Companies in frontier markets are showing their resilience

Lezzoo, a tech-enabled delivery company in Iraq, responded quickly to the challenges brought by Covid-19, providing PPE equipment to its staff and adding essential goods to their app. © Grei Agency

Adapting at Speed

In many ways, Lezzoo shares the traits found in other successful start-ups in frontier markets. In contrast to the Silicon Valley taste for break-neck growth, success in these markets often means prioritizing sustainability and business model flexibility.

Doing well by doing good

As in more developed markets, businesses have been playing a crucial role in both accelerating transport and stepping up production of healthcare-related goods. Fulfillment Bridge, a Tunisian-based logistics provider, has tailored an existing solution to create a dedicated shipping line for PPE products. By limiting certain shipments to PPEs alone and working with local custom clearance partners in North America, UK, EU and Australia, the company managed to fast track the custom clearance process from the norm of a few days to less than 24 hours. In the last two weeks, the company has shipped more than 200,000 face masks from China and onboarded six PPE providers.

CEO and Sales Team of Fulfillment Bridge (photo pre-covid)

Going digital

Businesses are adapting to longer-term trends as well as meeting short-term demands. One trend prompted by countrywide lockdowns is the accelerated pace of the digitization of services. In African countries, a number of fintech start-ups are adopting measures to ensure a further reduction in the handling of cash, key to the containment of the pandemic. The Nigerian mobile payments company PAGA, for instance, has reduced its fees to encourage cash-free money transfers and is providing business customers with a free customised web page they can circulate to facilitate digital payments. Similarly, in Kenya, Safaricom’s mobile-money service M-Pesa has waived its fees for smaller sized transactions to encourage uptake.

Resilience only goes so far

Many companies in frontier markets are demonstrating adaptation and resilience in the face of coronavirus. But help is still needed. Liquidity crunches brought by less predictable revenue streams and more risk-averse investors on the one hand and unaffected costs and repayment obligations on the other are likely to affect an increasing number of businesses, regardless of individual adaptability and innovation. There is, therefore, a vital need for multilateral organisations, development finance institutions and philanthropic organisations to step in and support businesses that have already proven their resilience in vulnerable economies, where local governments simply cannot. Without decisive intervention, years of economic progress risk being wiped out in the world’s most fragile economies.

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The CrossBoundary Group

The CrossBoundary Group

Our mission is to unlock the power of capital to make a strong return and a lasting difference in frontier markets.