One of Africa’s main attractions is its large population of 1.2 billion, which portends a large addressable market. But what happens when your target audience is the governments of 54 countries?
In our situation, it was. We have started Domineum Blockchain Solutions with the intention of helping African governments resolve shipping and record keeping issues.
We knew it would be hard work, but we didn’t anticipate that getting our first client would be the hardest part.
When entering Africa, it is common to want to focus on large popular markets like Nigeria, South Africa and Kenya. But what we have learned so far is that there is a high probability that these countries will not be your first point of entry.
Our first product was a freight service that tracks the origin and movement of shipments and determines the contents of goods imported or exported to any country. We built it to solve the problem of lost revenue due to shipments going through informal backdoor channels.
Focusing on sub-Saharan Africa, we approached four countries in 2019: our home country, Nigeria, as well as Kenya, The Gambia and Guinea-Conakry.
We started this conversation and did not get a substantial response from the governments of the four countries. They weren’t willing to try our solution – it was new and they were unfamiliar with blockchain technology. Distraught, we decided to add a smaller country to our list: Sierra Leone.
The seaport of Freetown, located in the country’s capital, is Sierra Leone’s main entry and exit point, with 80% of trade passing through this port. The port has a long history as a commercial hub and benefits from the country’s strategically important location halfway between Europe and the Americas.
But Freetown is not one of the first ports in Africa or even sub-Saharan Africa; a fraction of a percentage point global commercial shipments pass through its ports. The small African country, with around 0.1% of the world’s population, exports diamonds, cocoa and coffee, and imports food, machinery and chemicals.
In particular, he faced great challenges in shipping these products inside and outside the country. Sierra Leonean supply chain manager described this situation, “We used to face great challenges during the export process. There would be long delays at the port. Our trucks arrived before midnight and could stand in line for hours or even days. The documentation process was so complicated.
According to the World Bank, “Sierra Leone’s business challenges can be attributed to several factors: lack of access to business information; high levels of physical inspections; several fees, licenses, permits and certificates; manual processes; and lack of coordination between agencies. Domineum set out to resolve this issue.
Our first conversations with the Sierra Leonean government went well. Fortunately, Sierra had developed a five-year plan (2018-2023), supported by the World Bank Group, to reduce the time and costs required to transport goods across its borders. The aim is to reduce commercial costs by 10%. After three months of discussion, our cargo tracking system was put in place.
At the end of 2019, we launched this partnership and so far we have been able to capture $ 2 million in revenue that would have been lost. The business model is simple: we get a 40% commission on the additional revenue we are able to generate for the government of Sierra Leone through our cargo tracking system.
When entering Africa, it is common to want to focus on large popular markets like Nigeria, South Africa and Kenya. But what we have learned so far is that there is a high probability that these countries will not be your first point of entry. A business-to-government model is difficult. There is a lot of politics in working with government.
What we’ve seen work is approach other countries and gain a foothold, and then use that as validation of how the concept works. With the success of Sierra Leone, we hope to return to other countries and be better received.
Sierra Leone’s success has led us to rethink the services we provide. The initial conversation started with a freight tracking service, but then we wondered if we should offer a different service to countries that said no first.
We identified that land registration was a common problem in Africa. More … than 90% of rural land in Africa is undocumented and therefore vulnerable to land grabbing. This hinders the growth of agriculture and other sectors because land is lost to other parties or taken by force by the government in times of conflict.
We have returned to these countries, offering other services like registering land ownership through blockchain. We have received a positive response from a state government in Nigeria to conduct a pilot program. We are optimistic that once this pilot phase is completed, we will be able to secure the next trade deal.
What is it like working with African governments? It’s a smaller addressable market. If you are looking to showcase a product or service to African governments, it would be helpful to keep in mind that your first customer might be from a smaller country.
To seize other opportunities, we will continue to seek to expand into other African countries with this mindset.