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Nigeria’s Kwik Delivery to expand from Lagos to Abuja

By David Whitehouse
Posted on Tuesday, 29 December 2020 10:23

Lagos traffic. REUTERS/Akintunde Akinleye

Nigeria’s Kwik Delivery start-up plans to expand outside its original Lagos market after completing a $2m fundraising, CEO Romain Poirot-Lellig tells The Africa Report.

Abuja is the first Nigerian city on the list, and Poirot-Lellig expects to be operating there by the end of January. He also wants to expand outside Nigeria, with Accra a possible target.

The $2m fundraising was divided roughly equally between Nigerian and international investors. The money raised will be enough for the time being, Poirot-Lellig says. “I don’t believe in over-spending.”

Poirot-Lellig set up Kwik in Lagos in June 2019. The company provides B2B and B2C deliveries, with parcels varying from pharmaceutical products and food during lockdown to spare parts for cars, cosmetics and hair extensions. Having started off with motorbikes, the company in November started truck deliveries.

The challenges of fast delivery in Lagos, which is Africa’s most populous city and has the highest population density in Nigeria, are formidable. According to research by Emmanuel Mogal at the Centre for Multidisciplinary Research and Innovation in Abuja, traffic congestion in Lagos is so bad that commuters can lose up to 75% of their working week.

  • Transportation costs and congestion have increased in Lagos state as a result of Covid-19, Mogal finds.
  • Poirot-Lellig is unfazed by the difficulties. Solving hard problems, he says, is “what being an entrepreneur is all about.” Investments by Google to improve its maps data for Lagos have helped a lot, he says.
  • The company this month agreed a 12-month partnership with Mastercard, which has 70 million customers in Nigeria. Cardholders get a 10% discount on Kwik Delivery services so long as they use their card to pay. Kwik hopes to benefit as Mastercard advertises Kwik’s services through its partner banks.

Jumia “Co-petition”

Kwik competes with e-commerce platform Jumia, which in November said it’s opening its logistics service to third parties. Businesses which are not sellers on its marketplace can now use Jumia logistics to fulfil their orders in countries including Nigeria, its largest market.

READ MORE Lagos motorcycle ban hits digital ride firms, chills investor climate

Poirot-Lellig sees the relationship with Jumia as one of “co-petition” – competition combined with co-operation. “You need to use the best partner at any given time,” he says.

  • Still, he adds, Jumia’s approach to paying for deliveries has room for improvement.
  • Jumia only wants to pay for successful deliveries and makes contractors wait for 45 to 60 days for payment which, Poirot-Lellig says, is “not sustainable.”
  • Even then, payment rates are too low and mean that working for Jumia is unprofitable, he adds.

READ MORE: Getting sucked into current Jumia rally is a recipe for pain

One possible positive side-effect of Covid-19, Poirot-Lellig says, is the opportunity for greater digitalisation of the African economy. Software platforms can raise productivity and open new opportunities, he says.

  • In the long term, Poirot-Lellig sees his company as an enabler of digital commerce through software.
  • Yet, the price of data bundles in Nigeria, he says, is about double that in Europe, which is “crazy”.
  • Governments need to take the lead by strengthening data networks and pushing prices down, Poirot-Lellig says. “We need a unified digital market for Africa.”
  • Nigeria’s government this week said it has cut prices for Internet data by more than 50%.

Bottom line

Data-driven solutions to Africa’s logistical problems will depend on lower data costs.

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