In less than 20 years, Sudan has experienced a civil war resulting in the cession of South Sudan, uprisings that led to the ouster of its president Omar Al Bashir and a revolution last year that ended military rule in the country. Amid the political uncertainty, corruption and sanctions, the country’s startup ecosystem was non-existent and negligible, but the youthful determination that has brought about such change is now being channeled into entrepreneurship.
A staggering 64 per cent of Sudan’s population is under the age of 24 and the country boasts a mobile penetration rate of 73 per cent which is fuelling the rise of tech-driven startups. Over the past few years, a small ecosystem of incubation and accelerator programmes have emerged, as well as co-working spaces and a handful of investors.
While the Covid-19 crisis has further devastated Sudan’s economy where 47 per cent of the population still lives below the poverty line, it has fueled demand for technological solutions, especially in e-commerce and last mile delivery.
Khartoum-based Flex is one of these last mile delivery startups aiming to take advantage of the rapid growth in the e-commerce sector. Founded in July 2020, Flex has so far onboarded over 250 stores and e-commerce service providers and has processed 4000 shipments.
We spoke with Waddah Fadul, co-founder and product development manager of Flex, to learn more about Sudan's startup ecosystem and his future outlook for the logistics sector.
Why did you launch Flex?
We’re the first app-based last mile company in the country. The other delivery companies like DHL and Aramex, they don’t cover beyond the two or three major cities and none of them are specialised in last mile. We wanted to cater to the SME sector in the country, which is booming and last mile delivery is something that is very very important and critical for e-commerce and businesses – without that they cannot survive.
The [Covid-19] crisis has brought about rapid growth for the delivery and logistics services in Sudan. Driven by the high demand in home delivery and online shopping, especially after the lockdown. We were focusing mainly on supporting the digital transformation of our partners.
Many commercial enterprises, companies, banks, and service providers have suddenly found themselves hard-pressed to start using reliable delivery solutions in order to reach out to their customers during and after the lockdown and ensure business continuity for their own business.
Plus, the pandemic has pushed the country towards digital payment, which in turn helps spur the growth of last mile delivery solutions like ours.
What is the payment landscape like in the country?
Sudan is a cash-based society, but it is slowly moving to a cashless economy. There are now multiple international solutions in fintech.
Sudan also has developed its own payment infrastructure following the US embargo. At Flex, we match our system with the local payment systems, and accordingly, we are able to provide our clients with multiple payment channels.
We still accept cash, which makes up 5 per cent of our transactions right now.
Before the pandemic cash transactions [on Flex] were 55-57 per cent. We launched a campaign telling our customers we were moving to a cashless-based system, we delayed their cash payments by a day, but processed their digital payments in a few hours. Accepting cash causes governance issues, the driver needs to carry the cash, settle the transactions with the accounting department and after that we need to send it back to the supplier. It increases the need for auditing and our costs.
What were your main challenges in founding a startup in Sudan?
Most people were used to DHL in the city and dropping off their parcels. For the SMEs, they were used to phone-based companies, they’d call them and have their parcels picked up and delivered. Because we were the first app-based delivery company, we had to do some marketing campaigns and use influencers and explain how this works. There was some resistance in the beginning, but we’re witnessing huge growth now.
Another challenge was the culture of bookkeeping is not there yet in Sudan, so we had to do that on behalf of our customers. We provide them with bookkeeping services like a bank statement on a monthly basis. We also provide them with all the consultation needed in order for them to understand which areas of the business they need to work on improving and thus help them enhance their core capabilities in critical functions like marketing, accounting, and finance, etc.
Also it takes a very long time to register a business, it took us 6-7 weeks and finding talent was one of the big challenges. Many people have left the country so there is a shortage of talent. We have developed an internship programme with the universities which will kick off in 2021 because we believe we need a sustainable platform to keep providing us with fresh ideas and talent.
How do you see the future of the last mile delivery sector in Sudan?
The potential is definitely there in Sudan and the future looks bright for the sector. And it is not only the case for Sudan.
As per the China-proposed Belt and Road Initiative, there will be several huge infrastructure projects linking the West and East African markets together, which will help spark a new interest in the logistics sector as a whole. These countries share a lot in common; they speak the same language and even listen to the same music. We are talking about a population of 220 million in these markets combined. The potential is huge there and the need for delivery services like ours is urgent in these countries.
Besides, we have about four to five million expats that live outside Sudan, including 1.2 million who live in the GCC area. This could also present a business opportunity for us as a logistics company when it comes to handling the flow of inbound and outbound shipments. We believe the next step for our company is to expand outside Sudan.
What do you have in store for the near future?
We are planning to expand to another five big cities in Sudan, and continue acquiring more customers and grow our corporate client base.
In the long-term, we want to end up as a super app and integrate multiple verticals. We firmly believe that these newly introduced services need a very firm and concrete foundation for logistics services. So that is why we built it in a phased manner and started off as a last mile logistics company.
The first step in the creation of our super app will be the addition of food delivery services. We have also noticed that the area of cloud kitchens is so fragmented so we want to create a platform that will enable the providers of these services to organise and streamline their operations. It will be an isolated cloud kitchens concept with multiple people cooking in their own homes, we will provide them with the ordering platform, the marketing and the delivery.
What does Sudan’s startup ecosystem need?
Startups are the new job creators so it is important to help them. We need clear regulations that can govern this sector. Currently there are no specific laws for startups, if the government can give incentives, maybe tax-free schemes for startups, lifting of taxation for co-sharing and co-working spaces, these things will increase the job creation level.