Episode 10: Inefficiency the Income Thief
Lori and the Financial Story of African Logistics
On a typical episode, I don’t spend a lot of time on my guests’ personal and professional backgrounds. And it’s not because they aren’t interesting. But the underlying mission of The Trajectory Africa is to articulate first principles underlying what makes opportunities in specific sectors VC-backable, as well as how and why VC works (or doesn’t) in Africa as a whole. This usually means I have many more “technical” questions than there is recording time.
But in the case of Jean-Claude Homawoo, Co-founder and CEO of Lori, a comment made by Samora Kariuki (who was featured in the previous episode), triggered a departure from the norm. He observed that Africans with “elite” educations don't normally build their careers in industries that involve physical assets. Of course, this prompted me to ask Jean-Claude how he found his way into logistics.
His response was definitely the stuff of any devoted manifester’s dream. And yeah, <spoiler alert>, the narrative Jean-Claude shaped for his business school application about returning home to build tech actually became reality.
Notably, there might have been some serendipity at work when he realized, while we were reviewing potential questions, that the core of our conversation should be the “financial story” underlying the logistics industry in Africa. Why? Two words. Capital and utilization. Check out the episode for the full download, and read on for a sample of other hard-won lessons from Jean-Claude’s eight-year journey building Lori:
🚛 1. Africa’s logistics problem is about cost.
The price of goods across the continent is inflated by inefficient logistics—trucks are underutilized and the burden lands on both consumers and exporters, to the tune of 50-75% of the price of goods.
“Moving a truckload of anything in Africa is more expensive than doing it anywhere else in the world... that cost ends up in the price of goods.”
🔁 2. Everyone wins when trucks don’t return empty.
Lori’s core value proposition is optimization. By solving the backhaul problem—finding cargo for return trips—they lower costs for shippers and increase earnings for transporters, all without raising prices.
“When you’re able to give a transporter a job in both directions… you get discounts in both directions because they know they're not going back empty. That’s how you lower the rate for the shippers.”
💪 3. The least resilient player bears the greatest cost.
Transporters, the smallest and most financially fragile players in the logistics value chain, are expected to wait months for payment while absorbing most of the cost upfront. They often lack working capital to stay operational. Lori steps in with upfront payments and financing—addressing a critical pain point.
“Talk to any founder about working capital and their entire body language will straighten up… They see the opportunity, they see the problem, they have a solution, they know they can make it work, but they need money to make it work. From the minute you buy [a truck], the clock starts… 80% of the cost of moving a truck is upfront…and then they get paid in 60 to 90 days.”
⚡ 4. The biggest cost lever? Diesel.
A transition to renewable energy is where transformative change lies. Lori’s bet on electrification isn’t just climate-driven; it’s a strategy to slash logistics costs at scale.
“Diesel accounts for up to 70% of the cost of the operation of trucks… Electrification can lower that by an order of magnitude, we're talking 30 to 40% .”
🧭 5. Figure out how to serve the smaller wallet.
Business models have to match Africa’s realities—thin margins, low incomes, and expensive infrastructure—by being designed for radical cost efficiency.
“The African consumer's wallet will never be the size, maybe not never, but my expectation is that the wallet size of the African consumer [won’t] increase to be the size of the US or European consumer. It will grow some, but we have to scale down the costs by the same factor as the African consumer’s wallet.”
🏗️ 6. You're rarely solving just one problem.
African-focused startups (not just those in logistics), quickly discover they must solve upstream and downstream problems that established players in other markets don’t face. The result is forced vertical integration, even when it’s not strategic.
“Here, founders say that building a business in Africa is especially complicated because you have to build everything downstream and everything upstream yourself. If your business plan says we're going to sell croissants, usually three months in, what you realize is that you also need to make the flour and you need to pump the water.”
🏦 7. Embedded finance provides critical infrastructure.
In “developed” markets, financing is an entire industry. In Africa, startups have to embed finance just to operate. That demands capabilities far outside logistics or tech, and can eventually break a company.
“We all underestimated the complexity and weight of this part—the embedded finance portion. You're starting to talk about working capital into millions of dollars and you double that because of your cash conversion cycle. And so the complexity of taking on that financial burden as a young startup was, I think underestimated.”
And that concludes this week’s episode recap. See you next week!