Dear Quartz Africa members,
Larger retailers have struggled to compete with the multitude of small shops and stalls across African countries. In Nigeria and Uganda, for example, it represents the informal retail sector 90% of retail value of so-called fast-moving consumer goods (FMCG). In a continent where product distribution can be costly and complicated, how do major manufacturers ensure their goods get to where their customers can buy them?
A lack of data across the supply chain means FMCG manufacturers struggle to inform sales strategies and expansion plans. In addition, poor infrastructure in many parts of Africa it makes the distribution of products an expensive affair.
This picture becomes more complicated when considering the rapid development of the third-party logistics market, whose gross revenues in Africa hit 27.9 billion dollars in 2020. Smaller players, mainly individual truck owners and carriers, have traditionally dominated freight transport, which operates with minimal safeguards compared to logistics companies. But now, a number of startups are innovating around different aspects of the supply chain, from financing to inventory management, warehousing and distribution.
Each supply chain participant has a role to play in its transformation. The key to achieving this lies in increasing infrastructure financing and the adoption of new technologies.
A reminder that this is the penultimate issue of the Quartz Africa Member Digest you will receive. We have appreciated your membership. Check your inbox for instructions from the marketing team on next steps.
Cheat sheet.
💡 Opportunity: Supply chains in Africa have numerous gaps that startups can help close – be it in financing, inventory management, warehousing or distribution
🤔 Challenge: Weak infrastructure, fragmented markets and regulatory hurdles can raise the cost of doing business for supply chain startups
🗺️ Guide: Supply chain startups must build products that address the unique challenges of manufacturers, traders and transporters in Africa
💰 Stakeholders: Manufacturers, startups, governments, regulators, financiers, marketers and DISTRIBUTER
With numbers
90%: Share of informal retailers in retail value in Nigeria
$27.9 billion: Total revenue generated by the third-party logistics industry in Africa in 2020
100 billion dollars: Africa’s infrastructure financing gap
80%: Share of jobs in Africa created by SMEs
51%: The share of SMEs in Africa that require more money than they can currently afford
Case study
Getting Started: Maps
Headquarters: Dar es Salaam, Tanzania
Originally founded as a distribution platform complete with its own fleet of carriers, Ramani has evolved into the maker of logistics software that helps distributors manage inventory, process payments and access sales data insights. The Tanzanian company works with clients including CocaCola, Dangote Group, Serengeti Breweries and Vivo Energy.
With backgrounds in technology and finance, Raman’s three co-founders — Iain Usiri, Calvin Usiri and Martin Kibet — left their careers in the US to build a startup in Tanzania three years ago.
“We thought it would be a lot more meaningful if we had success here at home. So we took our savings, booked our one-way flights and started this journey,” CEO Iain, a former Salesforce product manager, told Quartz.
Ramani offers inventory and procurement management software, as well as point-of-sale (POS) software and handheld POS devices. The biggest benefit FMCG brands and distributors derive from the service is instant access to sales and inventory data. FMCG brands and distributors can also use insights, including heat maps – visual displays that let you see the highest and lowest locations at a glance – to identify opportunities to increase sales.
The company’s focus on software came about as a result of their participation in the US startup accelerator Y Combinator, which allowed them to explore new models for the company.
Having secured its Central Bank lending license in 2022, Ramani is now also lending to small businesses that use its services as a way to help them grow. until Inventory financing was a key component of Raman $32 million Series A funding round announced in November, however, Iain clarifies that the company’s main ambition is to become a software distribution engine.
In conversation with CEO Ramani, Iain Usiri
🤑 Why they are introducing inventory financing:
“Micro-distributors are SMEs and SMEs in Africa struggle to get financing from banks. They are unable to access credit and so they have to buy things using cash, making it difficult for them to grow with increasing demand.”
🏢 To be more than an inventory financing startup:
“What we’re building is not an inventory financing business. We’re digitizing independent third-party micro-distributors and building financial software.”
🚗 How did the move away from distribution affect Ramani:
“We were distributors ourselves…[and] shows in our information or on our heat maps showing where products are sold – we provide information that brands use leverage to make decisions.”
Supply chain deals in 👀
The start of Nigerian B2B trade OmniBiz announced a $15 million pre-Series A funding round in August 2022. OmniBiz connects FMCG manufacturers with retailers, enabling retailers to order goods through the platform and have them delivered for free.
Charia Moroccan B2B commerce startup, in January raised a bridge round of funding valuing the company to 100 million dollars. Founded in 2020, it allows retailers to order goods and have them delivered to their stores. In August 2022, Chari also acquired Karny.ma, a mobile credit ledger application that enables retailers to manage the credit they extend to their customers.
In October 2022, Cairo-based B2B commerce startup MaxAB closed a 40 million dollars pre-Series B capital round as it looks to expand into North Africa and the Middle East. The platform enables food and grocery retailers to easily access goods from various suppliers.
More from Quartz Africa
😃 More than half of Jumia’s deliveries are now made within 24 hours
🙌 One of Nigeria’s largest food distributors has acquired its Ghanaian counterpart
🤔 There is still work to be done in African e-commerce
📱 Social commerce is becoming an important business model in Africa
📹 African diplomats are broadcasting live to China’s consumers
🇲🇦 Morocco’s e-commerce boom outpaced its blockade
🛒 Why Central Africa is lagging behind in e-commerce
🤝🏽 Why B2B is the key to unlocking Africa’s e-commerce potential
This member summary was prepared during the hearing “Kuna Kuna” by Vic West, Brandy Maina, Fathermoh, Savara and Thee Exit Band. 🇰🇪. Have a wonderful week!
—Martin Siele, Nairobi-based contributor
One thing 🤯
Informal retailers are among the largest lenders in Africa. In Kenya, the number of households borrowing from vendors hit a 10-year high in 2019, with 29.7% taking loans from traders, mainly in the form of basic food commodities and other essentials.
