Radio frequency identification (RFID) provides benefits that surpass other alternative solutions, particularly bar codes. Due to these flexible benefits, RFID has the potential to make a significant impact in Africa.
The continent is not only becoming more aware of RFID, but is also slowly increasing the uptake of this technology. RFID vendors have also become specialised in providing specific applications and catering their offerings to particular industries.
A variety of factors currently influence Africa's demand for RFID applications. The need to reduce theft, fraud and counterfeit products is one of the key drivers of demand. The technology is able to track and trace the location of products more accurately than past technologies, which leads to a reduction in losses. The technology's ability to increase efficiency, as well as government support for RFID projects and international policies that require RFID applications on specific goods for import, such as beef products, are also influencing the uptake.
The slow adoption of RFID in Africa presents various opportunities for vendors. Most important is the availability of green field opportunities that have not yet been exploited but are perfect for early mover advantage. Projects to roll out RFID applications in different countries are also on the rise. Mining and supply chain/asset management are among the sectors expected to increase the demand for applications, and activities in these sectors are on the rise in many African countries.
Despite the availability of a variety of RFID opportunities, there are several factors hindering its expansion. The most notable is the high cost of deploying the application, particularly for low value/volume products. Several companies in Africa are small or medium enterprises with low volumes of production. RFID is costly for such businesses to implement. As a result, many sectors continue to use alternative solutions such as bar codes.
The technology is also ineffective if operated under certain conditions. For example, transponders do not function well when tagged on metallic objects or watery surfaces. This poses difficulties for manufacturing and other industries that use a variety of metallic objects.
The low degree of collaboration among industry participants is also slowing the market's growth. Given that RFID requires a standard of infrastructure, particularly in power and telecommunications, the demand is affected in many countries and regions facing infrastructural difficulties.
Despite various technological challenges, the cost of RFID tags has started to fall. This trend is expected to continue as more advances in the production of low cost RFID continues. The continued decline in prices will be a key factor in increasing the demand for RFID in Africa. Low cost tags will be particularly appealing to low value/volume items, where the market for RFID is currently small. This will also provide solutions for a spectrum of enterprises of all sizes. Market participants are currently working together to resolve interoperability and other issues that affect the use of RFID applications, such as finding a common approach to the industry standards.
For more information contact Patrick Cairns, Frost & Sullivan, +27 (0)21 680 3274, +27 (0)21 680 3274, patrick.cairns@frost.com
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