E-Business
Logistics Challenges Facing eCommerce in Africa
By Josephine Wawira ,
According to Euromonitor, the world’s fastest-growing economies by 2030 will be in Africa. This consequently makes the continent the next big e-commerce market. And as this positive narrative continues to place Africa as a top investment destination, the need for advanced logistics systems has become inevitable. The growth of e-commerce will significantly depend on the quality and efficiency of logistics networks; from intra and cross trade to financial transactions in payment of goods and services.
When writing the African e-commerce story, I often leap at the chance to explore only the enviable milestones the continent has made. Nevertheless, there still exist formidable challenges especially in logistics, a vital constituent of the industry. The African Development Bank, in its 2019 African Economic Outlook, notes that “trade costs due to poorly functioning logistics markets may be a greater barrier to trade than tariffs and nontariff barriers”. This side of the story must also be told; if we are to find sustainable solutions to what could be the gateway to growing Africa’s e-commerce by leaps and bounds.
Unsatisfactory National Address Systems and Transport Infrastructure
One of the biggest logistics’ hurdles holding back the industry is the lack of proper national address systems in most African countries. This, coupled by poor road networks, make it even harder to conveniently deliver products to customers. Consequently, companies have had to rely on fairly descriptive addresses and landmarks provided by the customers during the initial stages of the online purchase process. The delivery persons are also required to keep in constant contact with clients when delivering products, to receive further directions while en-route.
While generally Africa’s infrastructure lags behind that of its counterparts including America and Europe, it is worthy of note that each country has its own value proposition. In 2018, the World Bank’s Logistics Performance Index placed South Africa, Kenya, Rwanda, and Côte d’Ivoire as the top 4 best-performing countries in Africa, while Somalia, Sierra Leone, Eritrea and Zimbabwe were at the bottom 4.
In most African countries, the result of the poor road infrastructure is heavy traffic jams that lead to delayed deliveries, cancelled orders for the on-demand services and subsequently loss of revenue. Alternative modes of transport have therefore come into play in some markets like Kenya and Nigeria, with the use of easy to navigate motorcycles, popularly known as Bodabodas. With about 1.2 million motorcycles in the passenger transport business, Kenyan ecommerce companies have strived to tap into this market by using Bodabodas to swiftly deliver products, especially within busy cities.
“There are huge opportunities for logistics to grow e-commerce, but few established players exist in the market,” notes Apoorva Kumar, Jumia’s SVP of Logistics. Present in 14 African countries, Jumia is one of the ecommerce players building logistics and fulfilment infrastructures to ease delivery of products to consumers using both vehicles and bodabodas.
Jumia’s Bodaboda Rider
Providentially, technology has been a boon to the logistics industry. In Nigeria and Kenya, Jumia is running a well-established system using Machine Learning, relying on GPS enabled delivery apps. The coordinates collected in the first delivery are then registered and used in making a logistics network for future conveyance.
In Rwanda, companies like Zipline are leading the way in commercial drone deliveries. While initially focused on delivering blood to remote health centres that are otherwise difficult to reach fast due to Rwanda’s hilly terrain; it is expected that Zipline’s drones will in future be used in other sectors including e-commerce. Back in Kenya, Astral Aerial Solutions is using drones for among other services, last mile deliveries. The company aims to, in its words, “open up Kenya’s hard to reach regions to new and exciting business opportunities”.
The possibilities for a better future in logistics, in my view, are endless! And as Apoorva reiterates, companies cannot solely build a successful logistics system. “It requires integrating various systems and partners to create a big enough network to serve the growing needs of the e-commerce consumers,” he says, calling for both private and public partnerships to this endeavour.
What Then, Does the Future Hold?
Data by logistics consulting firm Knight Frank shows that the cost of transportation represents 50% to 75% of the retail price of the goods. This alone underpins the demand for long-term strategies to the logistics challenges in Africa.
From delayed deliveries between local destinations to sluggish growth of cross-border trade, the effects are being felt across the board. Modern online retailing is headed towards pre-orders, requiring mature infrastructure for both small and medium businesses. This will help meet the packaging, storage, distribution, freight and last-mile-delivery requirements. Though challenging, Africa is a land full of commercial opportunities; causing a scramble for a piece of the pie among international investors.
Therefore, for e-commerce companies in Africa to achieve sustainable bottom-line growth, there needs to occur more tech-empowered handshakes between multiple service providers across markets. Governments have the responsibility to create one-window-policies that empower digital payment solutions as well as logistics infrastructure including road networks, air cargo handling systems and warehouses among others. Similarly, e-commerce and logistics powerhouses like Jumia should commit to empowering more upcoming entrepreneurs. They must also use their leading positions to continue paving the way for economic integration in Africa.
Josephine Wawira is a Consultant in Communications and Public Relations, and a writer with a focus on African Development. She has written opinion articles covering among other topics e-commerce, travel, hospitality and tourism and is currently the Group PR & Communications Assistant Manager at Jumia Group.
Mallam Kashifu Abdullahi, director-general, National Information Technology Development Agency (NITDA), has reaffirmed the importance of collaboration in advancing Nigeria’s digital transformation agenda.
L-R: Mallam Kashifu Abdullahi, director-general, National Information Technology Development Agency, with Brig. Gen., Abdulrahman Idris, team lead of the Senior Executive Course 46 2024, National Institute for Policy and Strategic Studies, Kuru, Jos during a strategic tour visit to the agency headquarters in Abuja.
