Though much of the logistics sector’s growth funding-wise over the last few years has been driven by two companies, with more than 80 per cent of the space’s investment total in 2019 raised by Nigeria’s Kobo360 and Kenya’s Lori Systems, we are seeing a trickle-down effect, and startups raising at all levels.
Powered by opportunity
The development of the sector and its increased attractiveness to investors can be attributed to the size of the opportunity. The ability of e-logistics solutions to power the growth of African commerce – and e-commerce – as that undergoes a revolution of sorts is key.
Tonye Membere-Otaji is founder of Nigerian company MVXchange, a tech-driven maritime platform that matches vessel charter requests with available Offshore Support Vessels (OSVs), helping users conveniently charter vessels while reducing man-hours, cutting costs and improving performance. He says local and international investors and entrepreneurs are more aware of opportunities in Africa’s logistics space than ever before.
Oumar Basse is chief executive officer (CEO) of Senegal’s Yobante Express, an online marketplace connecting users with local couriers that has expanded into multiple markets across the continent. He says logistics is one of the fundamental factors in the development of any trade, and also to be a determinant of the success of online business, and thus startups operating in this space are of crucial importance.
Africa’s commerce revolution
Fuelling the growth of commerce on the continent is at the heart of the logistics opportunity, says Jean-Claude Homawoo, co-founder of Lori Systems, a tech-driven logistics services that, as mentioned previously, is a big fundraiser.
E-hailing solutions have many of the answers here, hence the sector’s swift growth. Lori, for example, effectively coordinates transactions between shippers and transporters using data to reduce waste and lower costs.
Free trade is coming
Logistics companies are also well-positioned for the future, with the African Continental Free Trade Agreement (AfCFTA) signed last year with the goal of creating a continental free trade area to accelerate intra-African trade. Logistics companies are set to benefit.
A funded future
All of this suggests logistics startups on the continent can expect a bright future. With 16 logistics companies already having receiving around US$40 million in total investment in 2020 so far, according to Disrupt Africa figures, the sector is on course to equal or better last year’s record.