Zambia: A ‘land-linked’ tech ecosystem
Between 1 and 5 October, our team was in Zambia to provide further support to our portfolio start-up, Musanga Logistics, and reflect on the progress made since we started funding them back in February 2018. The week was also coinciding with the launch of the Musanga Logistics mobile app. Lastly, the team was invited to speak on the role of mobile technologies in supporting entrepreneurial ecosystems across Africa at the Impact Capital Africa conference on 2 and 3 October. Here are our main takeaways from this packed week immersed in Zambia’s tech ecosystem.
1. Zambia is land-linked, not landlocked
According to the World Bank, inland transport costs are a higher proportion of supply chain costs throughout Sub-Saharan Africa compared to the rest of the world. High transport costs affect the ability for micro, small and medium enterprises (MSMEs) to offer affordable goods across the region – especially so in Zambia. In addition, Zambia has 18 million people spread across a landmass of 743 thousand square kilometres fully enclosed with land by its eight neighbouring countries – further compounding the inland transport challenge. Compared to Kenya, Zambia is 70 per cent less populated per square kilometre. As a result, connecting goods and services to consumers via existing road infrastructure represents an enormous challenge and cost to MSMEs. Musanga Logistics, one of the GSMA Ecosystem Accelerator portfolio start-ups, aims to simplify the process of delivering goods to consumers by connecting business owners to a network of truck drivers and bike riders across Zambia.
Through Musanga’s mobile app (on Android and Apple app stores) – launched on 4 October – businesses can now seamlessly connect to a network of drivers across Zambia. The solution helps businesses reduce their transport costs by up to 40 per cent, enables drivers to optimise their resources by matching them to more jobs and allows businesses to focus on their competitive advantages by removing the transportation burden from their list of activities.
Musanga’s team expects to have over 1,500 trucks registered on their platform by end of 2018.
2. A multi-stakeholder approach is required to unlock more opportunities
In addition to delivering their core service on a mobile app, Musanga is working with MTN Zambia to integrate their app with MTN’s mobile money service, and jointly market Musanga’s product to MTN’s customer base. The mobile money functionality will further simplify payment collection processes by enabling Musanga’s app users to settle payments instantly upon delivery.
This need for multi-stakeholder collaboration in the ecosystem was a central discussion point at the Impact Capital Africa event hosted in Lusaka and which brought together donors, investors, start-ups, tech hubs, government and private sector who openly shared about their experiences on doing business in Zambia. The two-day event demonstrated that more collaboration between stakeholders will ultimately unlock more social and financial value for citizens and businesses.
During a panel session, we discussed how we have been funding and supporting Musanga Logistics over the past seven months through the GSMA Ecosystem Accelerator programme. Musanga’s experience illustrates that start-ups and mobile operators (in this case MTN) can work together to unlock commercial and social value for each other. On the funding side, with the support of the UK Department for International Development (DFID), we have been able to allow Musanga Logistics to further de-risk their business, in turn improving their chances of commercial sustainability. All the while Musanga continues to deliver social impact by unlocking additional income for drivers and customers (MSMEs). In this case, win-win partnerships between the private sector (mobile operators), a start-up and donors leads to better outcomes for the business and the community at large.
As seen during the conference, investors such as AHL Venture Partners and Kukula Capital continue to play a critical role in providing follow-on funding to early stage businesses. To date, AHL Venture Partners has funded five Zambia-based businesses while Kukula Capital remains one of the few Zambia-only investors. However, with the exception of the recently created Zenga Venture Fund, early stage angel investors in the sub-$100,000 range are absent in Zambia’s start-up ecosystem. A few players are however, starting to close the gap. This is the case of Bongo Hive, one of Zambia’s major tech hubs, currently building a venture fund that will provide financial support to promising early stage start-ups before passing them on to commercial investors with larger ticket sizes.
3. Mobile is not a silver bullet but holds immense potential
GSMA Intelligence data shows that unique mobile subscribers in Zambia have grown from just under three million to about thirteen million in the last decade alone. In order to distribute existing mobile dividends across multiple industries, mobile technology provides the rails on which other industries can thrive. FSD Zambia data already shows that mobile money is closing the financial access gap in Zambia by providing financial services to 14 per cent of the adult population locally despite 40 per cent of the adult population remaining financially excluded.
Case in point on the enabling role played by mobile technology, the Lusaka-based start-up, RecycleBot, is leveraging a blockchain-powered mobile app to build an efficient recycling chain while Outsource Now is building mobile-enabled point of sale devices that help MSMEs to manage finances more efficiently.
Similarly, in 2017, a Zambian pay-as-you-go (PAYG) solar start-up, Vitalite, received grant funding from the GSMA Mobile for Development Utilities Innovation Fund to develop and trial smartphone and cookstove add-on products for their existing PAYG solar home systems (SHS). The project aims to drive an adoption of 1,500 smartphones and 500 cookstoves expanding to new regions in rural Zambia.
In summary, mobile technology will continue playing a critical role in delivering social impact through commercially sustainable businesses across multiple sectors one Musanga Logistics or Vitalite at a time.
We would like to end this blog post by thanking Impact Capital Africa, Musanga Logistics, Kukula Capital and Zenga Ventures for being great hosts during our week in Zambia.
The GSMA Ecosystem Accelerator Innovation Fund provides selected start-ups in Asia Pacific and Africa with equity-free funding, technical assistance, and the opportunity to partner with mobile operators in their markets to help scale their products and services into sustainable businesses with positive socio-economic impact.
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