• Saturday, March 02, 2024
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The keys to transforming last-mile logistics in Africa

Nigeria’s last-mile delivery system needs improvement

In supply chain management, last-mile logistics refers to the process involved in the transportation of packaged goods and products from the nearest distribution centre to the final destination.

A typical last-mile logistics process involves the movement of goods from the warehouse shelf to the trunk of a truck and to the doorstep of the consumer. Also known as “final-push delivery”, retailing giants like Amazon and delivery behemoths like United Postal Services (UPS) have revolutionized the industry over the years by rapidly increasing delivery speed and improving customer satisfaction.

In Africa, the last-mile delivery system remains nascent, due to a confluence of many recessive factors like lack of infrastructure, low economic growth, poor legal and regulatory framework, high rate of cybercrime, low participation in the financial sector and low mobile phone penetration. All these and more have kept last-mile delivery in Africa at sub-par.

The poor trade situation in Africa means that Africa only contributes 3% to global trade even though it makes up 17% of the global population. Yet, the World Bank confirms that trade is an engine of growth, and that through seamless trade countries can create jobs, reduce poverty and increase the economic opportunity in their domain.

To enjoy the immense benefits contained in trade activities, African countries must therefore implement key policies and build infrastructures that will transform last-mile logistics across the continent

To enjoy the immense benefits contained in trade activities, African countries must therefore implement key policies and build infrastructures that will transform last-mile logistics across the continent. The rest of this article will be focused on exploring the ways by which last-mile logistics can be improved in Africa, thereby boosting the African economy.

Tips for transforming last-mile logistics in Africa

1) Improving transport infrastructure through Public-Private Partnerships (PPP)

Infrastructure goes to the heart of supply chain management, and in last-mile delivery the need for seamless transport infrastructure couldn’t be direr. Extensive research conducted on African economic markets shows that the continent is emerging strategically as an important trade ally to many countries in Asia and parts of Europe based on its rich mineral resources and its teeming population.

However, African trade analysts conclude that trade relations with and within Africa are still beset by challenges relating to poor transport infrastructure. Some of the latent transport challenges affecting intra-African trade include bottle-necked port operations, expensive yet poor inland road quality, inadequate rail capacity, slow development in transportation technology, amongst many others.

This poor state of transportation infrastructure has, in turn, led trading companies to employ costlier air transport to move freight goods to avoid port delays and reach land-locked African countries with poor road networks. Businesses have also had to maintain higher inventory levels in many African countries, contrary to what obtains globally.

To scale up the efficiency of last-mile logistics in Africa, we need to fix transportation infrastructure across the continent. African governments can employ a variety of methods, one of which is by entering into public-private partnerships with prospective investors.

The African Development Bank (AfDB) maintains that PPPs is an imperative solution that can help build African infrastructure. Therefore, by allowing the private sector to invest in public utilities, the governments will gain access to the much-needed investment, that will allow it to focus on other critical infrastructures.

Africa needs $170 billion yearly from 2025 to improve its infrastructure to global standards. Yet a huge part of that remains unmet. I strongly believe that for African governments to meet their countries’ infrastructure needs there must be strong and durable partnerships with domestic and foreign investors just as the AfDB confirms.

2) Providing transparent legal and regulatory support to e-commerce players

Inconsistent legal and regulatory procedures are impeding e-commerce businesses in Africa, and by extension, businesses operating across the full spectrum of last-mile logistics. Consider the precarious situation of Max.ng, a last-mile logistics business that raised $7 million in venture capital funding in June 2019 to ensure smooth last-mile logistics in Lagos, Nigeria through its chain of motorcycles. Throughout its incorporation process, the company sought and got the approval of the Lagos State Government (LASG) to run and operate the business. However, within a twinkle of an eye, the company’s operating license was rendered worthless after the LASG banned the operation of motorcycles on highways within Lagos state.

While Max.ng maintains that it got the requisite regulatory approvals needed to operate in Lagos, the consequent regulation by the LASG means that the company’s operational capital and assets have now been rendered useless, at least within the Lagos metropolis. Indeed, it is inconsistent regulations like this that are hampering the investment of many businesses into the last-mile logistics space. Many investors and entrepreneurs secretly fear that inconsistent government regulations will affect their operational abilities in many African cities.

To this end, African governments must do well to properly synchronize their legal and regulatory positions to encourage investment in infrastructure and last-mile logistics, rather than discourage it. Efosa Ejomo, a Senior Researcher at the Forum for Governance and Innovation, maintains that regulations continue to fail in fledgling African countries like Nigeria because regulators are “over-regulating” the underdeveloped markets.

African governments must therefore ensure that business laws and regulations are simple, straightforward and transparent, so that investors in the last-mile logistics space will be enamored about the prospect of investing in Africa.

3) Reducing cybercrime in Africa by passing cybercrime legislations

According to the World Economic Forum through data obtained from TechCabal, Africa loses $4 billion annually due to the knock-on effects of cybercrime. What’s more, In 2022, 52% of African companies believed that they were unprepared to handle a large-scale cyberattack.

In fact, Interpol’s Africa CyberThreat Assessment Report confirms that 90% of African businesses are operating without implementing the requisite cybersecurity protocols to safeguard their businesses. Yet, even with the prevalent fears and economic consequences of cybercrime in Africa, the Global Cybersecurity index shows that only 29 out of the 54 African countries have passed relevant legislations targeted at curbing the ill-effects of cybercrime.

Supply-chain companies and last-mile delivery operators all employ the full functionality of ICT systems to carry out their businesses. However, with continuing threats of cybercrime, many of them cannot possibly function at their full capacity. Indeed, to say that cybercrime remains a bane to the complete actualization of digitalization in Africa will be stating the obvious.

To fight cybercrime and curb its effect on last-mile delivery in Africa, the remaining 25 African countries who have no legislation against cybercrime must immediately do so as a matter of utmost necessity. Only by doing so can the fight against cybercrime in Africa begin, and we can then plug the hole created by the $4billion yearly economic loss.

Conclusion

Last-mile logistics in Africa remain an integral part of the African supply chain industry. By implementing the tips outlined above, last-mile delivery in Africa can begin to take its place of pride amongst the last-mile delivery systems in many other parts of the world. All relevant stakeholders must therefore come on board to remedy the challenges related with last-mile logistics in Africa just so that the African economy can deliver better dividends for the African people.