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 the roads across the country, “but now when they stop you on the road, when they see the Honeywell sign, they know we don’t carry cash.”
Mr Ighodaro is an owner-operator who hauls grain to every corner of Nigeria for Honeywell Flour Mills and other clients of Kobo360, a 20-month-old start-up which announced earlier this month 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 to companies 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 industry mired in reams of paperwork and handshake relationships.
Where many drivers might get 30 per cent of their pay upfront in cash from traditional trucking companies — 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 for food, or use a Kobo service to buy discounted fuel at petrol stations via their phones.
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 of the world.
Mr Ighodaro signed up with Kobo a year ago, and has not had to hustle for business in the crowded truck depots of Lagos since. He and his fellow drivers — Kobo said it has signed up more than 10,000 — have also not had to wait in the notorious, winding line that leads to Lagos’s main ports. Kobo provides its drivers with a lift via barge to its customers located inside the 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 60 trucks has seen business triple in the year since it signed up with Kobo. “But now we can go in and out.”
Rail system unchanged since colonial times
Shoddy infrastructure is one of many challenges — along with insecurity, inefficiency, corruption, poor-quality trucks and high fees — that make logistics among the biggest obstacles for 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 performance index because the system is rife with inefficiencies. Shipping a container from China to Lagos is sometimes cheaper than moving one from the Lagos port to the other side of the city, said Obiora 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 to Nigeria [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 the logistics systems that will be key to the success of the recently signed Africa Continental Free Trade Area agreement. The accord aims to boost economic growth on a continent with a combined 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 rail system has remained largely unchanged since it was built by colonial powers. “And do I think any of the countries will have full rail in the next 25 years? That’s not possible. [We are] already moving stuff from Nigeria to Ghana, and it’s taking us 16 days to [move 460km].”
Gig economy gives freelance workers a lifeline
In the west, the unstable and demanding nature of work under the gig economy has generated a significant backlash from workers and commentators alike. But in Nigeria, where nearly a quarter of the population is unemployed, platforms that connect freelance workers to jobs can be a lifeline.
“They would be my second god if they [could] give me even more business,” said Kobo driver James Okoruwa. “That’s what we’re praying for.”
Kobo offers truck financing, discounts on diesel, healthcare and school fees assistance, per-trip insurance and upfront payments, for pay-cheque to pay-cheque truckers used to waiting two or three 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 occurrence on highways with potholes big enough to swallow cars — Kobo said it can dispatch a team to fix it, secure the payload from bandits and move the load to a new truck for delivery.
Kobo plans to use the $20m in equity from Goldman, Y Combinator, the International Finance Corporation and others to push further into Nigeria, expand into 10 other countries and launch a blockchain-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 fleet operators.
Mr Ozor, 30, had brief stints as a JPMorgan investment banker and as operations manager for Uber in Nigeria before launching Kobo in 2017. He said he plans to visit China later this month to start the process of designing “a truck that works for Africa” to cut costs for Nigerian truckers in half.
“There is no truck driver in Africa who uses AC, so why do we have $11,000 more additional costs for that? We have this digital dashboard — we don’t need that, take that $7,000 out and spend $4,000 on new suspension — that’s what we need in Africa.”