From an e-commerce venture adapted for rural Africa to a firm that allows anyone to profit from farming, here are five companies that have thought outside the box to introduce innovative business models in Africa.
1. An e-commerce model tailored for low- and middle-income consumers in Africa
A woman walks into a hairdresser in Siaya, a town in western Kenya, about 400km from Nairobi. While having her hair done, she browses through a printed Copia catalogue of products ranging from bulk fertiliser to face cream and flat-screen TVs. She places an order for her monthly toiletries with the hairdresser and pays for everything, including her new hairstyle, at the end of her visit. Two days later, an SMS informs her she can collect her order from the hairdresser.
“What we bring is, in essence, the largest virtual supermarket in Kenya,” says Tim Steel, CEO of Copia. The company caters to lower- and middle-income customers in Kenya and Uganda.
Copia works through a network of over 30,000 third-party agents who all own a small business, like the hairdresser in Siaya. These shopkeepers recruit customers for Copia, advise them on products and inform them of promotions, and earn commission on each sale. They then receive the deliveries and act as collection points.
2. A unique business model to move everything from cows to coffins in Rwanda
OX Delivers is a logistics company operating in Rwanda. The business runs a fleet of specially designed off-road electric vehicles, allowing customers to transport goods across rural areas.
OX Delivers has designed a heavy duty truck made to operate in a rural environment with bad roads. However, it soon realised that selling these vehicles would be difficult as the market for new vehicles in many African countries is limited. So instead it started a transport service using these trucks. Customers can book space on the trucks to transport anything from cows to coffins in rural Rwanda. The company currently has eight trucks operating in the country. It has seen rapid growth and recently raised $3.4 million from investors to further expand the business.
3. How Ilara Health found a way to sell healthcare devices to informal clinics in Kenya
Ilara Health is a company which provides diagnostic equipment and services to small clinics and pharmacies on the outskirts of urban areas in Kenya.
“Seventy percent of medical decisions require some form of diagnosis, like a blood test. Yet, there are more than 500 million people in Africa today who struggle to access, or cannot afford, a simple blood test. At Ilara Health, we make diagnostics in Africa more affordable, accessible and accurate to bridge the diagnostic gap and improve the quality of care,” explains co-founder Emilian Popa.
Greater availability of diagnostic equipment not only has health benefits, but also enables clinics and pharmacies to boost their revenue by offering additional services to patients. However, the cost of traditional diagnostic machines can run into tens of thousands of dollars, which is too expensive for Ilara’s customers.
To overcome this, Ilara has partnered with international manufacturers of next-generation small portable diagnostic devices, many of which integrate with mobile phones.
While Ilara’s devices cost a fraction of legacy diagnostic equipment, their price tags are still too high for informal clinics to purchase outright. To make its equipment more affordable, Ilara introduced an innovative financing option: its clients pay a small upfront deposit and the balance is settled over up to 36 months. Ilara’s devices are connected to a technology platform that allows the company to turn them off remotely if a client doesn’t pay.
“At the core of our business is a subscription model that enables our facilities to access the latest developments in diagnostic technology at a low initial cost,” Popa explains.
4. Start-up introduces electric fishing boat engines on Lake Victoria
ASOBO provides daily and long-term rentals of its lithium battery-powered electric boat engines to fishers on Lake Victoria, together with a complete maintenance and support package.
The primary challenge for most fishers is cost, and fuel is by far the biggest contributor. Fishers have very little leverage when buying petrol or diesel. There is also a high degree of unreliability and maintenance expense that comes with traditional petrol or diesel engines, along with a substantial upfront cost. With ASOBO’s electric engines, the daily cost is on average around 25% cheaper, and its service model means ongoing expenses are a lot more predictable.
5. Livestock Wealth allows everyday investors to profit from farming
Livestock Wealth is a South African company that allows anyone to profit from farming. In the same way someone can purchase stock in a company or invest in a money-market account, the platform enables its clients to invest in livestock and crops raised or cultivated on a farm.
The company offers investors four different products: a free-range ox, a pregnant cow, a connected garden or a macadamia nut tree. The prices of these products are fixed with Livestock Wealth’s commission built-in. The investment terms and prices range from R2,000 (about $122) for a macadamia nut tree and a profit of between 95% to 105% after six years, to R18,730 (about $1,141) for a pregnant cow with a profit of R1,873 (about $114) to R2,622 (about $160) after 12 months.
“The premise of all the products is very simple,” explains founder Ntuthuko Shezi. “Each of them looks like and behaves like a bank fixed deposit that follows the life cycle of that product.”