Digital revolution for boosting AfCFTA
ovid-19 encouraged the adoption of technology; before the pandemic, transporters still preferred the use of paper for invoices and because of social distancing policies.
Achieving the gains from AfCFTA is especially important due to the Covid-19 pandemic. Covid-19 encouraged the adoption of technology; before the pandemic, transporters still preferred the use of paper for invoices and because of social distancing policies, there is a spike in automated invoices. To make the trade seamless, digital platforms are becoming an important module for facilitating an uninterrupted supply chain.
The implementation of the African Continental Free Trade Area (AfCFTA) from January 1, 2021, enables trade facilitation measures that cut red tape and simplify customs procedures. It will support in increasing Africa’s exports by $560 billion, mostly in manufacturing and boost income by $450 billion by 2035 (a gain of 7 percent) while adding $76 billion to the income of the rest of the world, reveals a data released by The World Bank.
Achieving the gains from AfCFTA is especially important due to the Covid-19 pandemic. To make the trade seamless, digital platforms are becoming an important module for facilitating an uninterrupted supply chain. Under the direction of the Digital Hub Logistics, European and African digital innovation hubs have come together in the DIGILOGIC project, to exchange best practices and learn from each other - in the first pan-European-African network with a focus on intelligent logistics solutions. The H2020-funded project kicked off in January 2021 and will last three years, till the end of 2023.
Commenting on how Kobo360 is optimising its platform for supporting this agreement, Kagure Wamunyu, global head of operations, says, “It is very important for us to ensure that we are fully prepared to capitalise on the $3.4 trillion GDP market created by the AfCFTA. The agreement promises to create a single market of goods and services and boost trade by up to 52.3 percent which will, in turn, remove many barriers. However, many challenges will remain in moving goods efficiently from point A to B as well as facilitating cross-border payments. With the use of our data and technology, we connect the key players in the supply chain - cargo owners, transporters, truck drivers and the final recipient. Additionally, we’re fine-tuning our fintech offering, to make it easier for cross-border payments. Truck owners can also take advantage of reverse logistics for goods moving across the continent. Creating efficiency in the actual movement of goods would lower transport costs and with presence across Africa, Kobo360 is well placed for the implementation of the free trade agreement.”
Recently, Africa Delivery Technologies, the company behind a French/Nigerian mobility platform trading as Kwik Delivery, closed $1.7 million pre-Series A funding to dig deeper within Lagos, both for its bike service and for the 4-wheels service, which is added recently to the app. The platform can process 20,000 parcels per day in Lagos, now ramping up in Abuja, and is planning to foray into new cities.
Focusing on including four-wheelers for delivery, Romain Poirot-Lellig, founder & CEO, states, “There are incredible things to do in the 4-wheels sector. The logistical resources available are limited. Our role as a tech platform is to filter these resources and to onboard them on our marketplace. There are 500,000 last-mile deliveries every day in Lagos and a large part of these are large parcels. This market will strongly benefit from what technology can bring. Because Kwik is a digital aggregator with strong onboarding and quality control processes, our B2B customers can place their delivery requests on our system without having to worry about timing or safety. We monitor every transaction very closely through an automated system and a robust operations team, with various types of SLAs. We introduced the just-in-time delivery concept in Lagos with a 2 hours delivery timeframe, which is quite a breakthrough.”
There are 500,000 last-mile deliveries every day in Lagos and a large part of these are large parcels.
Romain Poirot-Lellig, Kwik Delivery
In collaboration with IFC, Kobo360 has announced an open call for innovators from around the world to bring climate-smart, temperature-controlled logistics (TCL) cooling solutions to Nigeria. The TechEmerge Temperature-Controlled Logistics Programme will help the country address food waste challenges, support its health sector, and reduce its energy consumption.
Wamunyu notes, “We are doing this because we have seen a gap in the market for shipping solutions - specifically concerning moving deep-frozen, cold and ambient goods in a safe and temperature-controlled environment. TCL is crucial for both producers and consumers to participate in the $10+ billion global markets for perishable products. Currently, Nigeria accounts for a very small slice of that market, but it offers long-term opportunities for those who enter at this nascent stage. A growing population, particularly of young urban consumers with increasing levels of disposable income, is expected to fuel demand for TCL for perishable products, a market that was valued at $63 million in Nigeria in 2017. Growing incomes are linked to greater consumption of fruits, vegetables, fish, and meat products, all of which need cold chains that encompass processing, packaging, transport, and storage.”
In May this year, Winpart, a division of CFAO Motors and Nigeria’s fast-growing distributor in original vehicle maintenance spare parts, has launched an e-commerce website as part of its commitment to solve the fake parts dilemma faced by vehicle owners, and to deepen access to quality spare parts, at affordable prices, in the country. With its last-mile partner, Kwik Delivery, consumer purchases can be delivered within 2 hours in designated routes.
Poirot-Lellig, concludes that Nigerians are extremely tech-savvy and are embracing innovation with open arms. “Even more importantly, Nigeria is the strongest innovation hub in Africa. The pandemic changed consumers’ behaviour during the lockdown but more importantly, it provoked paradigm shifts within the industrial fabric of the country. All the large industrial players and wholesalers are working on long term digital strategies now. Streamlining the supply chain and mastering the customer relationship is now on priority, often combined with leveraging on existing distribution networks.”
The Covid-19 pandemic did slow Kobo360 down; however, despite the challenges posed by the pandemic, it expanded into Côte d’Ivoire and Burkina Faso.
Wamunyu observes, “In some ways, the pandemic has helped accelerate the digital revolution, as the disruption it has caused has resulted in businesses across the continent having to look for newer, more innovative ways of doing business. Much of this innovation has been fueled by digitalisation. From location-based technologies to temperature-controlled storage, we have taken advantage of emerging and established technologies to provide the needed visibility, transparency and reassurance that will put businesses’ minds at rest.”
Logistics is a very traditional sector and it will of course take some time to convince transporters to adopt technology - however, the level of difficulty varies across countries. Covid-19 encouraged the adoption of technology; before the pandemic, transporters still preferred the use of paper for invoices and because of social distancing policies, there is a spike in automated invoices.