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27/08/2019 Tech start-ups drive change for Nigerian truckers |
Financial Times
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Neil Munshi in Tin Can Island
4 HOURS AGO
Until a year ago, Friday Ighodaro spent three or four nights a
month getting pulled out of his 30-tonne Steyr truck on the unlit
highways of rural Nigeria by armed robbers. They know that
long-haul truckers carry cash advances for provisions along the
way, he said.
“Nowadays in Nigeria when you carry money, it’s very dangerous,”
he said. Bandits prowl theroads across the country, “but now when
they stop you on the road, when they see the Honeywellsign, they
know we don’t carry cash.”
Mr Ighodaro is an owner-operator who hauls grain to every corner
of Nigeria for HoneywellFlour Mills and other clients of Kobo360, a
20-month-old start-up which announced earlier thismonth that it had
raised $30m in debt and equity in a funding round led by Goldman
Sachs.
The company uses an “Uber for logistics” model to connect
drivers and fleet operators tocompanies bringing goods into and
around Africa’s most populous country, and also Togo,Ghana and
Kenya, as it attempts to bring a cashless, app-based paperless
system to an industrymired in reams of paperwork and handshake
relationships.
Where many drivers might get 30 per cent of their pay upfront in
cash from traditional truckingcompanies — for food and fuel en
route — Kobo pays them 70 per cent on starting the trip,directly to
their bank account. Drivers can then use payment apps on their
phones to pay forfood, or use a Kobo service to buy discounted fuel
at petrol stations via their phones.
Nigeria
Tech start-ups drive change for Nigerian truckers
Uber-style apps are transforming industry rife with inefficiency and corruption
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27/08/2019 Tech start-ups drive change for Nigerian truckers |
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Its operations became all the more relevant last month on the
signing of a landmark continent-wide free trade deal aimed at
bolstering intra-African trade, which sorely lags that of the rest
ofthe world.
Mr Ighodaro signed up with Kobo a year ago, and has not had to
hustle for business in thecrowded truck depots of Lagos since. He
and his fellow drivers — Kobo said it has signed upmore than 10,000
— have also not had to wait in the notorious, winding line that
leads toLagos’s main ports. Kobo provides its drivers with a lift
via barge to its customers located insidethe port.
“Tin Can [in Lagos’ port] is the hardest place to move goods in
the world — the hold-up for days,the soldiers extorting money from
drivers in line,” said Goni Gombe, whose family fleet of 60trucks
has seen business triple in the year since it signed up with Kobo.
“But now we can go inand out.”
Rail system unchanged since colonial timesShoddy
infrastructure is one of many challenges — along with insecurity,
inefficiency,corruption, poor-quality trucks and high fees — that
make logistics among the biggest obstaclesfor businesses trying to
make it in Africa’s largest economy and across the continent.
Most African countries rank near the bottom of the World Bank’s
annual logistics performanceindex because the system is rife with
inefficiencies. Shipping a container from China to Lagos
issometimes cheaper than moving one from the Lagos port to the
other side of the city, saidObiora Madu, head of the Nigeria-based
African Centre for Supply Chain.
“If you are shipping coffee from Kenya, you actually have to go
to Europe first before it comes toNigeria [as there are no roads
connecting the two countries],” he said. “And by that single
act,you have destroyed any cost advantage you were supposed to have
had.”
Companies like Kobo360 and its main competitor, Kenya’s Lori,
are trying to revolutionise thelogistics systems that will be key
to the success of the recently signed Africa Continental Free
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27/08/2019 Tech start-ups drive change for Nigerian truckers |
Financial Times
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Trade Area agreement. The accord aims to boost economic growth
on a continent with acombined gross domestic product of over $3tn
and a young, fast-growing population.
“Logistics is at the heart of the [agreement] — that’s the only
thing that will make it work,because it’s not like we have rail,”
said Obi Ozor, founder of Kobo360. Africa’s limited railsystem has
remained largely unchanged since it was built by colonial powers.
“And do I thinkany of the countries will have full rail in the next
25 years? That’s not possible. [We are] alreadymoving stuff from
Nigeria to Ghana, and it’s taking us 16 days to [move 460km].”
Gig economy gives freelance workers a lifelineIn
the west, the unstable and demanding nature of work under the gig
economy has generated asignificant backlash from workers and
commentators alike. But in Nigeria, where nearly aquarter of the
population is unemployed, platforms that connect freelance workers
to jobs can bea lifeline.
“They would be my second god if they [could] give me even more
business,” said Kobo driverJames Okoruwa. “That’s what we’re
praying for.”
Kobo offers truck financing, discounts on diesel, healthcare and
school fees assistance, per-tripinsurance and upfront payments, for
pay-cheque to pay-cheque truckers used to waiting two orthree weeks
to get paid.
It offers customers — like Unilever, Dangote Sugar and steel
manufacturer African Industries —the ability to track their
deliveries in real time. If a truck breaks down — a frequent
occurrenceon highways with potholes big enough to swallow cars —
Kobo said it can dispatch a team to fixit, secure the payload from
bandits and move the load to a new truck for delivery.
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27/08/2019 Tech start-ups drive change for Nigerian truckers |
Financial Times
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Kobo plans to use the $20m in equity from Goldman, Y Combinator,
the International FinanceCorporation and others to push further
into Nigeria, expand into 10 other countries and launch
ablockchain-enabled logistics platform that brings together all of
its services. The additional$10m in debt it raised from Nigerian
banks will be used to offer financing to drivers and
fleetoperators.
Mr Ozor, 30, had brief stints as a JPMorgan investment banker
and as operations manager forUber in Nigeria before launching Kobo
in 2017. He said he plans to visit China later this monthto start
the process of designing “a truck that works for Africa” to cut
costs for Nigerian truckersin half.
“There is no truck driver in Africa who uses AC, so why do we
have $11,000 more additionalcosts for that? We have this digital
dashboard — we don’t need that, take that $7,000 out andspend
$4,000 on new suspension — that’s what we need in Africa.”
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27/08/2019 Tech start-ups drive change for Nigerian truckers |
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