Henry is a sesame seed farmer in Nigeria. He transports his seeds to Europe through his friend in Ghana. Normally, a road trip from Nigeria to Ghana shouldn’t take up to 12 hours. But due to problems with customs, security and finding a reliable transport company, the trip takes 1 week.
Improper storage conditions cause 2 of his 5 tonnes of seed to spoil. On reaching Ghana, the importers say they can only afford to buy 2 tonnes. A tonne of sesame seeds cost between $700- $1800 and at the end of the week, Henry had lost almost $4000.
The World Bank measures the logistics performance of regions of the world by taking an average of the performance index of customs, infrastructure, international shipments, logistics competence, tracking & tracing and timelines. With a ranking of 1 (lowest) to 5(highest), Sub-Saharan Africa ranks the lowest with a score of 2.45.
According to Obi Ozor, CEO of Kobo360, an African company digitizing cargo delivery, his first experience with logistics exposed him to how much cost is incurred due to the slow movement of goods, and how unaffordable it is for most people. In a 2018 report by the Lagos Chamber of Commerce, Nigeria loses about $19 annually due to red tape (excessive bureaucracy), delays and corruption at its port.
Like most sectors, technology is transforming the logistics industry and digital logistics companies like Nigeria’s Kobo360 and Ghana’s Truckr are looking to solve problems of security, tracking of goods, accessibility to drivers and high logistics cost. Kobo360’s e-platform allows cargo owners to link up with drivers and also enables them to track the movement of the goods. Obi Ozor also estimates that the platform saves users about 7% on an average in logistics costs. It also protects its drivers from theft by allowing them to store their money in the app.
Although Africa’s free trade agreement is expected to increase intra-African trade and thus make logistics much easier, the issue of poor infrastructure still lingers and it represents one more hurdle for transporters around the continent to conquer.
If you are a founder in Africa, please fill our investor list here and let us know who gave you your first check. Get TechCabal’s reports and send us your custom research requests here
