African logistics are a fragmented and challenging market to operate in. The costs of moving goods across the continent are among the most expensive in the world. Local tech companies are creating innovative solutions to help connect supply chains across the continent and improve the flow of goods across borders.
Kobo360, a Lagos, Nigeria-based tech startup focused on logistics, has been working to disrupt this market, backed by more than $36 million in funding from investors including Goldman Sachs and World Bank’s International Finance Corporation (IFC).
The startup already works with more than 50,000 truck drivers in five African countries — Nigeria, Togo, Ghana, Kenya and Uganda — to transport 1.67-billion pounds of goods across the continent.
A mobile-based app, Kobo360 offers freight hauling, cargo transportation and tracking solutions for fleet owners.
Its plans to expand to more markets on the continent, including Egypt, may be delayed due to the coronavirus pandemic effect.
Moguldom spoke to Kagure Wamunyu, Kobo360’s chief strategy officer, about the impact of the viral pandemic on Africa’s logistics business and how this startup is rising to the challenges and opportunities it presents.
Moguldom: How is 2020 looking for logistics business in Africa?
Wamunyu: 2020 had started out well for a lot of people. Then the pandemic happened. So it has meant a lot of changes on how we do our processes and trying to understand the needs that are now there in the economy and how we are going to meet them. We are in markets that have different types of reactions. We have Nigeria, which has Lagos and Abuja on lockdown, and Kenya has a curfew and partial lockdown in Nairobi. Definitely this has an impact on logistics business.
Moguldom: How has COVID-19 affected your business plans for 2020?
Wamunyu: We had plans to launch in different markets in Q2 but most of our plans have been moved to Q3. For example we were looking to launch in Egypt but there is a lockdown in Cairo, which means completing the business registration and other things become quite tough.
The other thing is that we have some of markets on lockdown. Lagos, our headquarter, is on lockdown and that means there is limited movement of goods and services. With restricted movement it also means restricted operations. We have to be innovative and we really need to give our customers the best, even when there are challenges.
Working from home also affects the productivity of our staff being able to deliver. When you have curfew, it may not affect food but it affects all the other cargo, which takes longer to transport because the cargo cannot move at night. Initially there was quite a bit of challenge at the borders because of the health (certification). This eased out, but what we saw was delays doubling because of the time spent at borders because of vehicles being sprayed. Drivers were not able to move from Kenya into Uganda without being quarantined, so it meant you need to have Kenyan drivers in Kenya and Ugandan drivers in Uganda. This increases cost. At the ports we’ve seen container levels go down because most of our imports are coming from China.
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Moguldom: What are some of the opportunities?
Wamunyu: We’ve seen an increase in demand in some of our markets as people were stockpiling on goods. But this has subsided a little. It’s a change to build as a tech company to try and adapt and serve the market better. Is this the new norm? Will be it be three months or 10 months? For us this is an opportunity to build. The risk remains as governments give the directives. How do you adapt as a logistics sector? Tech is easy to adapt but the actual truck that is moving remains a risk and that’s where we are focusing on.
Moguldom: What are the cost implication of this?
Wamunyu: Traditionally in logistics, every night a truck is out you pay per night. This has gone up in terms of numbers per night. It has been a general understanding in logistics not to pass down this cost because it’s nobody’s fault. Some players are stepping up in their own way. Absorbing the cost is just another way of contributing to the fight against COVID-19 and trying to support economies to keep moving.
Moguldom: How will the coronavirus pandemic affect Africa’s logistic business going forward?
Wamunyu: It is going to be tough. As people stay indoors there are goods and services that they will stop using. Some of the material that we would move might not have a market and we will not move them. You are likely to see some cargo go significantly down. I think the food and essential services would adapt.
Moguldom: What is your call for African techies towards COVID-19?
Wamunyu: As Silicon Savannah, we need to innovate to help solve the problem. I believe this is the time for tech to step in. Some of the solutions that may not have been viable (before) coronavirus may be a solution during this time. That’s the biggest call for the tech industry at this moment.