Logistics in Africa is a menace, and firms that try to launch logistics businesses face a mamoth of hurdles from poor infrastructure to double insurance on both the goods and the machinery and the capex is way too high.
East Africa is reported to have the highest freight and transport costs in the world; over 50% higher than the USA and Europe per kilometre. Indeed, transport costs for land locked countries in the region can be as high as 75% of the value of exports. Transit times have the most significant effect on exports and also result in firms having to carry higher levels of stocks making them less efficient.
To solve this, a US$ 16 million challenge fund has been opened for innovators who can devise a strategy to crack the code into reducing the cost of transport and logistics in East Africa. The Logistics Innovation for Trade (LIFT) challenge fund will provide grants ranging from US$ 200,000 to US$ 750,000 to winning proposals from innovators from across the world but whose ideas will be implemented in East Africa.
LIFT is managed by TradeMark East Africa (TMEA) Challenge Fund with funding support from UK-DFID; and seeks to trigger and introduce innovative approaches to tackling freight and transport costs in East Africa region. Successful LIFT project applicants will contribute to TMEA objective of reducing transport time along the main East Africa transport corridors by 15% by 2016.
TMEA Senior Director, Business Competitiveness Lisa Karanja said, “Our desire is to see East Africa adopt world class logistical technologies so it ably competes with the rest of the world. LIFT is a challenge to the private sector to develop and test new ideas that could reduce the cost and time of transport and logistics. Through the fund, TMEA will co-invest with the private sector in projects that have the potential to achieve this but may be too risky to undertake without external support”.
She added, “Across trade, we’re calling on the world’s brightest minds to tackle East Africa’s toughest challenge in trade: Transport and Logistics. In the last few years, TradeMark East Africa through its Challenge funds has rallied innovators, entrepreneurs, private businesses and IT geeks to tackle some of East Africa’s toughest trade problems. Today, East Africa is in dire need of new ideas and bold solutions to tackle its high transport and logistics cost.”
TradeMark East Africa Challenge Fund manager, Mr. Isaac Njoroge said, “The Challenge fund comes in to help private businesses and innovators mitigate risks of high return projects that are risky and have not been tested. The fund is open to businesses and individuals throughout the world that are operating or will operate in EAC. Businesses in the transport and logistics industry and those who provide services to it are hereby invited to submit the most innovative ideas to LIFT.
Noting the contribution of Challenge funds in providing solutions Njoroge added, “Transit times are an important determinant of trade and the competitiveness of firms. A reduction of one day in transit times leads to 7% increase in export for example. Thus reducing cost and time of transport would increase trade, reduce cost of living and contribute to higher exports and faster growth to create jobs.”
Since its inception in 2012, TMEA-Challenge Fund is supporting other Trade innovations worth US$ 10 million such as the Airtel Cross Border money transfer targeting Kenya, Uganda and Rwanda and the Africado Limited’s “Developing Export Markets for Avocado in Kilimanjaro Region which invested in capacity-building activities for avocado farmers, construction of a packing, cold chain export facility using new technology which ensured packaging and preservation was optimized.
Details for submission of proposals can be found in the LIFT website: www.lift-fund.com