‘Micrologistics’ is my name for a new approach to transport of goods in small loads, using mobile phones to provide the trust and tracking required to create an effective transport network out of existing vehicles. Below some thoughts on why I think small-scale logistics is a real problem in Africa, what the underlying challenge is, and a possible solution. I think Africa is ready for a new model of small-scale, bottom-of-the-pyramid logistics – for a ‘micrologistics’ revolution.
Transporting goods in Sub-Saharan Africa is hard – especially for individuals and small businesses. Many of the other obstacles to private sector entrepreneurship are slowly being addressed through innovation, as microfinance provides capital, mobile phones provide market information and communication, and mobile payments start to ease the flow of money. But logistics innovations are few and far between.
To understand the problem, compare the flow of people and the flow of goods. Across the continent, private minibus routes have standard prices and timetables, making it possible to travel almost anywhere cheaply and conveniently (though not necessarily comfortably). A ‘mutatu’ from Nairobi to Mombasa costs around Ksh1500/R150/$20 for a six hour journey, or a ‘taxi’ from Alexandra to town, across Johannesburg, costs around R8/$1 – even subsidised public transport would struggle to compete. For goods, on the other hand, there is certainly no comparable network.
The impact of a lack of goods transport is dramatic. Three examples:
- Securing stock for small-scale retail. From tourist arts and crafts stalls to kiosk/spaza shops selling basic essentials in villages, very few small-scale retailers benefit from a distribution network (with Coca-Cola a notable exception). Typically, to get stock the store owner closes the store, travels to a wholesaler or producer, buys as much as she/he and can carry, and travels back. The efficient people transport network has served in place of the missing goods network! But the cost is high – hours or days of lost retail time, and the expense of a round trip, all to buy only what a person can reasonably carry.
- Transporting crops to market. As described in a recent paper, small-scale farmers are typically reliant on traders coming to their farm gate to buy and transport crops. These traders aggregate the crops from multiple small farms and sell on to larger traders or to market. The farmers are thus unable to directly access the market. The impact is substantial – for Tanzanian maize farmers, ~50% of farmers find only a single buyer and ~55% of transactions are at a price dictated by the buyer. Perhaps consequently, only 38% of farmers sold at all in 2010, and of these almost all sold only once in the season. Margins in the supply chain also have to be significant, to cover the cost and risk that traders incur in owning the crops they transport. All this contributes to the lack of a vibrant commercial agriculture sector, and to the fact that around 60% of the world’s unused farm land is in Africa.
- Transporting manufactured goods to market. A few years ago I drove east from Lusaka. For tens or hundreds of kilometres, the road was lined with cyclists bringing charcoal they had made to Lusaka, a multi-day bicycle journey. Further along, the road was lined for several kilometres with beautiful wooden doors; further along it was lined with construction sand in a multitude of colours. Consistently, small-scale manufacturers either can’t get goods to major centres, or have to spend much of their time in transport rather than production.
What is the underlying challenge that leaves these gaps in the market? Yes, roads are not always great, and border posts and checkpoints are huge problems. But the minibus network transports people despite these challenges. Rather, I think the issue is that goods are not people! Specifically, people can get off at the right stop, people complain if the driver ‘loses’ them, people can flag down passing minibuses, and people carry money to pay their way.
The opportunity, I believe, is to use mobile phones and communications to make goods behave more like people, and allow a goods transport network to develop alongside the people transport networks that already exist. Specifically:
- Use mobile phones to track packages, so they ‘get off’ at the right place
- Use SMS-type technology with unique package codes to verify handover of packages, so that they cannot simply go missing
- Use mobile apps and Google maps to register packages needing transport, so that drivers can locate jobs
- Use mobile payments (M-Pesa, etc.) to handle payments in the network, once each package handover has been verified by SMS.
That’s obviously a very high-level summary of a complex system – and omits all the interesting practical questions of how one makes the system really work, how one reaches scale, and the specific offerings that could apply to the transport needs of retail, agriculture and manufacturing. I have a lot of thoughts on these topics, and some ideas that at least some people find exciting! I’m looking forward to bouncing some of them off people as I travel Kenya this week – and I’d love to chat with you, too! Get in touch if you’d like to hear more.