Could B2B Marketplaces Catalyze a “Leapfrog Moment” for Trade in Africa?
Q&A with Toby Sparrow, CEO of Dooka, B2B Marketplace
This interview with Dooka’s CEO, Toby Sparrow, was originally published in July of 2022. This article has been updated as of October 2022.
Toby Sparrow is CEO of Dooka, a B2B marketplace that aims to transform the way African businesses connect and trade with each other. We spoke to Toby about structural and macroeconomic challenges that businesses in Africa face and the role technology can play in accelerating trade in Africa.
Trade in Africa, especially Sub-Saharan Africa, was hit hard by the pandemic. Why is it that trade in developing nations has suffered disproportionately over the past two years?
The story of African procurement is rooted in complexity. Even before the pandemic, African procurement departments faced disproportionate regulation, operations, and execution challenges.
For example, ports in Sub-Saharan Africa have the worst efficiency globally – averaging 222 hours to import goods, 130 times worse than their high-income OECD equivalents. The global pandemic exacerbated this situation.
Covid-19 hit trade in Africa, where it hurt. Sub-saharan businesses weren’t digitally ready. For example, African businesses lagged global peers in having digital source-to-pay systems by 10%.
This lag meant African businesses struggled to adapt to new operating conditions during widespread lockdowns across the continent. This issue is addressable.
Sub-saharan Africa needs to address these challenges by implementing digital tools to support hybrid working in the event of further lockdowns and local sourcing to shorten the supply chain and import issues. The fragmented nature of the supply chain suggests that B2B marketplaces may be a good fit. They are able to support complex sourcing and purchasing requirements whilst optimizing for efficiency and transparency.
The pandemic has triggered a broad reassessment of the way supply chains are built and operated. What opportunities might that reassessment bring for Africa?
The African continent has an opportunity to step ahead of its global counterparts. This is a “leapfrog moment.”
Historically, “leapfrog” has been used to describe how circumstances enable a country’s technology adoption that suddenly makes the country move from laggard to leader in the adoption of that technology. A good example was the rollout of mobile phones across sub-Saharan Africa instead of fixed landlines. Now, large businesses have a similar opportunity to change how they purchase. Historically, digital purchasing systems have been like the “fixed landlines” in the mobile phone example - they have slowly changed to digital, where the same paper processes are replicated in code. However, now Africa has an opportunity to be the first continent that extends the marketplace revolution in purchasing from the consumer world to the business world.
The pandemic is at the heart of this opportunity. Covid-19 has caused a reassessment of what is possible in Africa and how digital can work across the continent. Now, African businesses want to increase their use of digital processes by 32% by 2025. We need to harness this desire to be world-leading and change how we go about purchasing. This new reality needs to be smooth, needs to be efficient, and, most importantly, needs to be more transparent. We will introduce these things over the coming months as businesses large and small join the Dooka marketplace. It is going to be a beacon and example for the world of how smoothly business can be transacted. We can bring business purchasing to the same level of user experience as buying at home.
Much has been made of the African Free Trade Agreement as a way to stimulate trade in Africa. But some commentators fear it may lose steam. What might accelerate the process?
The African Continental Free Trade Area is poised to open intra-Africa borders. The agreement, ratified in 39 countries, creates a single market across Africa by dropping 90% of tariffs. The widespread ratification of the AfCFTA is one of those milestones that heralds the much-awaited ignition of the African growth engine.
But, as you have rightly pointed out, it has had its stumbling blocks. AfCFTA will fall short if the next generation of trade in Africa is going to be an extension and acceleration of the status quo. The future of a new generation of trading is not pushing more paper faster. It is the elimination of paper and red tape. It is the embracing of the digital revolution to ensure that orders are received faster, goods get shipped faster, invoices get sent instantly, and suppliers get paid faster - with transparency across the entire process.
These behaviors need to become the norm, not just for individual consumer purchases but for business purchases - and business purchases across Africa. If African trade can make that crucial step into the digital world, then the establishment of the AfCFTA will become that much more real.
Dooka has partnered with Tradeshift, the global network for digital trade, to launch the first-ever pan-African digital marketplace for business-to-business trade across the continent. Find out more here.
Can you tell us more about the inspiration for Dooka and the issues it aims to address within the context of trade in Africa?
The name Dooka came from the Swahili word ‘duka’, meaning a shop or market. As large companies embark on their digital journeys, there is a risk that innovation, that is to say, really reimagining how things can be done for optimal value, gets forgotten. Just making something digital doesn’t necessarily make it better or right. The idea of bringing the consumer online shopping revolution into the corporate digital journey is one of those things that really does bring about positive change. That’s what inspired us to launch Dooka in Africa.
To find out more about global trade trends and insights from Q3 2022, download the latest Tradeshift Index of Global Trade Health.
Dooka is going to power this transformation across the African continent. In 2021, our founders came together to pair deep local know-how and leading international technology to change the way that corporations buy goods and services across the African continent. We have a vision of a digitally connected Africa where buyers and sellers can be part of this trade transformation. We believe that African procurement can be a force for development, a force for change, and a force for growth.
For buyers, it is our vision that the phrase “Just Dooka it!” will become popular when looking for cost-effective purchasing of indirect and tail-spend items. We make it slick and easy the next time you have to buy a set of pens or get a last-minute food caterer. Rather than going through an extensive procurement process, we let business buy on a marketplace (just like you do at home) whilst keeping the controls to prevent rogue spend.
For sellers, Dooka is a portal to more sales and increased opportunities. We are a bridge for sellers to connect with large buyers and expand what they can do.
Our latest Index mirrors other economic indicators in suggesting a difficult period ahead. How might the kind of digital infrastructure Dooka is building with Tradeshift help to mitigate against such pressures?
Currently, we face a difficult period that will bring acutely difficult challenges for the African continent. In an environment where resources are increasingly scarce and difficult to deliver, Dooka has a unique opportunity to build stronger digital connections between buyers and sellers using the Tradeshift network. Furthermore, when times get tough, cost efficiencies and savings become more important, and Dooka is all about making purchasing as cost-efficient as possible in a corporate environment.
Taking out your crystal ball, what does the ideal future of trade in Africa look like in five years, and what role does digitalization have to play in enabling this?
Five years from now, we want sub-Saharan Africa to be an interconnected trade block. A block where AfCFTA has opened the door to intra-African trade and digital marketplace are the bridges to connect sellers and buyers.
Our ambition is to have built Dooka, which was merely an idea back in 2021, to be an essential part of the African business landscape. We want to ensure 50% of African corporate indirect spending goes to African companies by achieving our own three significant milestones - serving 30+ large customers across 20 African nations, having handled over $1b in transactions, and supporting our suppliers with $100m in trade financing. We are committed to fundamentally increasing the African value creation of large corporations.
Read more about what Dooka’s partnership with Tradeshift to launch the first-ever pan-African digital marketplace for business-to-business trade across the continent means for the state of trade in Africa.
To learn more about global trade trends from Q3 2022, download the latest Tradeshift Index of Global Trade Health.
