The current state of logistics in Africa.
One time I traveled across 6 African countries using public transportation by road; i.e., Kenya, Tanzania, Zambia, Botswana, Zimbabwe, Malawi (through Zambia again). Back then I was driven by ‘passion for travel’ and blinded to the myriads of inefficiencies in the journey. Looking back, I remember the state of the roads, the situation at border posts/ towns e.g., busses having to queue behind cargo lorries, the busses being parked roadside in the middle of the night for us to sleep in them because night travel is banned or border control won’t be open anyway and lastly, I remember the manual systems of being cleared at check points and borders. And I'm not cargo! I can’t image how much harder it is to ship goods across African borders, so let’s talk about that.
Generally, cross-border logistics has a lot of challenges. One of the main ones being the the lack of adequate infrastructure, including roads, ports, and airports, to facilitate quick and efficient transportation of goods. Another key one is the complexity of customs procedures and regulations, which can be confusing and time-consuming for importers and exporters; leading to delays and increased costs. Additionally, many border crossings are understaffed and lack the necessary technology and equipment to process shipments efficiently, and are highly prone to corruption and bribery.
However, we’re starting to see strides by many African countries, which are investing heavily in infrastructure projects, which could help to improve cross-border logistics in the future. Additionally, we have seen the launch of the African Continental Free Trade Area (AfCFTA) agreement, by Africa Union (AU). This agreement has the potential to significantly reduce trade and cross-border logistical barriers in Africa, but first…
What is AfCFTA?
AfCFTA stands for the African Continental Free Trade Area, and its aim is to create a single market for goods and services across the continent, thus boosting intra-Africa trade and economic growth. Some of the ways AfCFTA will do this is by removing tariffs on 90% of goods traded between African countries, liberalise trade in services, and address non-tariff barriers to trade. What would the impact look like? Well according to the World Bank;
AfCFTA will create the largest free trade area in the world measured by the number of countries participating. The pact connects 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at $3.4 trillion. It has the potential to lift 30 million people out of extreme poverty, but achieving its full potential will depend on putting in place significant policy reforms and trade facilitation measures.
With AfCFTA in place, we can expect to see new opportunities for logistics innovation and technology, as companies and entrepreneurs seek to improve their supply chain efficiency and reduce costs.
What does the future hold in the logistics in Africa?
We’re yet to experience the full realisation of AfCFTA, but we do expect to see an increase in technology adoption and innovation in logistics and adjacent industries. Immediate ones are platforms and systems that have digitised long haul logistics, borderless e-commerce platforms, cross-border digital payment systems etc. Long term, we may see the development of cross-border logistics and transportation networks, IoT-based systems and trackers, blockchain for secure and transparent supply chain, AI-optimised transportation routes for reduced time delivery etc.
This will be particularly beneficial for small and medium-sized enterprises (SMEs) that may have previously faced high transportation costs and other logistical barriers to trade.
Highlight of startups in logistics in Africa.
We are seeing the rise of amazing tech startups in logistics such as;
Lori Systems seamlessly coordinates haulage across frontier markets, using its supply chain management system to improve transparency, flexibility, reliability, and save money.
Kobo360 provides an integrated logistics solutions and truck brokerage services. The company aggregates end-to-end haulage operations to help cargo owners, truck owners, drivers, and cargo recipients achieve an efficient supply chain framework.
Sendy facilitates on-demand delivery services, that enables individuals and small businesses to connect with drivers and request on-demand or scheduled package delivery services anytime, any day.
However, there are many more early and later stage startups in different blocks of the continent that are championing tech in logistics. I’d love to hear from you, which logistics startups do you think we should all be watching out for in 2023? Comment below :)