Logistics Challenges Facing E-Commerce 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 with poor road networks, makes 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 worth noting 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 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 e-commerce 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 e-commerce players building logistics and fulfilment infrastructure to ease the delivery of products to consumers using both vehicles and bodabodas.