Investor interest in Africa’s logistics industry is growing in recent years. Over the last two years, African logistics startups have raised millions of dollars from investors. But according to Obi Ozor, CEO of Kobo360, there is a growing realization that without efficient distribution and supply chain operations, businesses like agriculture and e-commerce will not scale.
Speaking at the TechCabal Mobility Townhall, Ozor said: “At some point, they [e-commerce companies] were able to prove the concept, but they were not able to scale. And the challenge was supply chain.”
He explained that the supply chain is no small challenge for African businesses. “Supply chain is not that easy because it requires a lot of infrastructure and other things. So it’s not a startup that anybody can just jump in.” Ozor said.
“Then you started seeing the need that without a supply chain and distribution platform, this e-commerce can’t scale.”
But it’s not just e-commerce, the dearth in logistics and supply chain operations in Africa makes it inefficient for several businesses to operate at scale. From agriculture to clothing to exports, supply chains affect the cost of doing business.
According to Uche Ogboi, COO of Lori Systems: “The cost of moving goods in Africa is among the highest in the world.” She adds that while “75% of the price that consumers pay being attributable to logistics, [it is] 6% in the US.”
Obi predicts that fixing the problems in the logistics industry will enable e-commerce and the entire economy. This is something that excites investors and has helped to push companies like Kobo360 and Lori Systems to higher funding rounds. This week alone, two North African logistics startups, TemTem and MaxAB secured over $10 million in funding.
Expect more funding to follow as investors identify startups addressing this challenge in Africa.
But Ozor doesn’t expect this fix to come swiftly. He says that over the next five to ten years, and with collaborations, the “ecosystem will kind of mature” and provide the data and insights needed for multiple sectors to boom.