In the first half of 2024, the transport and logistics sector attracted
the most funding—$218 million—knocking fintech off its long-held top spot as an
investment darling. This interest in the sector is underpinned by the
continent’s burgeoning e-commerce market and rising smartphone penetration and
a growing digital middle class. Two of the three largest deals announced in H1
came from Moove and Spiro. Both mobility firms have markets in the four
countries—Kenya, Nigeria, South Africa and Egypt—that dominate African tech.
The significant driver for logistics and mobility’s ascent can
be linked to the rise of digital commerce during the COVID-19 pandemic, which
positively impacted the growth of e-commerce and mobility in Africa. A
survey by GeoPoll identified electronics and clothing as the most
purchased items on the continent. For the Nigerian audience, their needs were
more diverse. They ranged from home decor to hygiene products, alcoholic to
non-alcoholic beverages, groceries, and automotive products.
Africa’s transport and logistics sector is far from fully
developed; there is still poor road connectivity, insecurity, and problematic
riders and drivers. Despite these inefficiencies, the sector is projected
to surpass $200 billion in market size by 2029. Some investors have been
enticed by the opportunity that logistics could create by connecting multiple
high-growth industries such as e-commerce, last mile delivery, agriculture,
electric vehicles (EV) and fintech.
A good example of this convergence is the growing electric
vehicle (EV) industry in East Africa. The region’s access to critical minerals
like lithium and cobalt is attracting significant investor interest. To
capitalise on this opportunity, infrastructure development is paramount. The
revitalisation of rail corridors such as the Lobito and TAZARA lines is crucial
for transporting these raw materials efficiently to global markets.
These transportation networks will not only support the EV revolution but also
create new economic opportunities along their routes, potentially stimulating
growth in agriculture, manufacturing, and trade.
The integration of logistics with fintech can streamline payment
processes, improve supply chain visibility, and facilitate cross-border trade.
As Africa’s digital economy expands, logistics providers that can leverage
technology to optimise operations will gain a competitive advantage.
In its outlook for the future, audit firm
PricewaterhouseCoopers (PwC) predicts a wave of mergers and acquisitions in the
transport and logistics sector, driven by digitisation and AI adoption in H2
2024. The groundwork is already being laid. Companies like Ampersand in Rwanda
and Spiro in Nigeria are demonstrating how the integration of energy
infrastructure (charging stations) with mobility services (electric motorbikes)
can disrupt traditional transportation models.
Ampersand’s evolution from an EV infrastructure provider to
a dominant motorbike manufacturer in East Africa highlights the potential
synergies between these sectors. By controlling both the charging
infrastructure and the vehicles, Ampersand has achieved significant market penetration
in Rwanda. Spiro’s rapid expansion of battery-swap stations in
Nigeria indicates a similar strategy to capture a substantial share of the
growing electric motorbike market.
These developments suggest that the convergence of logistics,
energy, and technology is not merely a future aspiration but a present-day
reality in the African context. As the EV market continues to expand and the
demand for sustainable transportation grows, we can expect to see more such
collaborations and integrations across the continent.
While the full-scale mergers and acquisitions predicted by PwC
may still be far ahead, the foundational partnerships and integrations
necessary for these deals are already happening.
