The future of Africa’s transport sector

Amidst the ongoing and unprecedented disruptions in global supply chains, Africa’s transport and logistics sector is experiencing a historic transformation. In just five years, African logistics startups have attracted $1.8 billion with a market that is projected to nearly double from $344 billion in 2020 to $447 billion by 2029. Nigeria’s Moove, a startup that finances vehicles for ride-hailing companies, is raising capital with a valuation at more than $2 billion, reaching unicorn status. By 2030, maritime trade is expected to grow from 58 million tonnes to 132 million and the African Continental Free Trade Area (AfCFTA) is set to increase intra-African freight demand by 28%, requiring 2 million additional trucks and 100 vessels. 

My book, “Realizing Africa’s Potential: A Journey to Prosperity,” highlights how despite its $150 billion annual infrastructure investment gap, Africa’s transport and logistics sector is a promising opportunity for investors to maximize impact and returns on a continent that is becoming one of the world’s most dynamic frontiers.

Key trends and investment opportunities

AfCFTA trade integration: The AfCFTA represents the fundamental growth driver as concerns transport and logistics. It is projected to increase intra-African trade by 109% by 2035, while the demand for intra-African freight could see a 28% increase by 2030. This year, Nigeria launched its AfCFTA air corridor to export to other African countries starting with Kenya, Uganda, and South Africa. According to their Minister of Industry, Trade, and Investment, this corridor will cut export logistics costs by 50-75%, offering a glimpse of the future benefits of full implementation of the AfCFTA.

The digital revolution: E-logistics are an important driver of the growth in Africa’s logistics sector, as across the continent, technology-enabled solutions, such as real-time tracking and mobile payments, are overcoming infrastructure limitations. As for market leaders, Nigeria ($676 million), Egypt ($409 million), Algeria ($182 million), and Kenya ($181 million), have attracted the most investment in their logistics and transport startups sector between 2020 and 2025. Companies like Egypt’s Trella are finding success in pioneering cross-border freight digitization. Looking ahead, opportunities abound for investment in tools for modern logistics technology (such as GPS tracking and cargo/real-time fuel).

E-commerce driven demand: A survey of African logistics companies found that 87% focus on B2B (business to business) solutions compared to only 5% who focus on B2C (business to consumer) solutions. The continent’s e-commerce explosion creates unprecedented logistics requirements. Africa’s e-market value is expected to reach $2.35 billion by 2030, more than double what it was in 2021.

Infrastructure megaprojects: Massive capital deployment is reshaping physical transport networks. South Africa’s 2025 budget includes R402 billion specifically for improving its transport and logistics sector, including improving the road network and railway systems. Strategic corridors are also being built to connect with consumers. For example, the Cotonou-Niamey corridor connects Benin’s Port of Cotonou to a market of 34 million people living nearby in Niger and Burkina Faso, while upgrades to ports in Egypt, Nigeria, and Kenya have expanded to accommodate large vessels. Investors can find lucrative opportunities to participate in Africa’s continued upgrade of its logistics infrastructure to accommodate growth. 

Green logistics solutions: Environmental considerations are driving innovation in sustainable transport. Nigeria just secured a $60 million investment in its first green port, which will focus on electrified container freights, making it a leader in sustainable port operations. Meanwhile, a Kenyan company is connecting rural farms with solar-powered refrigeration systems, offering an innovative solution to maintain cold chain resilience even between farms that are not connected to an electricity grid. Environmental, social and governance (ESG) concerns are also driving ambitious goals to reduce carbon emissions through optimized routing and electric vehicles in urban areas. 

Key challenges

African transport costs currently run at $1.8 per kilometer per container, whereas the  international benchmark is $1.0, indicating challenges with both infrastructure deficits and operational/regulatory barriers. In Nigeria, the Lagos Chamber of Commerce and Industry estimates that challenges such as poor roads and electricity alongside seaport and customs systems inefficiencies cost the country $8 billion per year—$5.8 billion of which is lost corporate earnings.

Physical limitations significantly impact the costs for investors and the potential for scale. For example, connecting rural networks who are isolated with inadequate road infrastructure will continue to be a challenge (although this has potential to be met with digital technologies). For farmers, inadequate infrastructure for storing and transporting agriculture leads to significant food loss. Fishers near Kenya’s Lake Victoria cite a loss of half of their daily catch due to these deficits, while the continent as a whole loses, on average, 37% of its locally-produced food in transit, with a food supply chain traveling four times longer than Europe’s.

Operational and regulatory barriers also create systemic obstacles, with cross-border processing delays and regulatory complexities due to fragmented procedures. While financing for logistics and transport companies has been impressive via private equity deals and debt financing deals, capital is so far concentrated in a few high-growth companies in a few key markets (Nigeria, Egypt, Algeria, Kenya, and South Africa), meaning smaller companies might have a harder time accessing affordable financing.

Winning investment strategies

Given the incredible boom in demand for transport and logistics products and services due to increasing populations, incomes, and intra-African connectivity, investors should consider a few key strategies to overcome challenges.

Technology-first approach with diversification: Investors should focus on platforms that address the unique challenges in the African transport and logistics sector, many of which are suited to be met via digital solutions. Rather than relying on new massive construction of infrastructure, investors can leverage sub-Saharan Africa’s growing smartphone penetration rates (expected to reach 88% by 2030) to overcome challenges via mobile-based payment and tracking systems. For investors focused on advanced technologies, AI-powered route optimization platforms that reduce delivery costs and times is an example of how tech can be integrated to address unique challenges. For risk mitigation, investors can diversify across multiple technology platforms and countries to avoid single-point failures.

Public-private partnerships with integrated value chains: Investors should explore and leverage government support while maintaining operational flexibility through structured partnerships. Strategies and examples include participating in strategic corridor development projects like Cotonou-Niamey and Abidjan-Lagos (which will support regional integration), supporting port modernization initiatives with government co-investment, engaging with the African Development Bank and World Bank infrastructure programs for blended finance opportunities, and targeting Special Economic Zone logistics infrastructure across Africa’s 300+ SEZs in 38 countries. For risk mitigation, investors should structure deals with clear governance frameworks, performance milestones, and exit mechanisms.

Sustainability-first method with financial innovation: Investors should position for long-term regulatory compliance and cost advantages while addressing capital constraints through innovative financing. Some examples include: investing in electric vehicle fleets to replace the diesel pump market and investing in solar-powered warehousing networks, supporting logistics fintech platforms providing working capital to transport operators, backing companies that implement route optimization to reduce fuel consumption and blockchain for supply chain transparency, and targeting carbon-neutral logistics operations aligned with global ESG requirements. For risk mitigation, investors can choose solutions that deliver immediate cost savings alongside environmental benefits.

Together, these strategies can help new and existing investors propose innovative and effective solutions in the African logistics and transport sector as it gets transformed to accommodate the incoming influx of demand. The investors and companies that recognize this moment will help build the infrastructure backbone that will connect 2.5 billion people to markets in 2050.