Jonathan Ndede would often hear his logistics industry friends talk about how difficult it was to navigate the informal transportation market while catching up during their free time.
For one thing, their drivers would have to wait in yards for extended periods of time in order to find a walk-in consumer willing to do business with them, or rely on brokers who would take hefty commissions on the money they made, eroding their earnings.
When they got a prospect, they would have to charge a lot of money because the products would only be delivered one way and there would be no return luggage to pay for the return trip. Some clients were put off by the rates.
Ndende, a software engineer, sought a solution to this problem. In 2019, he found a way to use his 30-year tech experience to develop a solution to bridge the gap between transporters and clients.
“We knew that there was an issue in terms of logistics transportation, supply chain and commercial movement of goods from point A to point B. Movement of people has been easy because of availability of platforms such as Uber and motorbikes, but it hasn’t been the same in the transportation of goods. The only solution was to go digital, riding on the fact that smartphone usage in Kenya had increased,” he says.
Mr. Ndede began by approaching local investors, who assisted him in raising approximately Sh50 million to launch the e-platform Ngamia Africa. His company’s board of directors was afterwards constituted by the investors. He used the funds to improve the platform, perform market research, and acquire new customers, as well as to keep human resources and an office running.
The platform was built in such a way that if a user registered and requested that their items be carried, they would receive a list of transporters who had registered as third-party service providers on the site. The transporters would begin bidding on the consumers’ requests in a competitive manner.
Once the customer saw a deal they liked, they would select it and deposit the payment into an escrow account. The system would release 70 percent payment to the driver after completing the first movement, then release the rest later once the customer was satisfied that the goods were delivered.
“We were trying to eliminate the previous way of invoicing where persons transporting goods were only paid after doing the job. At times they were not paid at all, or it took longer for them to get paid because they had to make an invoice first, ”says Mr Ndede.
With such qualities, Jonathan was convinced that this was the platform that would completely transform the logistics business. However, there were certain considerations that they had neglected.
For one thing, most transporters were still using low-end phones, making it difficult to connect to the Internet or even track their location while on the road. Others might have smartphones, but they were rarely online. As a result, they had to devote a significant amount of resources to educating drivers about the need of going digital.
“Whenever a client needs their goods delivered, besides asking the people they know, they are likely to go online looking for the drivers that are readily available. Further, especially if the client needs to transport goods of value, they will need to be assured of the credibility of the person handling their goods, and that can only happen if the driver is using a credible online site, ”says Mr Ndede.
He adds that over time, more drivers began embracing their platform, and their database grew to close to 5,000 registered drivers – 1,500 in Nairobi. Just when business was starting to pick, however, the Covid19 pandemic struck.
While many people would now rely on online platforms to conduct most of their transactions, the level of disposable incomes diminished.
“It was a big test for us. For six months there was no business and we were almost going under. But our directors encouraged us to remain resilient and use the available financial resources to take care of the human resource and also strengthen our product, ”says Mr Ndede.
The techpreneur says this resilience paid off. Soon enough, business began picking and they could see a return on their investment. The Ngamia Africa team of six developers even managed to develop another feature called Marquee and integrated it into the e-platform to complement the haulage feature.
“We wanted a scenario where transporters could also identify what is out there, in terms of the things they may need in transit such as tires, petrol stations or garages.
“Therefore, Marquee came as a platform where companies offering these products could advertise,” says Mr Ndede.
Within a short while, they got several advertisers on the platform and this encouraged them to later open it up to other businesses to advertise their products for between Sh1,000-Sh3000.