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Logistics Challenges Facing eCommerce in Africa

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A truck stuck in mud in Buikwe, Uganda - Adam Jan Figel
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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.

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                                                                                 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.

Ugo Onwuaso is an ICT enthusiast. He believes technology should be used for general good. He holds a Master of Public Administration (MPA) degree from the Lagos state University.

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Facebook Agrees to Pay $5Bn in Vast Privacy Settlement

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Federal Trade Commission is expected to announce on Wednesday that Facebook has agreed to a sweeping settlement of allegations it mishandled user privacy and pay roughly $5bn, two people briefed on the matter said.

 

As part of the settlement, Facebook will agree to create a board committee on privacy and will agree to new executive certifications on user privacy, the people said.

 

‘The Washington Post’ reported on Tuesday that the FTC will alleged Facebook misled users about its handling of their phone numbers and its use of two-factor authentication as part of a wide-ranging complaint that accompanies a settlement ending the government’s privacy probe, citing two people familiar with the matter.

 

Two people briefed on the matter confirmed the Post report that the FTC will not require Facebook to admit guilt as part of the settlement. The settlement will need to be approved by a federal judge.

 

The FTC confirmed in March 2018 it had opened an investigation into allegations Facebook inappropriately shared information belonging to 87 million users with the now-defunct British political consulting firm Cambridge Analytica. The inquiry has focused on whether the data-sharing violated a 2011 consent agreement between Facebook and the regulator and then widened to include other privacy allegations, reports The Guardian.

 

A person briefed on the matter said neither the phone number nor two-factor authentication issues were part of the initial Cambridge Analytica investigation.

 

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How, Why Mobile Wallets Can Deepen Financial Inclusion

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Access to financial services opens doors for families, allowing them to smooth out consumption and invest in their futures through education and health.

 

Access to credit enables businesses to expand, creating jobs and reducing inequality.

 

Unfortunately, in Nigeria, financial Inclusion is a serious challenge as Enhancing Financial Innovation & Access (EFInA), a financial sector development organization that promotes financial inclusion in Nigeria recently said that 60.1 million Nigerians are currently financially excluded.

 

That is why the Central Bank of Nigeria’s (CBN) recently authorized commercial banks to commence full operation of mobile money wallets.

 

The move is expected to deepen financial inclusion in Nigeria and maintain the CBN’s commitment to actualise 80% of the target by 2020.

 

Sam Okojere and Ahmad Abdullahi, directors of Payments System Management Department and Banking Supervision Department respectively of the CBN, said, that the aim of the initiative is basically to complement growth in agent banking services under the Super Agent and the Shared Agent Network Expansion Facility (SANEF) initiative.

 

They also, said that the initiative is also being implemented in recognition of the increasing demand for no-frills mobile money services.

 

Mobile payment (also referred to as mobile money, mobile money transfer, and mobile wallet) generally refer to payment services operated under financial regulation and performed from or via a mobile device, that is mobile phone.

 

Mobile payment works in just three simple steps; To send or receive money to a friend: (1) Register with a money transfer service by setting up an account and making a deposit.

 

(2) Use the provided short text commands to text cash to your friend’s phone number or account id; and to (3) Receive funds by requesting and accepting payments via text message.

 

Though there are inherent dangers of mobile banking, including the risk of getting fake SMS messages and scams, the benefits are far greater.

 

For instance, there is the ability to access funds anywhere, anytime saves time, improves security and provides a means for saving and managing money more effectively than traditional methods.

 

But it also creates an effect that drives broader economic growth.

 

 

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Experts Urge Implementation of National Cyber Security Policy & Strategy

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Worried by absence of coordinated approach in the fight against cybercrimes, information and communications technology experts hare seeking the revival of National Cyber security Policy and Strategy document.

 

Speaking at Telecom Executives and Regulators Forum, organised by Association of Telecommunications Companies of Nigeria (ATCON), Mohammed Rudman, president, Nigeria Internet Registration Association (NiRA), said the National Cyber security Policy and Strategy is supposed to be the highest document for Nigeria when it comes to cyber security.” It was supposed to be constantly reviewed so that certain frameworks of cyber security will always be added and implemented as security should be constantly reviewed for effectiveness.

 

“It was implemented in February 2015 during federal executive council meeting when they wanted to change the timing of election of 2015, at that time President Jonathan approved that document. Since that time, I have not heard anything from the Office of National Security Adviser regarding that document. That document is the most critical document among all the cyber security documents coming out from NCC and NITDA; they are supposed to be all coordinated to have a national strategy to know where we are going.

 

“The Office of National Security Adviser needs to do more because Computer Emergence Response Team (CERT) is actually an output of that regulation. CERT that is supposed to handle and monitor activities of Nigerians, detect and respond to issues of cyber security derives its power from that document and nothing is been done much,” he noted.

 

Engr. Ike Nnamani, president, Demadiur Systems, publishers of Nigeria Cyber Security report, corroborating Rudman said that National Cyber security Policy and Strategy is a guideline for different organisations to secure their infrastructure against cyber attacks and how they can collaborate as well as report incidences of cybercrimes.

 

“As at today, I don’t know anything about this document after it was approved. What has happened with the absence of its implementation is that organisations and institutions’ cyber security efforts as well as policies are in silos without coordination and collaboration,” he added.

 

On sovereignty of data, Rudman said: “we need to be ambitious in terms of localising our data. The target of NITDA to achieve 30 per cent local cloud adoption in five years is small. I have been an advocate of localising data and traffic in Nigeria for the last 12 years.

 

“I have been pushing that as a country with huge population we can position Nigeria as a hub for internet content in Africa, right now South Africa for example has 70 per cent of their websites registered and hosted in South Africa, while 80 per cent of their internet traffic are localised within South Africa and IP resources they are consuming is 26 per cent.

 

“IP resources Nigeria is consuming is only 3 per cent while we are number seven in the world in the use of internet and people doing this are aware; the telecoms doing Network Address Translation, using private IP addresses.

 

“We need to find ways to be honest to ourselves, find ways within the industry to collaborate while pushing the cloud. If we don’t have a localised cloud services, how can you regulate what you don’t have on ground?

 

“The data centres we are using is somewhere in the world which you don’t know where it is, in fact some of the data centres are hidden, they are in black market. How do you regulate that?

 

“We have the infrastructure on ground with international certified data centres with tier IV, what we need is determination to ensure compliance to directive for our data to be hosted in the country.

 

The biggest government agencies in Nigeria are not hosting their data in the country. You can’t be talking about data sovereignty when almost all your data is outside of the country,” he said.

 

 

 

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