory, 2012”

  32. Broadband access continues to grow, including new fiber optic cable around the continent. • Steve Song, ManyPossibilities.net

  33. Even across landlocked countries, entrepreneurs like Liquid Telecom are working to provide fast, reliable broadband access. $350 million invested to install 17,500 km of fiber cable across 12 countries • The Economist. “Cabling Africa’s Interior: Many Rivers to Cross.” 5 July 2014.

  34. Access to the internet through broadband and mobile devices is rapidly increasing across sub-Saharan Africa. • GSMA and Deloitte “Sub-Saharan Africa Mobile Data Observatory, 2012”

  35. As ICT becomes more accessible and affordable, it is increasingly being leveraged in logistics and supply chain management.A recent landscape analysis by the mHealth Alliance identified more than 40 different electronic logistic management systems currently in use in countries around the continent and the world.

  36. The African pharmaceutical market is rapidly expanding.

  37. Total health expenditure in Africa has increased more than three-fold in the past decade. • African Development Bank Group. “The Africa Pharmaceutical Summit: Pharmaceutical Capacity and Finance for Results in Africa Summary Report.” September 2013.

  38. African Development Bank Group. “The Africa Pharmaceutical Summit: Pharmaceutical Capacity and Finance for Results in Africa Summary Report.” September 2013. African Pharmaceutical Growth

  39. The total annual pharmaceutical spending in Africa is expected to more than double within this decade. 2010 $21 billion Today $29 billion 2020 $45 billion • IMS. “Africa: A Ripe Opportunity.” White Paper

  40. An estimated $25-30 billion in new investments will be needed to meet demand • for improved distribution and retail systems for pharmaceutical and medical supply product facilities between now and 2016.$11-20 billion of those funds are likely to come • from the private sector.

  41. As new producers come into the market, many multinational pharmaceutical companies expect to see declines in revenue of up to 40% between 2008 and 2015. • PriceWaterhouseCoopers Pharma2020 Report

  42. Local manufacturers are game changers in pharmaceutical procurement. • 13 essential medicines procured through local suppliers • Reduced lead time by more than 50% Tanzania of 45 total essential medicines • Reduced landed cost by 5.3% Ethiopia • Data from the Partnership for Supply Chain Management on local procurement in 2012

  43. Right-sizing responsibility with capacity. HIGH VOLUME / RELIABILITY SUPPLIERS HIGH VOLUME / RELIABILITY SUPPLIERS LOW VOLUME / RELIABILITY SUPPLIERS • CMS – 30% • Stock from small suppliers (or infrequent deliverers) AND to consolidate stock for small volume clinics Determined on a case-by-case basis LOW VOLUME SITES • Cross-Docking – 40% • Reduce handling of bulk goods and reduce the workload for CMS operational and administrative functions • Direct Delivery – 30% • Full truck load • product volume HIGH VOLUME SITES 7 X 27 = 70% • Major hospitals • Top suppliers of volumes

  44. Local Economic Impact Study: Preliminary Findings Prashant Yadav and Sarah Alphs Note: These are results from an independent study. SCMS facilitated travel and lodging for one of the researchers to conduct vendor interviews. The researchers did not receive any other funding for this research.

  45. SCMS local sourcing-background and questions Over the past 7 years, SCMS has contracted 650 local vendors in 14 African countries to supply commodities valued over $260 million What is the local economic impact (direct and indirect) of local sourcing by SCMS? • Is SCMS’ strategy of enhancing local value-creating activities working? • Is SCMS driving competitive advantage amongst it local vendors and making them more sustainable? • Will the upgrades in technology, new SOPs, efficiency and quality improvements in production and distribution by local vendors become a “sticky equilibrium”?

  46. SCMS Local Economic Impact Study Objectives • To understand the direct and indirect impact of SCMS program on its local vendors • To understand the direct and indirect impact of SCMS program on the broader economy • To develop a white paper on lessons learned and accomplishments achieved thus far Project Partner • The Partnership for Supply Chain Management (PFSCM) has partnered with the William Davidson Institute (a non-profit research institute at the University of Michigan in the USA) to carry out the independent data collection and analysis for this study.

  47. Assessing Direct and Indirect Impacts of SCMS Local Sourcing

  48. Assessing Direct and Indirect Impacts of SCMS Local Sourcing Today’s presentation

  49. What would we measure to understand impact • Other indirect impact will be evaluated as well

  50. Methodology • Current status of project

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