Nigerian digital freight marketplace startup Kobo360 raised $20 million in a Series A funding round led by Goldman Sachs while pocketing another $10 million in working capital financing from Nigerian commercial banks. Kobo360 is one of the most recognized FreightTech players in Africa, revolutionizing a cacophonic market riddled with several inconsistencies.
Kobo360 began its journey from the largest Nigerian city of Lagos in 2017, looking to restructure the Uber model to suit on-demand capacity and freight volume matching over a digital platform. But unlike in the U.S., there are few digital freight matching players in Africa, partly due to the challenges that the emerging countries of Africa face – issues that are nearly non-existent in the West.
The economic challenges within African markets mean that digitalization of the freight sector is not just about educating carriers and shippers of its advantages, but to further look at measures that could serve the industry at-large even when the infrastructure is not quite there yet. In that context, Kobo360 is looking to overhaul critical financial problems of drivers by spinning off its capital finance program called KoPay, KoboSafe driver insurance, and even services that provide tuition assistance for drivers’ kids.
Though intercontinental trade in Africa is vital for the economic growth of its countries, the market opacity and the lack of a unifying language across the continent are key concerns. To circumvent these issues, Kobo360 has introduced its app in several local languages to ensure its drivers are comfortable with the digital experience.
The bulk of logistics processes are carried out through paperwork, faxes and phone calls. It results in incongruous communication, leading to critical inefficiencies with goods being hauled amidst severe time lags. This is especially hard on global forwarders like DHL or FedEx, that have to call up hundreds of carriers to move loads to make sure a handful turn out at the given location at the given time.
Kobo360 brings visibility to the market, claiming to have registered over 10,000 trucks on its platform. The digital platform brings in greater accountability among carriers, helping freight forwarders get their logistics pipeline in order and reduce operational uncertainties. Kobo360 now has a varied customer base, comprised of companies like Dangote, DHL, Honeywell, Olam and Unilever.
The introduction of the African Continental Free Trade Area (AfCFTA) agreement is beneficial for startups like Kobo360. Signed in June this year, AfCFTA will make intercontinental trade more seamless by reducing many of the barriers to trade. The 55 nations that signed the agreement cumulatively represent a $3 trillion economy, which makes this trade region the fifth-largest economic front in the world.
With complexities in customs processes erased by AfCFTA, startups like Kobo360 can now scale-up across different countries with relative ease. The company has stated that it will use the Series A investment to upgrade its platform and expand to 10 new countries, apart from its existing hubs in Nigeria, Kenya, Togo and Ghana.
Kobo360’s largest competitor in Africa is Lori Systems, a Kenya-based e-logistics startup, that has similar aims to that of Kobo360. Lori Systems’ impact is heavily felt in the commodities trade between Kenya and Uganda, with more than 40 percent of the key commodities that move between the two countries running through the Lori platform.