Predicting potential winners of Nigeria’s rising meals supply struggle

This text was contributed to TechCabal by Uche Aniche, co-founder of SSE Angel Community.

On this publish, I attempted to foretell the potential winners of Nigeria’s rising meals logistics house. I additionally evenly broached the dialog round Nigeria’s right market sizing. 

Not too long ago, Bolt, the Estonian ride-hailing firm, introduced it could be shutting down their meals supply operations in Nigeria. Some ecosystem leaders felt they had been displaced by Chowdeck—a YC-backed startup within the house—based by Femi Aluko a Paystack alumnus. I, alternatively, thought it was the results of Nigeria’s latest financial challenges. Nigeria is at present grappling with the dual problems with acute foreign money depreciation and rising inflation. The ride-hailing house (the place Bolt leads and largely makes use of petrol-powered vehicles) has taken a big hit within the wake of the subsidy elimination coverage, which has led to excessive pump costs. 

A lot of the meals supply companies use petrol-powered motorbikes and bicycles. Glovo, Gokada (based by the late Fahim Saleh) ACE Logistics and naturally Chowdeck to say only a few. 

I grew to become conscious of Chowdeck simply earlier than #StartupSouth8 (our annual convention) as a result of they introduced the launch of their operations in Port Harcourt on X (previously Twitter). Subsequently, I began seeing their riders across the metropolis and have become enthusiastic about studying extra in regards to the firm. I noticed and skim a collection of Medium posts by Femi Aluko, the corporate’s founder. I discovered the ideas fascinating and even teased him on X. On my latest journey to Lagos for Zoholics (the place we held a press convention to announce our neighborhood’s partnership with Zoho for Startups), I wished one thing completely different from lodge meals and it was an ideal alternative to attempt Chowdeck’s service. I shared my expertise in a publish on X in the event you’d prefer to know the way it was. 

In the meantime, I solely realized about Glovo when Uche Anisiuba—a good friend, an incredible animation entrepreneur, and a lecturer on the Pan Atlantic College—spoke so glowingly about them. I used to be stunned that there was one other chief in that house. Surprisingly, alternatively, he didn’t know Chowdeck, though he remembers seeing them and even had a faint concept of what their brand appears like. 

Then, on my approach to the airport in Lagos, I used to be surprised by what I noticed; I noticed Glovo’s presence in all places I turned. From Ikoyi to Anthony, from bikers going to ship an order to riders fixing their bikes. Billboards additionally weren’t neglected—many had 25% off meals from Rooster Republic screaming at you. I most likely noticed solely two or three Chowdeck bikers on that route. Maybe it’s notably not their zone; however possibly it doesn’t matter, as a result of Chowdeck received yet one more order and a buyer who would most likely proceed to make use of it in Port Harcourt when mandatory. 

The boundaries of myopic market sizing

The airport in Port Harcourt might be the third busiest airport within the nation after Lagos and Abuja for apparent causes. The airport is a global airport and Port Harcourt, except for being the house of the hydrocarbon trade, may arguably be known as the capital of the South-South area. In response to the Nigeria Bureau of Statistics, the highest 5 airports in Nigeria by way of the quantity of passengers who handed via within the first half of 2018 had been Lagos, Abuja, Port Harcourt, Kano, and Owerri. These 5 airports served over 89.39% of complete passengers (6,707,195) within the first two quarters of 2018. Port Harcourt and Owerri mixed served 10.6% of passengers. Moreover, Port Harcourt was the second-largest cargo vacation spot in Nigeria in the identical interval. 

About ten (conservatively) completely different flights come into Port Harcourt day by day from Lagos. In the event that they conveyed a mean of thirty passengers, this can translate to roughly 9,000 people who find themselves probably uncovered to Glovo that received’t have the ability to use them in Port Harcourt and Ibadan (one of many different cities Chowdeck operates in). 

That is probably why Uber misplaced its management place in Nigeria to Bolt. I bear in mind the response I received in 2016 for asking Ebi Atawadi, then Basic Supervisor, West Africa at Uber, why she wasn’t trying to broaden aggressively to different areas. It made me pray and seek for one other ride-hailing service to dethrone them. 

In 2018, Bolt launched in Owerri after which Port Harcourt following up with different cities like Enugu, Uyo, and Benin. Apparently, I grew to become the very first passenger to experience a Taxify (as they had been referred to as then) in Owerri. My go to in preparation for #StartupSouth4 coincided with their launch. I bear in mind being referred to as by the staff to understand me for being their first rider solely to run into the launch staff at HotFM shortly earlier than they left for Darling FM. They went on to associate with us for the convention that yr.

Bolt would go on to grow to be a market chief in Nigeria forward of Uber beneath the management of Uche Okafor— the well-known Uche from Bolt.

This expertise and the story spotlight the gross underestimation of the Nigerian market over what I consider is the restricted understanding of our returnee founders and their overseas traders. 

I don’t see startups within the US dominating San Francisco/California claiming they’ve conquered the nation and set eyes on worldwide growth. That is what’s at present taking place in Africa, particularly in Nigeria—the largest economic system with a inhabitants of over 200 million individuals. False equivalence, maybe, particularly when evaluating GDPs however at the very least the complete worth of the market must be extracted as a way to right the warped narrative of the African market. I additionally don’t wish to begin the dialog of traders backing merchandise that appear like what they’re used to of their nation forgetting Africa has basic challenges that spell alternatives and but complain when their fantasies don’t pan out.

For this reason we began Insurgent Seed Capital—to again African founders constructing high-growth ventures in in the present day’s secondary cities. We consider extra of Africa’s future unicorns will come from these locations for lots of causes. However for now, we wish to be the primary VC agency to assist these underserved visionaries and future financial titans. 

Whereas Glovo will most likely proceed to dominate Lagos, I and maybe 1000’s of others like me who reside outdoors Lagos however continuously go to, will vote with our pockets for Chowdeck. And if historical past is an effective choose, your guess is pretty much as good as mine as to who would possible win.

Uche is the Convener of #StartupSouth—a Startup Ecosystem improvement and advocacy organisation and a neighborhood of founders constructing high-scale ventures in Nigeria’s South-South and South-East areas. He’s the co-founder of SSE Angel Community and at present the Co-founder and Basic Companion at Insurgent Seed Capital— Africa’s secondary cities-focused Enterprise Capital agency.