Why there is a great opportunity for logistics startups in Africa

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From drones to apps, there are startups across Africa trying to fix the continent’s transportation problems.

The size of the opportunity here is huge. Governments have failed to provide the required infrastructure. Almost half of Africans live on unpaved roads. Almost 25 per cent say it is the major issue that needs addressing.

Slowly, but surely, it is being addressed. Startups are coming up with innovative ways to fill the gap.

Getting stuff from A to B

Within cities, businesses and individuals face challenges with delivering packages. Cost and efficiency are serious issues, but they are being tackled by the likes of South Africa’s WumDrop, Nigeria’s KOBO and Kenya’s Sendy. All of these are Uber-style on-demand apps for couriers.

For Michelle Miller, marketing manager of Sendy, solutions such as Sendy’s overcome multiple challenges, including issues with addressing and infrastructure.

“’Kenya time’ can prove challenging when people expect riders or drivers to wait long hours just to collect a package. When schedules are booked tightly and preparation of a load by a client isn’t ready on time. When traffic causes constant delays. When ‘time’ is overall an undervalued and underappreciated metric,” she told Disrupt Africa.

Sendy tackles all of this with tech such as GPS locating of senders, and algorithms that identify the best-located driver for a sender.

For Obi Ozor, co-founder of KOBO, the opportunity for on-demand courier startups lies in the fact the overall courier industry in Africa, which features the likes of DHL, has not gained public trust, with customers concerned that they may not receive their goods.

“The situating is improving, albeit gradually. We’re seeing signs of growth especially locally, as entrepreneurs and existing logistics firms are waking up to the fact that proper functioning logistics in Africa is vital to the economic world,” he said.

Miller believes startups like Sendy – which has received backing from Safaricom – will succeed in Africa given the willingness of people to adopt technology. The quick adoption of M-Pesa is the age old example.

“When M-Pesa was launched by Safaricom, it took only four years to capture 17 million people. The people are willing to adopt. Other applications like Uber and Jumia are becoming exceedingly popular and are encouraging behaviour to switch from traditional, inefficient ways of shopping, transport, and delivery to a more modern, faster, productive way of life,” she said.

“The possibilities for technology in Kenya are endless, and if there are innovators willing to push the envelope with technical developments, tech isn’t just the solution to Kenya’s logistic problems, but can be taken much further in developing this country.”

Transportation in and out of Africa

Africa’s logistics problem also extends to shipping goods in and out of the country, which is costly and inefficient. Moreover, there is demand from Africans wishing to shop in international stores and have their goods delivered to their homes.

Ghanaian startup Aquantuo has developed an on-demand service that allows users to match their goods with empty space in cargo containers. Co-founder Clement Owusu-Donkor says the company is making use of technologies that have been around for quite some time to solve a serious problem.

“What we are doing is tapping into their respective potentials and channelling them to meet the needs we seek to address. I call it customised deployment of existing technologies to meet existing needs that are long overdue,” he said.

“These innovative technologies include GPS, smartphones, mobile applications, real time messaging and notifications, and obviously some of the most advanced programming languages that drive these applications.”

Other companies are doing a similar thing, evidence of how attractive this space is to startups and investors. Perry Ogwuche runs Shypmate, which is active in Nigeria and Ghana. The platform allows a user to purchase an item and connect with a traveller to transport it for them.

“We are greatly impacting the amount of time and the cost of delivering items internationally. We are creating access for people across the world,” Ogwuche said.

One challenge for companies like Shypmate and Aquantuo is earning the trust of customers, as services like this are relatively new.

“People have never seen it being done formally with tech. Therefore trusting that a company will actually deliver your items in the time they say and for the amount they are charging can be a little tough for some customers,” Ogwuche said.

“However we very quickly overcoming that challenge by the number of testimonials that our users are sharing and the quality product we are building based on trust.”

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Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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