Free trade: get set to de­liver a golden African era

Cape Times - - OPINION & ANALYSIS - Mu­toni Karasanyi Mu­toni Karasanyi is a mar­ket­ing and com­mu­ni­ca­tions ex­pert and a con­tribut­ing writer for He has con­sulted for The World Bank Group, Cor­po­rate Ex­ec­u­tive Board, MTN, and oth­ers. Fol­low Mu­toni on Twit­ter at @Karasanyi

THE FREIGHT lo­gis­tics in­dus­try is huge. By 2025, the global mar­ket is ex­pected to reach more than $15 tril­lion (R202trln), and so far, the global lo­gis­tics in­dus­try has seemed al­most im­mune to dis­rup­tion.

Com­pa­nies have cer­tainly lever­aged IT to make their in­ter­nal op­er­a­tions more ef­fi­cient, but for your av­er­age con­sumer or small busi­ness, com­par­ing quotes is still a very opaque process. How­ever, as on­line shop­ping and taxi apps con­tinue to change con­sumer ex­pec­ta­tions, busi­nesses are un­likely to put up with in­ef­fi­cient ser­vice providers for much longer.

Over the past five years or so, the trans­port in­dus­try has seen many in­no­va­tive start-ups launch into that space. These ven­tures have aimed to de­liver every­thing from pri­vate taxi and pub­lic trans­port ser­vices to take-out and gro­cery drops, and even sought to pro­vide seam­less freight lo­gis­tics so­lu­tions for fer­ry­ing goods large and small.

As Africa’s am­bi­tious Con­ti­nen­tal Free Trade Agree­ment (CFTA) comes into ef­fect, we might do well to re­view some of the con­ti­nent’s most promis­ing start-ups in the lo­gis­tics space.

The CFTA might fi­nally usher-in a golden era of in­tra-African trade, with some econ­o­mists ex­pect­ing vol­umes to grow from 34.9 mil­lion tons in 2009 to 120 mil­lion tons in 2030. As the largest and most de­vel­oped lo­gis­tics in­dus­try on the con­ti­nent, South Africa po­ten­tially has much to gain from adding their sig­na­ture to the agree­ment. Im­proved lo­gis­tics leads to lower costs and thus more ac­ces­si­ble pric­ing for con­sumers.

Higher truck and rail util­i­sa­tion means less car­bon emis­sions for the en­vi­ron­ment, and it also means that SME’s that may have been pre­vi­ously priced out of eco­nomic par­tic­i­pa­tion might now en­ter the fray.

From hype to hard cash

Lo­gis­tics start-ups have been trendy par­tic­i­pants at start-up pitch­ing com­pe­ti­tions for a while now, and a few no­table ones have suc­ceeded in land­ing the at­ten­tion of in­vestors. Case in point, the cargo-trans­port lo­gis­tics plat­form Lori Sys­tems (Kenya) grabbed head­lines for win­ning last year’s Start-up Bat­tle­field Africa, and Twiga Foods (Kenya) won the grand prize at the 1776 Global Chal­lenge Cup.

Be­fore you dis­miss the hype of those wins com­pletely, it’s worth not­ing that last July, Twiga Foods raised an im­pres­sive $10.3 mil­lion (R138.7m) in se­ries A fund­ing. More re­cently, the on-de­mand de­liv­ery ser­vice Sendy (Kenya) at­tracted $3m in in­vest­ment; while di­rect-to-re­tail dis­tri­bu­tion web plat­form TradeDe­pot (Nige­ria) se­cured and fleet track­ing plat­form Kobo360 (Nige­ria) pulled in $3m and $1.2m, re­spec­tively.

Each of these start-ups has very dif­fer­ent busi­ness mod­els and com­pet­i­tive ad­van­tages. Af­ter all, even the most ba­sic cross-bor­der ship­ment can in­volve dozens of bro­kers, truck­ers, cus­toms agents, and de­liv­ery per­son­nel. Thus, a dy­namic ecosys­tem of in­no­va­tors is re­quired.

In South Africa, a num­ber of last-mile de­liv­ery start-ups have emerged – in­clud­ing Zulzi, Picup, Rush and, most no­tably, WumDrop, which Makro ac­quired last year. FastVan has launched a SAAS (soft­ware as a ser­vice) plat­form for in-house lo­gis­tics, while LineBooker and Emp­tyTrips now of­fer on­line mar­ket­places op­ti­mised truck­ing util­i­sa­tion ser­vices.

What this means for us all

As­pir­ing truck owner-driv­ers might do well to root for plat­forms like Senga (Kenya) which as­pires to be­com­ing the “Tax­ify of truck­ing”. Mean­while, clear­ing agents might ben­e­fit from sign­ing up with Bi­fa­sor (Ivory Coast), Africa’s first so­cial net­work­ing plat­form fo­cused en­tirely on lo­gis­tics pro­fes­sion­als.

Shop own­ers op­er­at­ing in in­for­mal mar­kets might find value in so­lu­tions like Spazapp (South Africa) which help stream­line day-to-day op­er­a­tions.

Re­gard­less of the mar­ket seg­ment, suc­cess in lo­gis­tics re­quires both cus­tomi­sa­tion to lo­cal con­di­tions, and spe­cial­i­sa­tion to a spe­cific niche of buy­ers and sell­ers. It is, there­fore, no sur­prise that the largest cap­i­tal raise ref­er­enced in this piece, Twiga Foods, is widely con­sid­ered an agritech start-up be­cause it fo­cuses specif­i­cally on solv­ing lo­gis­tics is­sues for ru­ral farm­ers de­liv­er­ing fresh pro­duce to ur­ban mar­kets.

Sim­i­larly, Mastercard’s niche agri-app 2Kuze (Kenya) – launched ear­lier this year – aims to co-or­di­nate sales, pay­ments, and lo­gis­tics for small-scale farm­ers look­ing to sell their crops more ef­fi­ciently. Mean­while Zi­pline (US) has cho­sen to spe­cialise in de­liv­er­ing blood parcels via drones to dif­fi­cult-to-reach parts of coun­tries like Rwanda and Tan­za­nia, while LifeBank (Nige­ria) has opted to do the same via mo­tor­cy­cles. Sendy started out do­ing last­mile mo­tor­cy­cle par­cel de­liv­er­ies, but now also per­forms de­liv­er­ies via mini­vans.

There will likely be con­sol­i­da­tion among these start-ups in the com­ing years. In some mar­kets, this has al­ready be­gun. For in­stance, in 2016, the Nige­rian B2B last­mile de­liv­ery plat­form MAX, ac­quired the take-out de­liv­ery app, Easyap­petite.

While the con­ti­nent might be sev­eral years away from re­al­is­ing the full po­ten­tial of the CFTA, if Louis Pas­teur’s maxim, “For­tune favours the pre­pared…” holds true, now might be a good time to start back­ing African lo­gis­tics start-ups with some se­ri­ous cash.


The freight lo­gis­tics in­dus­try is huge. Over the past five years or so, the trans­port in­dus­try has seen many in­no­va­tive start-ups launch into the space.

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