Chowdeck hopes to prove food delivery in Nigeria doubters wrong

A Nigerian company backed by Silicon Valley’s top startup incubator hopes to prove food delivery apps can take off in an underserved market littered with failures.

African e-commerce firm Jumia stopped delivering food in seven countries last December, as did Estonian ride-hailing platform Bolt in Nigeria and South Africa.

But business is booming for Chowdeck, a food delivery app created three years ago that operates in Nigeria. It has doubled its daily deliveries to 40,000 in the three months since it raised $2.5 million from investors that included Y Combinator, Chowdeck’s chief executive Femi Aluko told Semafor Africa. It was Nigeria’s most downloaded food delivery app in the last month, according to tracking platform Similarweb.

Chowdeck’s new partnership strategy may partly explain the surge and offer a model for success. Earlier this month it reached a deal to exclusively deliver orders from Chicken Republic — one of Nigeria’s largest fast food chains — in the southern cities of Lagos and Ibadan. Aluko said deals with other chains are in the pipeline.

Other delivery services are competing in Nigeria. After two years operating a grocery delivery service in Nigeria, Angolan company Mano began delivering food in Lagos and Abuja this month. Glovo, a Spanish outfit that launched in Nigeria in 2021, reported a 166% increase in jollof rice orders on its app last month.

The International Market Analysis Research and Consulting estimates that the Nigerian food delivery sector was worth $936 million as of last year. The sector is poised to shoot past $2 billion by 2032, the research group said.
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Chowdeck’s motorcycle delivery riders operate in eight Nigerian cities, although Lagos accounts for seven in 10 orders. An average order is about 4,000 naira ($2.50) in the Yaba area of Lagos regarded as home to Nigeria’s innovation ecosystem, but up to twice that amount in some interior parts, Aluko said.

Using software to understand customer demand trends and predict the routing of riders, who deliver 12 orders per day on average, to pick up locations is key for efficiency, Aluko told Semafor Africa. He also said the startup has developed a more precise digital map in-house, using the open source service OpenStreetMap, because Google Maps has not fully served the company’s needs for accurate directions.

On expansion, Chowdeck wants its operations in existing cities to be profitable before new ones are started. “It takes three to four months for us to become profitable in a new city,” Aluko told Semafor Africa.

Alexander's view

 

 

 

 

 

 

 

 

 

 

 

Bursts of growth like that experienced by Chowdeck in recent weeks illustrate the expanding reach of locally developed digital technology services in Africa. Mobile money and cashless payments attract the most attention and investment in the continent’s tech scene, but changes in how people buy food online offer opportunities for growth.

The tricky part is identifying the best business model.

Chowdeck started off focusing on street food vendors that offered local delicacies. But while that class of vendors remain dominant on the app, much of its recent growth could be attributed to preferential or exclusive deliveries from popular fast food chains as well as discount offers to customers. For the young student or worker who “understands the value of time” — as Aluko describes Chowdeck’s typical user — the majority of orders arrive within 30 minutes.

Beyond tech and marketing strategies, however, Chowdeck and other current food delivery players also owe their performance to a Nigerian market more prepared for the service, says Osarumen Osamuyi, founder of African tech analysis platform The Subtext.

“My hunch is that the market has been caused to mature by the activities” of earlier players, Osamuyi said. Where Jumia Food started by offering payment on delivery ostensibly to build customer trust, Chowdeck can now take for granted that there is enough confidence in Nigeria’s online payments system to pay before delivery, he said.

Nigeria’s inflation rate of 33.4% is at one of its highest levels in three decades, though it slowed in July. As fuel prices rise in the country, restaurants can be expected to push production costs to consumers, leaving food apps vulnerable to price sensitive users. The inflation pressure will reveal a good deal about the resilience of the country’s food delivery sector, Osamuyi said.
 

Room for Disagreement

Tech-driven food delivery is at an early stage in Africa. It doesn’t boast the multimillion dollar fundraising hauls of startups in fintech and e-commerce.

Last year, Jumia said it scrapped its food delivery business because it had “not achieved profitability since its inception” and could not bear Nigeria’s macroeconomic conditions of soaring inflation and currency devaluation.

Two years ago in Kenya, Kune crashed after barely a year of aiming to fix a street food problem Kenyans said did not exist.
 

Notable

Explaining Jumia’s decision to quit its food delivery operation, CEO Francis Dufay said the sector’s low barrier to entry made it “a very unattractive business” for e-commerce companies in Africa whose major focus is to deliver physical goods.

By Alexander Onukwue, SEMAFOR

Related story: Jumia to shutdown food delivery service in Nigeria

Floods in Nigeria kill at least 49, displace thousands

At least 49 people have been killed and thousands displaced in Nigeria after heavy rains caused flooding in the northeast of the country, the National Emergency Management Authority (NEMA), said on Monday.

