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.”
Founded in 2017, Obi Ozor, a Wharton Alum and ex-Uber Nigeria and his co-founder Ife Oyedele II, Kobo360 are building a digital logistics platform that enables the development of an efficient supply chain for end-to-end long-haul freight operations, connecting and supporting cargo owners, truck owners & drivers, and cargo recipients. Fresh from their $6mn fundraise just last year, the YCombinator-alumni have had an exceptional year, beating e-commerce platform Jumia to win “Disrupter of the Year” at the 2019 Africa CEO Forum, as well as securing double-digit investment and expanding across the continent.
With only a click of a button on our seamless mobile and web applications, cargo owners can simply request for any truck of their choice and have their goods picked up and delivered to the required location through an all-in-one robust logistics ecosystem.
Kobo uses big data and technology to reduce logistics frictions while empowering rural farmers to earn more by reducing farm wastages and helping manufacturers of all sizes to find new markets. Kobo enables unprecedented efficiency and cost reduction in the supply chain, providing 360-visibility while delivering products of all sizes safely, on time and in full.
Obi Ozor: “Kobo360 wouldn’t be where we are today without our truck drivers. Plain and simple. Right from the start of our journey, we’ve made it a point to ensure our drivers are well-taken care of as they’re such a crucial part of our team and the supply chain. We’re looking to raise our driver fleet from 10,000 but behind the scenes, we’ve been putting our efforts towards optimising our current offerings for our current and future drivers when they arrive.
For example, drivers running trips on the Kobo360 platform are already increasing their monthly earnings by 40%. In addition to this, we also provide access to a range of services including access to up to $5,000 monthly working capital, insurance products, and discounted petrol, comprehensive HMO packages and an incentive-based education program for drivers’ families through our driver-empowerment programs KoPAY, KoboSAFE and KoboCARE. We have drivers from a range of backgrounds on the continent, which is why we’ve adapted our apps to accommodate local languages such as Hausa, Pidgin, Twi, Swahili and French. But this feature also speaks to an inclusive approach we’re taking to another issue on the continent – unemployment.
With the AfCFTA coming into effect and our planned expansions, we’ll need more truck drivers from across the continent and we want to provide an opportunity for them to secure their financial futures. It’s not just about saying we value our drivers, it’s about backing it up with tangible measures to show they’re a massive part of the Kobo360 family.”