Dear Quartz Africa members,
Larger retailers have struggled to compete with a myriad of small shops and stalls across African countries. In Nigeria and Uganda, for instance, the informal retail sector represents 90% of the retail value of so-called fast-moving consumer goods (FMCG). In a continent where distributing products can be costly and complicated, how do large manufacturers make sure their goods get to where their customers can buy them?
The absence of data across the supply chain means that FMCG manufacturers struggle to inform sales strategies and expansion plans. In addition, poor infrastructure in many parts of Africa makes product distribution an expensive affair.
This picture gets more complicated when considering the fast evolving third-party logistics market, whose gross revenues in Africa hit $27.9 billion in 2020. Smaller players, mostly individual truck owners and transporters, have traditionally dominated the transportation of goods, operating 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.
Every supply chain participant has a role to play in its transformation. The key to achieve this lies in increasing infrastructure funding and adoption of new technologies.
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💡 The opportunity: Supply chains in Africa have numerous gaps which startups can help plug—whether that’s in financing, inventory management, warehousing or distribution
🤔 The challenge: Poor infrastructure, fragmented markets, and regulatory hurdles can drive up the cost of doing business for supply chain startups
🗺️ The roadmap: Supply chain startups should build products that address the unique challenges of manufacturers, traders, and transporters in Africa
💰 The stakeholders: Manufacturers, startups, governments, regulators, financiers, traders, and distributors
By the digits
90%: Informal retailers’ share of the retail value in Nigeria
$27.9 billion: Total revenue generated by the third-party logistics industry in Africa in 2020
$100 billion: The infrastructure funding gap in Africa
80%: Share of jobs in Africa created by SMEs
51%: Share of SMEs in Africa that require more cash than they can currently access
HQ: Dar es Salaam, Tanzania
First established as a distribution platform complete with its own transportation fleet, Ramani has developed 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 tech and finance, Ramani’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 felt it would be much more meaningful if we succeeded here at home. So we took our savings, booked one-way flights and commenced on this journey,” CEO Iain, a former Salesforce product manager, told Quartz.
Ramani offers inventory management and procurement 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 heatmaps—visual displays allowing you to see the highest and lowest-selling locations at a glance—to identify opportunities to increase sales.
The company’s pivot to software happened 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 also now lending money to small businesses that use its services, as a way to help them grow. While inventory financing was a key component of Ramani’s $32 million Series A funding round announced in November, Iain, however, clarifies the company’s overarching ambition is to become an engine of software-powered distribution.
In conversation with Ramani CEO, Iain Usiri
🤑 On why they’re introducing inventory financing:
“Micro-distributors are SMEs and SMEs in Africa struggle to get financing from banks. They’re unable to access credit and so they need to buy stuff using cash on hand, making it difficult for them to grow with increasing demand.”
🏢 On being more than an inventory financing startup:
“What we’re building is not an inventory financing business. We’re digitizing independent third party microdistributors and building financial software.”
🚗 On how the pivot away from distribution impacted Ramani:
“We were distributors ourselves…[and] it shows in our information or heat maps showing where products are selling—we offer information that brands leverage to make decisions.”
Supply chain deals to 👀
Nigerian B2B commerce startup OmniBiz announced a $15 million pre-Series A round of funding in August 2022. OmniBiz connects FMCG manufacturers to retailers, enabling retailers to order goods via the platform and get them delivered for free.
Chari, a Moroccan B2B commerce startup, in January raised a bridge round of funding valuing the company at $100 million. 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 book application enabling retailers to manage loans they give to their customers.
In October 2022, Cairo-based B2B commerce startup MaxAB closed a $40 million pre-Series B equity round as it looks to expand in 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 biggest grocery distributors bought its Ghanaian equivalent
🤔 Work still needs to be done in African e-commerce
📱 Social commerce is becoming an important business model in Africa
📹 African diplomats are livestreaming to China’s consumers
🇲🇦 Morocco’s e-commerce boom outlasted its lockdown
🛒 Why central Africa is lagging behind in e-commerce
🤝🏽 Why B2B is key to unlocking Africa’s e-commerce potential
This member brief was prepared while listening to “Kuna Kuna” by Vic West, Brandy Maina, Fathermoh, Savara and Thee Exit Band. 🇰🇪 . Have an amazing week!
—Martin Siele, Nairobi-based contributor
One 🤯 thing
Informal retailers are among the biggest lenders in Africa. In Kenya, the number of households borrowing from shopkeepers hit a 10-year high in 2019, with 29.7% taking credit from shopkeepers, mostly in the form of basic food commodities, and other essentials.