Three states in the northeast, Jigawa, Adamawa and Taraba, have been hit hard by floods, with 41,344 people displaced, said NEMA spokesperson Manzo Ezekiel.

In 2022, Nigeria experienced its worst flood in more than a decade which killed more than 600 people, displaced around 1.4 million and destroyed 440,000 hectares of farmland.

"We are just entering into the peak of the season, particularly in the northern part of the country and the situation is very dire," Ezekiel told Reuters.

The floods have also destroyed farmlands affecting around 693 hectares of agricultural land. Nigeria is battling double-digit inflation which has been stoked by high food prices.

Heavy rains have added to problems in the farming sector where farmers are deserting their farms in the northeast due to repeated attacks by militants.

The government in this year's flood outlook said 31 of the country's 36 states were at risk of experiencing "high flood".

"We also have information about the high tide in the upper countries of the River Niger before Nigeria. All of these are flowing towards Nigeria. We are beginning to see a manifestation of our predictions," Ezekiel said.

By Ope Adetayo, Reuters 

Related story: Video - Jigawa Flood: Death Toll Rises To 28, Over 40,000 People Affected

 

Doctors strike in Nigeria over kidnapped colleague

Doctors in Nigerian public hospitals have started a seven-day nationwide strike to demand the release of their colleague, Dr Ganiyat Popoola, who has been held by kidnappers for eight months.

The mother of five was taken from her home in the middle of the night on 27 December alongside her husband and a niece.

Her husband was released in March after a ransom was reportedly paid but the kidnappers held onto the ophthalmologist and her relative.

The doctors say they will not even provide emergency care during the strike.

Dr Popoola works for the National Eye Centre hospital in Kaduna, north-west Nigeria, and lives in the official quarters provided by the hospital.

The hospital is one of the biggest eye hospitals in the country.

Experts say the hospital's location on the outskirts of Kaduna city makes it an easy target for kidnappers.

In 2021, dozens of students were taken from the nearby college of forestry.

Dr Taiwo Shittu of the Lagos University Teaching Hospital said what happened to Dr Popoola could happen to anyone.

“We want the authorities to act fast, this has dragged on for too long,” he said in a video on social media.

The doctors feel the security agencies are not doing enough to secure her release.

The kidnappers are asking for 40m naira (£19,000; $25,000) for their freedom.

Although a controversial law criminalising ransom payments came into effect in 2022, they are still often paid by relatives desperate to free their loved-ones.

The law carries a jail sentence of at least 15 years for anyone who pays a ransom, although no-one has yet been convicted.

The government is yet to comment on the strike or the doctor’s situation.

President of the doctors' association Dr Dele Abdullahi told BBC News that “the family was exploring a diplomatic route initially, but they have now given us the permission to explore other options”.

The doctors' association recently held a march in public hospitals across the country and gave the government a two-week ultimatum for “the unconditional release” of Dr Popoola.

In recent years, kidnapping has become rife in Nigeria, with hundreds of people abducted, largely by criminal gangs who see it as an easy way to make money. It has been particularly bad in the north-west of the country.

By Azeezat Olaoluwa & Mansur Abubakar, BBC

Related story: Police say 20 abducted Nigerian medical students freed

Video - Nigeria’s Central Bank announces a 130% surge in remittance inflows

According to the apex bank, this is a sign that ongoing policy measures to enhance liquidity in Nigeria's foreign exchange market are bearing positive results. 

CGTN

Cows obstruct Nigeria’s capital as climate change and development leave herders with nowhere to go

At an intersection seven miles from the presidential villa, frustrated drivers honk as a herd of cattle feeds on the grass beautifying the median strip and slowly marches across the road, their hooves clattering against the asphalt. For the teenage herder guiding them, Ismail Abubakar, it is just another day, and for most drivers stuck in the traffic, it’s a familiar scene unfolding in Nigeria’s capital Abuja.

Abubakar and his cattle’s presence in the city center is not out of choice but of necessity. His family are originally from Katsina State in northern Nigeria, where a changing climate turned grazing lands into barren desert. He moved to Idu — a rural, bushy and less developed part of Abuja — many years ago. But it now hosts housing estates, a vast railway complex and various industries.

“Our settlement at Idu was destroyed and the bush we used for grazing our cattle cut down to pave the way for new houses,” Abubakar said in a smattering of Pidgin English. It forced his family to settle on a hill in the city’s periphery and roam the main streets for pasture.

Fulani herders like Abubakar are traditionally nomadic and dominate West Africa’s cattle industry. They normally rely on wild countryside to graze their cattle with free pasture, but the pressures of modernization, the need for land for housing and crop farming and human-caused climate change are challenging their way of life. To keep cattle off of Abuja’s major roads and gardens, some suggest that herders need to start acquiring private land and operating like other businesses. But to do that, they’d need money and government incentives.

