US$200bn opportunity within Africa’s eLogistics market
Africa has not even scratched the surface in terms of the opportunity that lies in eLogistics and has a long way to go before being in a position to truly ease the processes and procedures involved in running a business.
Mark Mwangi, CEO of logistics firm Amitruck, put the situation in perspective: “About 60 percent of the cost of toothpaste in Africa is in transport logistics.”
Amitruck connects cargo owners with truck drivers to ease Kenya’s logistics supply chain.
“It’s a huge problem,” said Mwangi. “Africa heavily relies on imports and these imports translate to cost of last mile delivery. A lot of that is to do with inefficiency and lack of good infrastructure.”
According to Mwangi the market opportunity for eLogistics companies in Africa is pegged at US$200-billion and growing every year.
The E-Conomy Africa 2020 report by the International Finance Corporation (IFC) details the growth of this market.
“Kobo360 connects cargo owners with a network of 10,800 truckers in Nigeria, and Truckr (Ghana) services more than 250 businesses with approximately 18,000 trucks,” the report said.
It added that, “Trend lines project that long-term growth will rapidly accelerate as e-Logistics companies scale and pivot to support rapid e-Commerce growth, and that e-Logistics companies will expand geographically as they look to connect rural areas with regional supply chains.”
Impact of COVID-19
According to the Africa Tech Startups Funding Report 2020, investment in the sector was heavily affected by the COVID-19 amid lockdown conditions across most countries.
The report stated: “The logistics ventures raised US$37,075,000 (5.3 percent of Africa’s pot), which is a major slide of 87.8 percent on the previous year, when US$69,627,000 (14.2 percent) was raised.”
In 2019, the sector recorded US$19-million in total investment.
“There were queues along the East African countries’ borders. Some of those queues were like sixty kilometres long, so a lot of trucks got stuck there. The effect was that the return load disappeared,” Mwangi explained. ” The business was affected by the end of quarter one last year.”
The E-Conomy Africa report said that in April, Kobo360 saw nearly 3,000 trucks essentially stranded in Nigeria, as drivers feared they would be penalised or arrested if they attempted to move them.
Nevertheless, the growth in this sector did improve as restrictions were loosened.
Mwangi said that the sector could benefit significantly from the African Continental Free Trade Area (AfCFTA) and on the improvement of infrastructure in Africa.