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How African trucking firms are trying to make everything cheaper

November 24, 2020. Summarized by summa-bot.

Transporting goods in Africa can be inefficient, making products more expensive. A new generation of logistics startups is trying to change this.

But a new generation of trucking companies believes internet technology can transform supply chains and bring down prices for shoppers.

Among the "e-logistics" businesses looking to shake up the transportation of goods is Kenya's Lori Systems, which uses a cloud-based platform to connect companies wanting to shift cargo with the truck drivers who can move it.

"We manage a network of tens of thousands of trucks," says Jean-Claude Homawoo, co-founder of Lori Systems, which works across 10 countries in Africa.

The ultimate goal is to make Africa more competitive on global markets, he says.

Poor infrastructure and logistics can add between 40% and 60% to the cost of goods in Africa, according to a report this month by the International Finance Corporation (IFC) and Google.

"Even within local markets, inefficient distribution networks can lead locally grown fresh produce to cost substantially more in Africa than in developed markets, even though the cost of labor is substantially less," says William Sonneborn, senior director of the IFC, part of the World Bank group.

With better logistics, Africa could be a bigger exporter of fresh fruit, says Sonneborn.

"As you fix the whole system, which includes e-logistics and some investments in ports and other key infrastructure assets, you are creating the opportunity for exports," he says.

Homawoo says Lori Systems has raised "north of $25 million" in funding.

But Sonneborn says that for e-logistics to really make an impact, more financial backing is needed, as well as more digital skills on the continent.

The IFC report cites e-logistics startups as key in growing Africa's internet economy, which could be worth $180 billion by 2025, accounting for more than 5% of the continent's gross domestic product.

"If we can make logistics more efficient, the opportunities are endless," he says.

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