Grace Ashiru
Guinness Nigeria Plc, alongside other major consumer goods companies, is increasingly turning to startups to tap into Africa’s vast informal retail market.
Flour Mills of Nigeria Plc has invested in OmniRetail, a startup that offers inventory management and payment services via a mobile platform. OmniRetail connects 130 manufacturers, including major companies like Guinness, CHI, and Dufil Prima Foods Plc, with 14 banks and logistics providers, reaching over 150,000 small retail stores in Nigeria, as well as informal vendors in Ghana and Ivory Coast.
Emerging businesses like OmniRetail and TradeDepot are unlocking the potential of a market comprising approximately 8 million informal traders in Nigeria. These online platforms enable manufacturers to reduce distribution costs and expand their reach in a country that ranks 29th on the Africa Infrastructure Development Index for its transport network.
Informal retail is a dominant force in Africa, accounting for up to 80% of sales in some countries, contributing similarly to corporate revenues in places like Nigeria. According to the International Labour Organisation, the sector supports around 86% of Africa’s workforce, particularly in agriculture, trade, and services.
For retailers, typically operating from small stalls or roadside setups, better access to goods translates to greater income potential, especially in a nation where many live in extreme poverty.
Adetilewa Adebajo, CEO of CFG Advisory in Lagos, explained that the consolidation of services enhances efficiency for manufacturers and reduces costs for retailers, particularly the last-mile traders. He also highlighted the case for digitization to facilitate trade, given the country’s underdeveloped road infrastructure.
These startups are tackling several challenges faced by businesses in Nigeria. Rampant unemployment, widespread poverty, insecurity, a volatile currency, and decades of economic mismanagement have caused many international companies to exit the country.
OmniRetail, based in Lagos and backed by a Norwegian development finance institution, processed 1.3 trillion naira ($849 million) in sales transactions last year, according to CEO Deepankar Rustagi. The platform provides real-time market demand and retailer behavior data, which has helped Flour Mills expand into Ghana and Francophone West Africa. Boye Olusanya, CEO of Flour Mills, pointed out that Guinness had managed to reduce its distribution costs by up to 20%. Girish Sharma, CEO of Guinness, emphasized how the platform streamlines the entire process for manufacturers, from order placement to payment by distributors, facilitating real-time transactions.
OmniRetail and Koolboks, a company that sells solar-powered refrigerators to small retailers, raised a combined $31 million in funding this year for expansion. Koolboks, which partners with major firms like Coca-Cola, Guinness, and Flour Mills, is offering both solar and regular refrigeration units to help retailers preserve food and drinks, boosting their sales. The company plans to raise another $30 million, part of which will be used to ramp up its refrigeration production capacity from 7,000 to 72,000 units annually, according to Managing Director Ayoola Dominic.
While fintech platforms enhance supply-chain efficiency by cutting costs for both manufacturers and retailers, they don’t guarantee future growth for the mom-and-pop shops. Yele Okeremi, CEO of financial technology firm Precise Financial Systems, warned that as time progresses, companies and apps might bypass the retailers and sell directly to consumers for higher margins, similar to Amazon’s business model. Okeremi also noted that weak institutions for dispute resolution, exchange rate volatility, and other risks are dampening investor confidence.
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