By Wasana Nadeeshani Sellahewa
(Commonwealth) _ African logistics firms are reshaping how products move across the continent. The African Continental Free Trade Agreement (AfCFTA) is expected to usher in a new age of African economic prosperity. The historic pact, which will enter into force in May, would establish the world’s largest free trade zone since the World Trade Organization.
However, the AfCFTA’s revolutionary potential will be dependent on the free movement of commodities across borders, which only the logistics industry can assist to unleash. Local enterprises and global corporations have long decried the continent’s broken logistics and supply systems.
Although AfCFTA will provide some assistance to businesses conducting business across the continent by lowering border tariffs, the region’s $130-170 billion infrastructure gap remains a stumbling block to lowering logistics costs. Hundreds of African enterprises are solving the region’s logistical concerns, despite the region’s challenging obstacles.
According to a recent Briter Bridges study of logistics technology businesses throughout the continent, three themes will determine the future of logistics in African markets: the closure of the urban-rural gap, logistics digitalization, and the continuous expansion of B2B logistics enterprises. African logistics firms are expanding outside megacities to connect Africa’s rural areas to regional supply networks.
While megacities that lure millions of young Africans are sprouting up across the continent, Africa’s population remains mostly rural. A small population and a lack of suitable road infrastructure in rural regions cut off a large percentage of the people from supply networks. One of the next frontiers is to bridge the urban-rural divide.
Twiga Foods connects rural vegetable supply to urban customers by connecting farmers directly with merchants on an easy-to-use platform. Inspira Farms solves the problem of rural logistics from a unique perspective. It employs offgrid solar technologies to offer farmers with cold storage. Farmers have more options to engage in regional supply chains because to the flexibility given by on-site cold storage.
These companies’ solutions will continue to interconnect rural and urban markets, making regional logistics more effective. The most forward-thinking logistics organizations in African marketplaces are using digital platforms to provide efficient and cost-effective logistics services.
These businesses do not need to radically rethink logistics in African nations; commodities are still carried by motorbikes, vehicles, and trucks.
The innovation is in the creation of digital platforms that link supply and demand, whether they be courier applications that deliver groceries or systems that coordinate freight deliveries. Firms such as Trella in Egypt and Kobo360 in Nigeria, which recently concluded a $20 million financing round headed by Goldman Sachs, have found success by utilizing digital platforms to link current transportation capacity with demand.
Increased internet penetration throughout the continent is improving market connection by bringing more customers online and enabling enterprises to employ cloud services.
These developments will continue to fuel logistics innovation as African companies seek methods to eliminate intermediaries, eliminate cumbersome operational processes, and streamline supply chains. Startups focused on business-to-business (B2B) will continue to fuel the expansion of African logistics industries.
While consumer-facing logistics companies are witnessing potential development as a result of growing urbanization and increased ecommerce penetration, enterprise-focused firms are projected to dominate Africa’s logistics market in the short to medium term. In a recent study of leading African logistics companies, 87% ran enterprises focusing on B2B solutions, while 5% primarily concentrated on B2C (business to consumer) services.
The low demand for consumer goods due to poor purchasing power in many African countries, and the absence of verifiable addresses for last-mile delivery, are two factors impacting the increase of the number of B2B logistics firms. As a consequence, the best option for logistics startups will continue to satisfy company demands.
Sokowatch, a Nairobi-based B2B business, has seized this opportunity by concentrating on supply chains for merchants in Africa’s informal sector. Daniel Yu, the company’s creator, described the decision to focus on B2B as a choice between “creating effective…logistics…for 10,000 tiny stores rather than the one million individual consumers who buy from those shops.”
