Where is Africa’s food value chain headed?

Figure 5:Investment in each layer of the food value chain 2019-2022. Source: Briter Bridges. Last mile logistics was not a separable category.

So what important trends do we see on this landscape? Figure 5 shows venture investing activity which overwhelmingly goes to the storage, logistics and distribution segment, which is in turn mostly driven by major rounds of the B2B restock market leaders. In the past year alone, companies, including Wasoko, MarketForce, Twiga, Maxab, Sabi, and Omnibiz, have raised over $400 million in venture capital and debt financing.

In fact, there is so much activity here that we decided to launch our Retail Digitization Tracker study, which interviews a representative sampling of 2,200 retail store owners and managers across the major urban areas in Nigeria and Kenya. The data charts who is winning in the restock wars as well as the usage of other forms of digital tools and marketplaces by retail locations. We put together a great webinar with four of the market leaders in the restock wars discussing this data and market trends here and PPT here (please contact jake@dfslab.net with inquiries about further analyses of the data).

The restock players are some of the most well placed to corner this value, but they also live in a challenging position as margins are quite low (3–5% generally) and traditional retail owners tend to focus on price and convenience—two things that lead to a race to the bottom of price wars and logistics costs. Meanwhile the space is becoming crowded and competitive.

So yes, food is hard. But we see many points of light.

Between the sector growth and large influxes of investment money there is also a good deal of innovation. In addition to the well funded market leaders, there are lots of smaller players who are tackling different niches, geos, or new models. Examples include Maad who are recreating the restocking model to fit West Africa, Logistify who are building software to make warehousing efficient, Tushop who are creating a group-buy social commerce model in Kenya (a la Pinduoduo in China), Orda creating a SaaS and neo-banking for restaurants, 500Chow with their new take on ghost kitchens, Bumpa who are creating the social commerce operating system, Ando with a growing collection of popular food brands in East Africa, GoBeba who are creating the first dark store model in East Africa, and the list goes on. The market is deepening and running experiments across many models and points on the value chain.