Reimagining the Future of Retail Trade in Africa through Public-Private-Partnerships
Traditional retail trade across Africa is notoriously fragmented and expensive to service, with hundreds of thousands of independent retailers being serviced by an equally fragmented network of distributors, wholesalers, and sales agents. Each step in the chain adds more to the final price of the good to consumers. Manual forms of operations and data capture (e.g. pen and paper for 90% of retailers) and lack of systems for tracking goods/sales down the value chain provides poor real-time market visibility for all actors, leading to a myriad of issues such as low product availability, frequent retailer stockouts or shop closes (e.g. to travel for restock), the concentration of margin/benefits higher in the value chain, corruption risk, and general lack of optimization towards a better consumer price.
In the journey of seeing how best to bridge the pertinent value chain gaps which perennially cripple retail trade across Africa, MarketForce has spotted an immense opportunity in Public-Private-Partnerships, otherwise known as PPPs.
Over and above B2B E-Commerce and Retail Tech, which has significantly made a difference over time, we believe that an Ecosystem comprising Government (or Government Agencies) and the Private Sector, will go a long way in closing the loop of revolutionizing Africa’s informal trade both in the short and long term.
PPPs in the context of Africa
PPPs typically involve collaboration between a government agency and a private sector body to finance, build and deliver a public asset or service. They combine the strength of the government’s mandate and ability to deliver public services, with the private sector’s investments, technology, products and distribution systems.
PPPs are not new in Africa, and world over we have seen several markets express interest in this kind of partnership, especially on large infrastructure projects. Of late we have equally seen interest in thematic areas like the provision of basic health services and good & affordable education.
With more governments setting technology-enabled goals, the timing seems right to apply the principles of PPP for technology innovation.
It really is the logical next step.
Beyond, and perhaps even more important than direct efficiencies from using private industry experience and innovation, PPPs can serve as catalytic investments into the national economy which produce sustainable benefits of jobs, IP, and economies of scale for SMEs and corporations. Private partners in PPPs can leverage the scale of government contracts to grow their businesses and customer reach, including building up the local economic infrastructure such as a healthy local supplier base and network of contracts/partnerships, which reap benefits in the supply chain and local economy far beyond the PPP.
PPPs and Retail Tech; Where do we start and what will be the winning formula?
In the B2B e-commerce and retail-tech space that MarketForce plays in, we see the tremendous promise that constructive engagement and effective collaboration with the Government holds in unlocking the latent potential of informal retailers through a distribution-as-a-service model. Imagine a world where governments, NGOs, or development agencies that wish to distribute a critical good, service, or awareness campaign use existing informal sector infrastructure rather than funding a parallel donor-reliant supply chain – a world where the service is delivered with better reach while the small shop owner or local youth gig earns a living for helping distribute that service, leading to more growth and investment in their own local businesses.
The synergy between Government and Private sector needs to begin with the common understanding that the informal merchants are the bedrock of Retail trade across Africa who comprise over 80%. This will be realized through a comprehensive collaboration between Government’s access and provision of subsidized commodities and services on one hand (whether by stimulating local production or Government to Government treaties and concessions), and on the other hand, Private Sector’s proven technology platforms and robust infrastructure. The synergy is to ensure that:
- Government achieves its core objective of creating:
- The right trade environment through the formalization of informal businesses
- Job opportunities especially for the youth population
- Competitive and affordable prices which will go a long way to reduce inflation costs
- Private sector and technology partners create the right marketplace technology platforms where informal merchants (at the touch of a button) can access affordable goods, digital financial services and stock loans, which over time create the much-desired business growth.
Increasingly, we believe PPPs will play a critical role in achieving global scale and local impact beyond large infrastructure projects. The technology innovation actors in the private sector will be integral in fostering PPPs that streamline efficiencies, accelerate impact, and support governments to meet the rapidly evolving needs of their citizens. The era of catalytic government investment and procurement down to the MSME level, utilizing local private sector ‘as-a-service’ models to increase sustainable economic impact alongside the core program objectives, is upon us.
The time is now to make this work as we revolutionize Retail Trade across Africa.
MarketForce is building the largest retail distribution network in Africa through an organic and inorganic growth strategy. Our goal is to be the ultimate partner for neighborhood merchants, empowering them to maximize their profits and grow in a digital age by getting better service and access to new revenue opportunities. We are operational in 5 markets in Africa (Kenya, Uganda, Tanzania, Rwanda, and Nigeria), with over 200,000 merchants and ~200 consumer brands trading on the platform. Together, we are reimagining a better future for retail trade and the communities we serve.