How digitalisation is shaking up logistics and freight services in Nigeria

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After raising $30m in a recent round of financing, a Nigerian start-up is looking to revolutionise the country’s transport and logistics sector.

Freight logistics start-up Kobo360 uses an Uber-like app to organise freight trucking services. In mid-August it announced that it had generated $20m in a Series A funding round led by US investment bank Goldman Sachs.

This investment – the fifth largest made in an African start-up this year, according to investment data company Africa Digest – was accompanied by $10m in working capital secured from Nigerian commercial banks.

Company officials said the financing would go towards upgrading its online platform and expanding into 10 new countries across Africa; at present Kobo360 operates in Togo, Ghana and Kenya, as well as Nigeria.

See also: The Report – Nigeria 2019

The road to increased efficiency

Established in 2017, Kobo360’s rise has been instrumental in driving digitalisation and improving efficiency in Nigeria’s transport and logistics sector.

The company’s online app connects cargo and truck owners with drivers and customers.

Previously, companies wanting to transport cargo would have to physically travel to key ports to look for trucks. By contrast, the app allows logistics managers to schedule and monitor trips online, which is expected to help improve logistics efficiency.

Due to unsuitable rail infrastructure, more than 90% of cargo in Nigeria is transported by road, often leading to significant congestion. In addition, around 70% of all imports arrive via ports in Lagos’ Apapa district, exacerbating gridlock problems.

The Lagos Chamber of Commerce and Industry estimates that the country loses an estimated $19bn annually from traffic jams, illegal charges and poor security at ports.

Boost to inter-African trade

Kobo360 is one of several start-ups in the region that are shaking up the haulage panorama.

These include Kenya’s Lori Systems, an all-in-one logistics platform, and Ghana’s AgroCenta, which provides both a comprehensive supply chain platform, facilitating small-scale farmers’ access to large markets, and a financial inclusion platform.

It is hoped that the proliferation and expansion of such companies will help facilitate greater inter-African trade.

Inefficient processes and a lack of supporting infrastructure have long hindered cross-border trade in Nigeria, with the country ranked 182nd out of 189 countries in the World Bank’s trading across borders metric, part of the 2019 “Doing Business” report.

However, app-based freight services could help reduce red tape and ease the flow of goods across borders.

The incoming African Continental Free Trade Agreement could also consolidate this expansion.

The agreement, signed this year by all 54 African countries, aims to reduce barriers to trade and commercial activity across the continent, with plans to reduce tariffs on 90% of all goods.

At present, just 15% of African exports are transported to other countries on the continent, according to the African Export-Import Bank. This is far lower than comparative levels in Europe (67%), Asia (58%) and North America (48%).

Transport infrastructure upgrade

Logistics and trade in Nigeria are also set to benefit from significant public investment in transport infrastructure.

In its 2019 budget the government allocated some N258.4bn ($714.1m) to the rehabilitation of roads throughout the country.

Meanwhile, in an effort to encourage greater rail travel and help ease congestion on the roads, around N100bn ($276.4m) was set aside for the construction and upgrade of existing rail links.

Upgrading transport infrastructure has been a key priority for Nigeria in recent times. Highlighting this, the country was ranked 124th out of 140 countries in terms of infrastructure in the World Economic Forum “Global Competitiveness Report” 2018.

In order to address this, Nigeria’s Economic Growth and Recovery Plan, released in 2017, stated that the country needs $3trn in infrastructure development over the next 30 years, with $30bn in near-term borrowing to help meet the shortfall.


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