Zipline signs $61mn commercial agreement with Rwanda

Logistics company Zipline has struck a groundbreaking $61 million commercial agreement with the government of Rwanda, signaling a significant expansion of the company's operations in the country. What began as a blood and medical logistics and delivery system is now set to diversify its services to cater to the tourism, e-commerce, and financial sectors. Daniel Maffor, Senior Vice President of Zipline, shed light on the company's journey and future plans during an exclusive conversation with CNBC Africa's Julius Busimungu. The partnership between Zipline and Rwanda dates back to 2016 when Zipline became the first country the company launched its services in globally. Initially focusing on revolutionizing blood distribution in collaboration with the Rwanda Biomedical Center, Zipline has since expanded its scope to include medical products delivery in partnership with the Regional Medical Stores. However, the recent agreement opens doors to leveraging Zipline's technology beyond human health. Apart from healthcare, the new partnership will extend to agriculture, post-service, and tourism sectors, promising a transformative impact on various aspects of Rwandan society. A key component of the deal is the enhancement of pig farming through a pilot project with the Rwanda Agriculture Board, aiming to modernize animal health distribution across the country. By utilizing Zipline's innovative technology, Rwanda's farmers are projected to witness improvements in food security, productivity, and income levels, thereby elevating their quality of life. Additionally, the collaboration with Visit Rwanda and Made in Rwanda initiatives will enable drone deliveries of souvenirs to tourists visiting lodges and tourist sites, blending cutting-edge technology with the serene beauty of the Rwandan landscape. The $61 million agreement, known as the Dikamasa agreement, comprises both service fees and an equity investment by the Rwandan government. This investment underscores Rwanda's confidence in Zipline's technology and its role in shaping the future of transportation. While the exact equity percentages remain undisclosed, the agreement spans until 2029, solidifying a long-term commitment to mutual growth and innovation. Addressing the logistical aspect, Zipline clarifies that while it currently operates two distribution centers covering 98% of Rwanda, the focus lies on establishing new drop points rather than building additional centers. By creating delivery points within different sectors and provinces, Zipline aims to broaden its outreach, including facilitating deliveries within Kigali. The ambitious target of completing close to two million instant deliveries and flying over 200 million autonomous kilometers by 2029 underscores the scalability and integration of Zipline's technology into Rwanda's societal framework. The evolution of drone capacity presents another crucial aspect of Zipline's growth trajectory. With continuous technological advancements, Zipline is enhancing its drone payload capacity to accommodate a broader range of products, especially in the burgeoning e-commerce sector. By increasing payload capacity and conducting extensive research on e-commerce product suitability, Zipline is primed to meet the evolving demands of various industries and offer enhanced value to its clientele. Reflecting on the business model, Zipline acknowledges the Rwandan government as a significant customer but emphasizes its collaboration with private enterprises across healthcare, solar energy, and e-commerce sectors. As Zipline ventures into serving the tourism industry, collaborating with hospitality establishments for drone deliveries, the company envisions a future where private sector partnerships will dominate its customer base. This diversified approach signals a shift towards a sustainable and inclusive business model, with autonomous deliveries poised to benefit the broader African market. In conclusion, Zipline's strategic partnership with the Rwandan government exemplifies a visionary step towards technological innovation, economic empowerment, and societal advancement. With a steadfast commitment to leveraging its expertise for the greater good, Zipline is poised to redefine the logistics landscape in Rwanda and set new benchmarks for drone delivery services across the continent.