E-Business
Logistics Challenges Facing eCommerce in Africa
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.
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.
E-Business
Court orders Binance to release data of Nigerian Users to EFCC
Binance Holdings Limited has been ordered by Justice Emeka Nwite of a federal high court sitting in Abuja to provide the Economic and Financial Crimes Commission with the comprehensive data or information of all persons from Nigeria trading on its platform.
The order was granted following an ex-parte motion moved by the EFCC’s lawyer, Ekele Iheanacho. In the motion deposed to by Hamma Bello, an operative of the EFCC attached to the Special Investigation Team (SIT) of the commission domiciled in the Office of the National Security Adviser (ONSA), he stated that they “received an intelligence stating the nefarious activities (money laundering and terrorism financing) on Binance, a crypto currency exchange platform.”
He added; “That on receipt of the Intelligence, the team began investigation by conducting surveillance of the activities of the platform.
“That the team uncovered users who have been using the platform for price discovery, confirmation and market manipulation which has caused tremendous distortions in the market, resulting in the Naira losing its values against other currencies.
“That the damage the platform has caused was clearly explained to the operators of the platform and they were requested to delist the Naira and avail the ONSA on the activities of the Nigerians on their platform.
“That from the information afforded to the team by Binance shows that the total trading volume from Nigeria in 2023 alone stood at $21.6 (twenty one billion, six hundred million dollars).
“Attached and marked as Exhibit EFCC 1 is a copy of the document from Binance to the ONSA stating this fact amongst others. That the commission will ensure that investigation is conducted within such reasonable time.”
Bello also said that it is utmost urgent public interest, that the data be provided to enable the commission accomplish its investigation activities. He said refusal of the request woulf largely hamper the commission’s investigation.
Granting the application, Justice Nwite said; “The applicant’s application dated and filed 29th February, 2024, is hereby granted as prayed. That an order of this honourable court is hereby made directing the operators of Binance to provide the commission with comprehensive data/information relating to all persons from Nigeria trading on its platform.”
E-Business
Moove Unveils ‘N500M Moove Cares Program’ for All Customers in Nigeria
Moove, the world’s first mobility fintech platform, has announced the launch of its ‘Moove Cares’ program, introducing a substantial support package aimed at mitigating the adverse effects of ongoing inflationary prices in Nigeria.
Recognising the challenges posed by rising fuel prices for its customers managing their businesses and the additional burden of inflationary food prices on household budgets, Moove is providing support both at work and at home. This program includes fuel subsidies to assist with business operations and a comprehensive care package to support households during these difficult times.
This program underscores Moove’s dedication to ensuring its positive impact in the lives of its customers, especially against the backdrop of Nigeria’s challenging and chronic economic landscape.
Nigeria, Africa’s largest economy, is grappling with an acute cost of living crisis and food prices, exacerbated by a confluence of factors including severe inflation, currency fluctuations, and logistical disruptions. This crisis has pushed essential food items beyond the reach of many, with the Nigeria Bureau of Statistics reporting a staggering 35.41% food inflation rate in January 2024 alone.
In the wake of the removal of the fuel subsidy in May, fuel prices in Nigeria have soared to an all-time high, reaching N610 per litre, marking a significant increase from the previously subsidised price of N264 per litre in March 2023.
This sharp increase of fuel costs by 131% has had a ripple effect across various sectors, notably leading to increased transportation fares and a substantial hike in the prices of food and other essential goods.
Recognising the urgency of the situation, Moove has committed to distributing free-of-charge ‘Moove Cares’ packages worth over N150,000 to each of its customers. Starting next week, the program aims to mitigate the impact of high fuel prices and escalating food prices, particularly during the critical periods of Easter and Ramadan celebrations.
‘Moove Cares’ is a testament to Moove’s proactive approach towards corporate social responsibility and customer focused support in these challenging times for the country.
Taiwo Ajibola, Moove’s Regional Managing Director for Nigeria, elaborated on the program objectives, “As a listening organisation, we understand from our customers’ feedback the pressing need for support amidst the ongoing cost of living crisis affecting both fuel and food prices.
“Our Moove Cares program is our small way of providing some much needed support to our customers amidst this extremely challenging economic environment.”
Since its inception in 2020, Moove has been at the forefront of democratising access to financial services for mobility entrepreneurs. With a presence in 9 markets globally, Moove’s innovative platform has facilitated over 30 million trips, significantly impacting the lives of 80,000 of its customers and their dependents.
As Nigeria navigates through these turbulent economic times, the ‘Moove Cares’ campaign stands as a vital lifeline for Moove’s customers, further solidifying the Company’s position as a socially responsible leader in the mobility fintech sector.
Through this comprehensive support package, Moove reaffirms its dedication to fostering a resilient and thriving community, capable of overcoming the current economic challenges.
E-Business
Nigeria’s inflation rate rises to 31.7 %
A report released by the National Bureau of Statistics (NBS) has revealed that the headline inflation in the country increased to 31.7 per cent in February 2024 from 29.9 per cent recorded in January 2024.
The recent figure is the highest level of inflation recorded in the country for 28 years. In the Consumer Price Index report for February 2024, it was also stated that food inflation increased to 37.92 per cent in February from 35.41 per cent in January 2024.
It read; “In February 2024, the headline inflation rate increased to 31.70% relative to the January 2024 headline inflation rate, which was 29.9%. Looking at the movement, the February 2024 headline inflation rate showed an increase of 1.8 % points when compared to the January 2024
headline inflation rate.
“On a year-on-year (YoY) basis, the headline inflation rate was 9.79% points higher compared to the rate recorded in February 2023, which was 21.91%.
“This shows that the headline inflation rate (YoY basis) increased in the month of February 2024 when compared to the same month in the preceding year (i.e., February 2023).
“Furthermore, on a month-on-month (MoM) basis, the headline inflation rate in February 2024 was 3.12%, which was 0.48% higher than the rate recorded in January 2024 (2.64%).
“This means that in February 2024, the rate of increase in the average price level is more than the rate of increase in the average price level in January 2024.
“The food inflation rate in February 2024 was 37.92% on a YoY basis, which was 13.57% points higher compared to the rate recorded in February 2023 (24.35%).
“The rise in food inflation on a year-on-year basis was caused by increases in the prices of bread and cereals, potatoes, yam and other tubers, fish, oil and fat, meat, fruit, coffee, tea, and cocoa.
“On a MoM basis, the food inflation in February 2024 was 3.79%; this was 0.58% higher compared to the rate recorded in January 2024 (3.21%).
“In February 2024, food inflation on a year-on-year basis was highest in Kogi (46.32%), Rivers (44.34%), and Kwara (43.5%), while Bauchi (31.46%), Plateau (32.56%), and Taraba (33.23%) recorded the slowest rise in food inflation on a year-on-year basis.
“On a MoM basis, however, February 2024 food inflation was highest in Adamawa (5.61%), Yobe (5.60%), and Borno (5.60%), while Cross River (2.08%), Niger (2.56%), and Abuja (2.60%) recorded the slowest rise in food inflation on a MoM basis.”
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