“It’s disheartening,” said Baba Ngelzarma, the president of Miyetti Allah Cattle Breeders Association of Nigeria, a Fulani pastoralists’ advocacy group. “Nigeria is presented as an unorganized people. The herders take the cattle wherever they can find green grasses and water at least for the cows to survive, not minding whether it is the city or somebody’s land.”

He added that part of the problem is the government’s failure to harness the potential of the livestock industry by offering incentives such as infrastructure like water sources and vet services at designated grazing reserves and providing subsidies.

For its part, the government has said it will address the issue, previously promising fenced-off reserves for cattle herders. President Bola Tinubu announced in July a new livestock development ministry, which Ngelzarma said would help revive the abandoned grazing reserves. No minister has been appointed.
 

Fewer places to go

Nigeria is home to over 20 million cows, mostly owned by Fulani herders. It has the fourth largest cattle population in Africa, and its dairy market is valued at $1.5 billion. But despite its size, almost 90% of local demand is met through imports, according to the US International Trade Administration. It’s a sign of the industry’s inefficiency, Ngelzarma said, as cows stressed from constant moving and poor diets can’t produce milk.

For Abuja, the city’s environment bears the consequence, and so do businesses when traffic grinds to a halt because cows are crossing busy roads. And in other parts of Nigeria, herders are often involved in violence with farmers over access to land, especially in central and southern Nigeria where the two industries overlap with religious and ethnic divisions.

There are four designated grazing reserves in rural areas surrounding Abuja, but they lack the needed infrastructure and have been encroached on by other farmers and illegal settlers, according to both Ngelzarma and Festus Adebayo, who’s executive secretary of the Housing Development Advocacy Network.

With those reserves not functioning, herders set up settlements anywhere and stay for as long as they can before legitimate owners claim it or the government builds on it.

Mohammed Abbas, 67, has repeatedly had to move locations over the years. Most of his current settlement in the city’s Life Camp neighborhood has been taken over by a newly constructed petrol station, and he is aware that the remaining land will soon be claimed by another owner.

As a smallholder pastoralist, he said he could not afford to buy land in Abuja for a permanent settlement and ranching. To afford one, “I have to sell all my cows and that means nothing will be left to put on the land,” he said in Hausa, sitting outside his hut.

Other pastoralists would rather resist.

“We are not going anywhere again,” said Hassan Mohammed, whose family now occupies a strip on the edge of a new estate near the Idu train station. Once a vast bush, the area has been swallowed by infrastructure and housing projects. Mohammed now also drives a lorry on the side because of the shrinking resources needed to keep cattle.

Despite repeated orders from the owners to vacate, Mohammed said that his family would stay put, using the dwindling strip as their home base while taking their cattle elsewhere each day for pasture. The landowners have repeatedly urged the government to resettle Mohammed’s family, but the government has yet to take action.

“Many don’t have anywhere to call home, so they just find somewhere to sleep at night with the cattle,” said Mohammed, in Hausa. “But for us, we are not leaving except there is a new place within Abuja.”
 

Making room for development and cows

Folawiyo Daniel, an Abuja-based real estate developer who has endured difficulties with pastoralists that affect his project development, said the issue is a failure of urban planning.

“Real estate development is not the problem,” he said, and the government should revive grazing reserves in the city for pastoralists.

Adebayo, from the Housing Development Advocacy Network, agreed, saying “it is time” for Abuja’s minister Nyesom Wike to take action and prove that “the problem of open grazing in the city of Abuja is solvable.”

Herders have to be moved to the place designated for their work or restricted to defined private property, he said.

The official responsible for animal husbandry in the agriculture ministry said they could not comment on a major policy issue without authorization, while the spokesperson for the ministry in charge of Abuja declined a request for an interview.

But in March, after the Belgian ambassador to Nigeria raised concerns to Wike about cattle roaming Abuja’s streets, he replied that efforts were in progress to stop the indiscriminate grazing without disclosing specific details.

Herders say they are not opposed to a restricted form of herding or practicing like a normal business that buys their own feedstock instead of using free pasture and water wherever they find them.

The problem, according to cattle association chief Ngelzarma, is that the government has neglected the sector and does not provide incentives as it does other businesses, giving the examples of irrigation systems for crop farmers and airports for private airline operators paid for by the government.

“The government should revive the gazetted grazing reserves fitted with the infrastructure for water and fodder production, training and veterinary services and generate jobs and revenues,” Ngelzarma said.

“Then, you can say stop roaming about for free pasture,” he said.

By Taiwo Adebayo, AP