E-commerce: Africa waits for Konga
By Ray Umukoro
Africa is on the rise. From entertainment to agriculture, Africa is boldly expressing its identity and productivity in a brave new world. But the real boom, indeed the next revolution on the continent, is without a doubt, e-commerce. Africa’s e-commerce quotient is daily being fuelled by a number of factors.
There is a changing lifestyle of Africans that is witnessing a growing middle class. This growth in the middle class population has thrown up young men and women who can spend between $4 and $20 a day. According to data from African Development Bank (AfDB), this group is expected to grow to about 40 percent by 2060 which translates to over one billion people. This will spell a boom for e-commerce going forward.
The growth in Africa’s mobile market coupled with the growing deployment of broadband infrastructure and increasing assimilation of emerging advances in technologies including artificial intelligence, robotics, blockchain, Augmented Reality (AR) among others are sure indices that e-commerce will boom across the continent sooner than later.
As far back as 2012, consumption spend in Africa stood at over $1 trillion from $364 in 2000. That’s an impressive jump. And if you factor that internet penetration in on the rise with a good 50 percent of the continent expected to have access to internet by 2025, then you can imagine the impact of this on online shopping. McKinsey report predicted that online shopping could account for 10 percent of aggregate retail sales. This works out to $75 billion a year of total retail spend. This figure is expected to shoot up in the coming years.
This is why focus is shifting to Africa. E-commerce pundits are looking to Africa to deliver the next revolution in wealth creation through a burst of e-commerce activities. And Nigeria is tipped to lead the African e-commerce chart. Instructively, Nigeria pioneered e-commerce in Africa through Buyright Africa Dotcom, a baby of Africa’s most far-sighted digital entrepreneur, Leo Stan Ekeh. Buyright Africa was Africa’s genuine online outpost birthed to deliver online services to a continent-wide audience starting from Nigeria. By 2012 when Buyright Africa was founded, it was obvious it came ahead of its time. Poor infrastructure, poor debit (credit) card transaction culture and low internet penetration frustrated the vision of its founder who is also the Chairman of Zinox Group.
But Leo Stan is never one to balk at challenges. He waited for the right time. Already he had sowed the seed and in no time, the idea was given life again by his son, Prince Nnamdi Ekeh, who founded Yudala, a truly composite online-offline e-commerce platform. Though short-lived, Buyright Africa is historically the forerunner of all modern day e-commerce companies in Africa.
The Zinox Group later acquired another truly indigenous e-commerce company Konga to add to its growing conglomerate. The acquisition of Konga and its merger with Yudala therefore gave rise to the biggest truly African e-commerce giant. Konga has already set sight on over-running the competition on the continent. Konga’s ambition of ruling Africa is helped by unwillingness of e-commerce players in South Africa to re-invest in their businesses.
A 2019 survey of online retail in South Africa conducted by research group WorldWide Worx showed that South Africa online retail shop demonstrated a manifest unwillingness to re-invest to expand the business. Only one in 5 companies surveyed invested more than 20 percent of their online turnover back into their business. Half invested less than 10 percent. This is essentially why e-commerce is not enjoying astronomical growth in South Africa. The leaves the market open for Nigeria’s Konga to take the cream.
The other e-commerce giant, Jumia, does not get much of a look in because it is thought to be a foreign company. Jumia funded by two French businessmen has its headquarters in Germany and Dubai. For a company incorporated in Germany with its technical headquarters in Portugal and its top executives from France, it is difficult to tag it an African, nay Nigerian, company.
In a recent interview on CNBC, Jumia co-CEO, Mr. Sacha Poignonnec, tried to convince his interviewers that Jumia is an African company but his explanations fell short of answering the question of why Jumia was incorporated in Germany, has its head offices outside Africa and its top executives non-Africans. But the report at the end fittingly classified Jumia as a foreign company doing business in Africa. It debunked Jumia’s claim of being the first unicorn startup in Africa, positing that Jumia only sees Africa as a means to an end.
In essence, Jumia is not an African company and does little to address the challenges of e-commerce in Africa let alone promote core African business ideals in the sector. Poignonnec in his attempt to justify non-commitment of Jumia to help deepen Africa e-commerce claimed that Africa lacks developers and infrastructure. While it is true that many African countries are battling with infrastructure, it is an unkind cut on African developers most of whom are all over Europe and America setting pace in software engineering.
Africa is regarded as the next big thing to happen in e-commerce and Nigeria is at the cusp of this expected wealth boom. With a population of about 200 million and currently Africa’s largest economy, the prospects are colorful for e-commerce. Experts have predicted that none of the foreign e-commerce players would sizzle the African market. Some have projected Konga to play a leading role in positioning e-commerce on the continent. They cite Konga’s indigenous ownership, a truly African company, its innovativeness, tradition of delivering only original products, prompt delivery culture, offline presence in every neighbourhood, strong capital base, seamless operational efficiency and sound backroom technical integrity as reasons why Konga has the clear capacity to dominate the continental market which enjoys a forecast of $29 billion revenue by 2022, according to research firm Statistica.
Africa waits for Konga. But even Africa is not a good hunting ground for ICTpreneurs. This is the only continent in the world where the top 10 billionaires list is not dominated by digital entrepreneurs. Africa, especially Nigeria, is a difficult place to do business. But if the promoters of Konga can succeed in this difficult clime with other companies within the conglomerate, Africa is lucky to have a company owned and run by Africans leading the charge in the soon-to-explode e-commerce market.
Edward Heaton, an expert on African e-commerce placed Konga as the best poised company to create the next Jeff Bezos out of the continent. By the way, Bezos who has just lost $35 billion to his wife, MacKenzie, in the most expensive divorce payout is still the world’s richest man valued at $110 billion (Forbes) with Bill Gates trailing in second position at $100 billion all because of good return on investment which e-commerce has come to represent in the 21st century.
Promoters of Konga have not openly reeled out their plans to rule the African market but like Heaton noted their pioneering status and experience gives them the edge over others. It is not also clear how soon Konga would listed on major stock markets across the world but one thing is clear: Africa waits for Konga, a truly indigenous company with global standards.
• Umukoro, a blogger writes from Accra, Ghana.