Abdullahi disclosed this during a strategic engagement with participants of the 2024 Senior Executive Course 46 from the National Institute for Policy and Strategic Studies (NIPSS), a delegation led by Brigadier General Abdulrahman Idris.
Abdullahi emphasised that no organisation can achieve its goals in isolation, stressing the need for collaborative efforts to harness ideas, experiences and insights for national development. He highlighted the potential of collaboration between NITDA and NIPSS to leverage technology and digital innovation for driving economic growth, creating job opportunities and attracting foreign direct investment (FDI).
“At NITDA, we have re-imagined our social contract with Nigerians, focusing on improving service delivery and fostering the swift growth of the ICT sector,” said Abdullahi. He emphasised the agency’s commitment to serving Nigerians and outlined the strategic direction outlined in NITDA’s Strategic Roadmap and Action Plan (SRAP 2024-2027) 2.0. The SRAP is structured around eight pillars aimed at fostering digital literacy, building a robust technology research ecosystem, strengthening policy implementation, promoting inclusive access to digital infrastructure, enhancing cybersecurity, nurturing innovation and entrepreneurship, forging partnerships and cultivating a vibrant organisational culture.
The brigadier-general provided insights into NIPSS’s role as Nigeria’s foremost policy think-tank, tasked with developing top-class technocrats to drive national development initiatives. He highlighted NIPSS’s contributions to policy formulation and implementation over the years, emphasising the institution’s mandate to address issues of national interest, particularly in the digital economy sector.
The collaboration between NITDA and NIPSS underscores the importance of synergistic efforts in harnessing technology and innovation for national development. By leveraging each other’s expertise and resources, both organisations aim to drive economic growth, foster job creation, and position Nigeria as a leading player in the global digital economy.
Through strategic partnerships and collaborative initiatives, NITDA and NIPSS are poised to chart a path towards sustainable development, leveraging digital innovation as a catalyst for socioeconomic transformation and inclusive growth.
Ivorypay, a blockchain-based payment and remittance firm, has teamed with Tether, the stablecoin pioneer, to improve crypto-based transactions across Africa.
Tether is the business that developed the stablecoin, USDT, and with this agreement, it will mint and issue USDT straight to IvoryPay.
According to the partners, this agreement would provide more dependable and economical digital transaction choices to businesses and consumers across Africa.
Ivorypay will leverage Tether’s widespread acceptance to provide a buffer against the typically unpredictable nature of crypto-currencies, increasing user confidence in using digital currencies for daily transactions as well as cross-border transfers.
“Partnering with Tether is a strategic move that aligns perfectly with our vision of simplifying and securing crypto transactions across Africa,” said Oluwatobi Ajayi, CEO, IvoryPay.
He added: “It gives us easy access to the liquidity we need to cater to more businesses and individuals across the continent and to do that cheaper and faster than anybody else, which we believe will significantly enhance user trust and increase adoption rates across our platforms.”
“This strategic partnership between Ivorypay and Tether represents a transformative step for digital transactions across Africa,” said Aly Madhavji, managing partner of Blockchain Founders Fund.
“By incorporating USDT into their payment systems, IvoryPay aims to increase financial inclusion and streamline cross-border remittances, establishing a new standard for stability and efficiency in the region’s financial services We are thrilled to assist Ivorypay as they endeavour to create new opportunities for businesses and consumers across Africa.”
The Corporate Affairs Commission (CAC) has revoked the certificates of incorporation of NIPOST Properties and Development Company and NIPOST Transport and Logistics Services Limited.
This revocation followed the discovery of an illegal transfer of N10 billion in restructuring funds released by the Federal Ministry of Finance to the agency’s subsidiaries.
The CAC, in a statement on Monday, said, “The General Public is hereby informed that the Commission, sequel to its powers contained in Section 41 (7) of the Companies and Allied Matters Act No. 3 of 2020, revoked the Certificates of incorporation of the below-mentioned companies because the same was improperly procured. These companies are:
“1. NIPOST Transport and Logistics Services Company Ltd RC 1673881 and 2. NIPOST Properties & Development Company Ltd RC 1673971.
“By virtue of these revocations, the Companies are deemed to be dissolved and their Assets and Liabilities transferred to the Nigeria Postal Services established under the Nigerian Postal Services Act Cap N127 LFN 2004.”
It was gathered that CAC records confirm that as of November 8, 2023, some top officials of BPE control significant shares in the subsidiaries.
Responding to these discoveries, the Senate passed a resolution on December 30, 2023, for a probe into the matter.
The resolution declared the NIPOST subsidiaries in question “irregular and illegal” and recommended their immediate winding-up and deregistration.
The Senate resolution goes beyond immediate action; it demanded a thorough investigation into the N10 billion voted by the Ministry of Finance for NIPOST’s restructuring and recapitalisation.
Should evidence of “injudicious utilisation” surface, the Senate said the committee responsible must recover the full amount.
In its resolution of December 30, 2023, the Red Chamber said it uncovered an alleged illegal transfer of Federal Government shares in two NIPOST subsidiaries to private individuals.
The discovered infractions sparked outrage, prompting the lawmakers to call for immediate action.
Some individuals in key positions within the Bureau of Public Enterprises (BPE) and NIPOST were listed as shareholders of the two NIPOST subsidiaries.
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