Rapid economic growth has significantly contributed to developing the African fuel sector. Now the stage is set for a dynamic wave of development in Africa. This has also opened the door for growth and innovation in the fuel industry.
This innovation has made Africa a hub for fuel delivery startups. That is why many popular fuel delivery businesses are focusing on making an on-demand delivery solution so that they can make the most of fuel delivery markets of Africa.
If you are looking to start a fuel delivery business in Africa, then firstly you would have to understand these challenges. Apart from this, Africa is becoming the land of attractive opportunities in the fuel delivery sector that can help you to fetch great profits.
In this blog, we will give you an in-depth view of African fuel delivery industry. We will show you the latest fuel delivery trends of the African fuel delivery markets. Also, we will discuss with you in detail about the challenges and opportunities in the African fuel delivery markets.
Fuel delivery market trends in Africa
In the past, Africa used to be a country with less consumption. But today this scenario is changing. Nowadays, Africa has the fastest-growing youngest population in the world. People of Africa are no longer using public transport modes instead they have started using modern vehicles.
As per Reportlinker, the fuel delivery system market in Africa is expected to grow from $3734.78 million to $5206.30 million (approx.) till the end of 2025. The Compound Annual Growth Rate (CAGR) of 5.69% (approx.). So from these, we can say that the demand for fuel delivery services is going to increase in Africa.
South Africa is the prime centre of this continent. The South African government has started making tremendous attempts to get its economy back on the track. The development of the fuel sector is the government’s first step in this process. The government is hopeful about the growth in the fuel sector.
As per S&P Global, the South African government has kept 10 percent of GDP in the development of the fuel sector. Also, the government is targeting to create maximum employment in the fuel sector.
So as you can see here that African markets are soon going to prosper in the future. If you want to make the most of these opportunities, then you need to make a robust on-demand fuel delivery app for your customers. But before you start, you need to consider the fuel delivery rules and regulations of Africa.
Regulations in Africa
When you are targeting the market of some country, then it becomes extremely important for you to understand the regulations of that country. If your business is not accepted by the legal authorities of that country, you may be in trouble. And the same thing can be said about Africa also.
Fuel is one of the important resources in Africa. The demand for fuel has witnessed an upsurge in Africa from quite a few times. The African government is also encouraging fuel startups and businesses by offering them with a subsidy. Since fuel is expensive to produce, the intervention of the government is necessary. That is why the Government of African countries have passed several mandates.
For starting a fuel delivery business in Africa, you have to follow the steps mentioned below:
- First, you need to take permission from the government to start your fuel delivery business.
- Second, you need to get approval and clearances from respective government departments.
- Define the type of trucks in your fleet to the government.
- Ensure that your drivers are well trained in dealing with fuel deliveries.
Apart from these regulations, governments have also started encouraging fuel delivery businesses. It has reintroduced the production resharing contracts in the fuel delivery business.
Also, the government has redesigned the fiscal regime for encouraging investors and introduced the local business requirements. Government has offered a tax holiday of 5 years for fuel delivery and 7 years for gas delivery. Thus, these are the legal regulations imposed for the fuel sector in Africa.
Challenges for African fuel delivery market
The challenges in the African fuel delivery market have not changed much in recent times. Crucial challenges such as regulatory framework, corruption, and constantly changing tax laws.
But volatility in foreign currency and financing costs has made it more challenging for the new businesses to start operations. Here are some more challenges for African fuel delivery markets that you need to know :
Lack of proper infrastructure
Accuracy becomes an important thing when it comes to providing fuel deliveries. Delivering fuel in big cities can be easy due to its developed infrastructure and transportation. However, delivering fuel to small villages and remote areas can be quite tough as your drivers have to travel a very long distance for delivering fuel.
You have to face the same challenge while starting a fuel delivery business in Africa. Africa has not developed much and also it lacks the basic logistics and transport infrastructure. This logistics barrier may increase your maintenance and transport costs.
Also, you require multiple providers for providing your fuel delivery services. You need a large staff of technicians for repairing your fleet of delivery vehicles.
So, consider these servicing issues before you take a plunge in the African fuel delivery markets.
Less revenue flows
Providing fuel delivery in Africa is very challenging. There are many reasons for it. The first one is the issue of payments. The banking and other economic systems of Africa are not developed properly. So it is not easy for the businesses to get enough financing.
The revenue flows in the African fuel delivery markets are also not that big. The demand for fuel delivery is also very less. The transactions done in the African economy are mostly cash-based. So people may hesitate in accepting the latest payments modes. Due to this, you may not fully reap the benefits of the fuel markets.
Market opportunities in Africa
The African fuel market is not only full of challenges but it also has some opportunities to offer to the new businesses and startups. Also, the mindsets of people have started changing in African countries. Here are the opportunities for fuel delivery businesses in Africa:
The rise in the number of automobiles
The urban population in African countries is growing rapidly. People have started using their own vehicles. This has boosted the Automobile sector. As per Mordor Intelligence, automobiles covers around 6.9% of the GDP of Africa.
The African automobile market is expected to grow at a CAGR of 6.5% (approx.). Also, the urban class have started purchasing cars in Africa. 85% (approx.) of cars have been sold in South Africa itself.
The rising numbers of vehicles have increased the workload of fuel stations in Africa. That is why people are looking for an efficient way of getting fuel so that they do not have to keep waiting for fuel.
Thus, this is the best opportunity for you to kick start doorstep delivery of fuel in Africa. By doing this, you can explore new markets and also you can grow more profits for your business.
Demand for a convenient fuel filling alternative
Despite some challenges, fuel deliveries are gradually becoming popular in the African fuel markets because of the limitations of physical gas stations. People find it difficult to visit the fuel stations for filling petrol into their vehicles.
Many cases of fuel thefts have also been recorded in these gas stations. Also, the quality of fuel provided by these gas stations was not as good as the quality of fuel provided by the fuel delivery operators.
The fuel needs of the African population will surely grow in the future due to the rapid urbanization and faster economic progress. So this is the best time for you to invest in a profitable fuel delivery solution for expanding your fuel deliveries.
However, you have to face some challenges in starting a fuel delivery business in Africa, but you can eliminate them easily by making an effective strategy.
I believe that this blog has provided you with all the essential details about the fuel delivery markets of Africa. You can anytime share your views with us on this topic. Thanks for reading this blog.