Transport start-ups growing in sub-Saharan Africa

In an expert insight article released in June, market research company Frost & Sullivan Africa consultant Nomvo Kasolo says transport start-ups show great growth in sub-Saharan Africa.

A wave of innovative transport start-ups is helping to keep Africa’s “heartbeat sector” growing.

In the past year, the transportation sector achieved an impressive record of 21 start-up companies, the majority of which were aimed at unlocking new growth opportunities through software, Internet-enabled solutions, and alternative e-mobility solutions.

With roads being the arteries through which the African economy pulses, the ongoing challenges have been great hindrances to sustainable economic growth and global competitiveness and trade.

The spark of positive change being driven by recent start-ups in markets such as Nigeria, South Africa and Kenya has the potential to continue being positively influenced by global trends and shifts, but will require the continued support of innovators in both the private and public sectors.

This start-up wave brings one step closer achieving the estimated jump of $16-billion in intra-regional trade that economists and trade experts expect to be possible through the African Continental Free Trade Area (AfCFTA) agreement.

Though not without challenges, including an infrastructure investment shortfall of between $67-billion and $107-billion yearly, according to the International Finance Corporation, ​a look at recent start-ups and funding avenues in Africa points to a growing attraction of the continent as the last growth frontier for investors. ​

Last year, Africa attracted about 564 start-ups with fintech accounting for the majority share.

For transport start-ups specifically, the records show a proactiveness by innovators to help solve Africa's connectivity predicament, ​where supply chain challenges and limitations in physical infrastructure network limitations amount to about 40% to 60% of the surcharge costs for goods in Africa.

These companies’ activities point to an industry gearing up for global trends that are likely to leave lasting changes in the industry.

These trends, recognised by industry body Association of African Exhibition Organisers, were noted to likely be around technology and automation and environment, social and governance.

In the African context, these have already been adopted and are surfacing through a rise in the e-logistics and e-mobility sectors.

Kasolo says 2022 is expected to follow the growth trajectory seen in 2021, through several ongoing joint efforts to support innovators.

Among these are incubation and accelerator platforms such as venture capital investment company The Baobab Network, which raised funding worth $200-million in just eight months.

Additionally, private sector participation, such as global automotive manufacturer Toyota's Mobility 54 venture unit and several newer financing options, offer solutions targeted at reaching untapped markets in Africa.

South Africa saw an impressive seven start-ups in 2021, with the 'WhereisMyTransport' company raising about $14.5-million. ​

With Africa's population expected to nearly double by 2050 – to about 2.5-billion people – achieving efficiency in the connectivity of goods and people will be critical, which speaks to the importance of supporting current business avenues that are proving to work well.

The transport start-up industry is evidently one of them, particularly in Nigeria, South Africa and Kenya, and the North African countries.

Additionally, with the ongoing challenges around fuel hikes and disruptions caused by the Russia-Ukraine conflict, African nations have an opportunity to strengthen their networks.

She concludes that this will be achieved through forward-thinking solutions, but also by leveraging the potential of the AfCFTA agreement through collaboration.