CEVA Insights

In African Logistics, Small-Batch is not Small-Time

One trend that has gone under the radar in the flurry of COVID-19 reporting is the resilience the African supply chain and logistics network has shown during the pandemic.

African exports surged in April 2021, compared to the same period in 2020, by a mind-boggling 101%. Africa’s import trade, considered more “informal” than the internationally-oriented exports sector, fared even more remarkably. Indeed, Africa's recovery from the pandemic measured by African airlines’ inbound air cargo volumes has been the most momentous in the world with a dramatic 24.6% increase compared to 2019 (or double the export rebound performance).

Why has Africa's trade proven so much more resilient than many thought? And why is it surprising that the supposedly less organised and more informal component has proven even more robust?




Modular logistics driven by frugal innovation

The reason is that the continent has a long history of inventing adaptive solutions. That many of these solutions also happen to be frugal innovations in the area of "modular" logistics and supply chain agility sometimes reinforces the perception that they would be ditched as soon as resources increase. Yet, Africa's richest businessman, in a recent explanation of the dramatic 36% average growth in revenues at his two main enterprises, cited innovative management of supply chain resilience as the primary source of such stupendous wealth creation. In many ways, focusing on supply chain hacking is how he built his empire in the first place. Why would he ditch it?

The fragmentation of Africa's supply chain should penalise small-timers in a period of rising cost of living in urban Africa, where purchasing power has migrated. But things are not so linear: modular logistics and supply chain agility adapts well to small and fragmented markets, such as the African manufacturing and retail environment.

Furthermore, fragmentation is also a wellspring of powerful innovation in a world where people want to buy more local, eat fresher and get their deliveries instantly, with lower environmental footprint. Whilst the tensions that have yielded Africa's frugal innovations in trust-based aggregation across multiple, independent, actors in the supply chain may be different from the lifestyle driven ones in the Global North, the innovations themselves could prove global in applicability.


Another innovation model is possible

There are three core tenets of frugal innovation that those architecting African supply chains should keep in mind: "aggregation efficiency", "trust accretion", and, most importantly, "pricing risk flexibly" so that proof of concepts can be scaled up as risk appetite grows.

This has led to the rise of start-ups like Sokowatch who, are working hard to integrate into their models the small-batch, frugal strategies that have made it possible for Africa's small-time traders to transcend the barrier of economies of scale.

Indeed, just as the first ERP software targeting mid-sized enterprises got honed in Cameroon by JD Edwards founders, small-batch delivery solutions for the drone sector by the likes of Zipline could only test their commercial viability in places like Rwanda and Ghana, where scrappy government systems could adjust to the untested model quicker, before venturing back to the US.

All this is testimony to the truth that the principal duty of the frugal innovator is to build just-in-time tools that lower the cost of adoption for frontline operators skilled in their use of resilient, traditional, techniques.

Our organisation, mPedigree, for instance, deployed feedback loops by SMS to get real time information on seed batch defects from farmers who have never seen, much less been trained on, any kind of business management software. Not only did this model enable trust to “accrete”, it also created a communal model for dealing with counterfeit and fake seeds to emerge. Instead of the “brand protection” paradigm that makes fighting fake products an enterprise-centric issue, the communal risk sharing model reduces the cost of containment and allows strategic flexibility in how a particular enterprise is positioned in the agro-logistics network.

Similarly, when Sokowatch tried to enhance goods delivery in the Mombasa freight corridor, much of their initial success in designing frugal and context-sensitive software was driven by recognising the fact that the primary logistic unit for international sea-freight is not the container, but rather the sub-container.

What is fascinating about this is how, after decades of presenting the highly integrated mass production system as the only viable future of industrial production, the notion of small-batch manufacturing has only recently caught up with how so many of Africa's hardy micro-factories already deal with logistics. 

And now that concerns about our environmental footprint, a shift towards fresh and lightly processed foods, a surge in urban on-demand deliveries, and the rise of do-it-yourself home decor are all interconnecting to redefine the modern logistics landscape, African frugal innovators have a strong advantage if only they can find mutually rewarding ways to work with Africa's small-time traders; they need to become “transmediaries", building out the nodes of the network, and not just intermediaries linking points of least resistance.

Disclaimer: this article was written by an external expert contributor to CEVA Insights. The perspectives and ideas are the contributor's and do not necessarily reflect the views of CEVA Logistics.

Bright Simons

Author: Bright Simons

Bright Simons is the President of mPedigree, a social enterprise working on three continents using innovative technologies to secure communities from the harmful effects of counterfeiting. He is honorary director of development research at IMANI, a TED and Ashoka fellow and consulted on innovation strategy by international organizations such as the World Bank, UNECA, USAID, and the Commonwealth. In 2016, Fortune Magazine named Bright in their 50 World’s Greatest Leaders.


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