Ken Ugbechie
Africa is no longer the next frontier. Africa is the new frontier. The often vilified continent’s tomorrow is here. And it is audaciously reflecting in the e-commerce space where a new generation of smart, knowledge-driven and globally-tooled Africans are defining their identity and finding their niche. E-commerce is flowering in Africa and it has the capacity to get even bigger in the coming years going by statistics from the United Nations Conference on Trade and Development (UNCTAD).
Two major players define the Africa e-commerce ecosystem: Konga and Jumia. There are many others scattered across the continent. Jumia is a foreign company registered in Germany. But it has in recent time come under severe and highly inclement business weather. It became a victim of one of the challenges dogging e-commerce in Africa: Lack of trust. While listing in the New York Stock Exchange (NYSE), Jumia came under scrutiny and was found to have under-declared certain facts about its operation.
Trouble started when on May 9, 2019, Citron Research, a respected firm with a history of in-depth research in stock markets and investments, published a brutally damaging report accusing Jumia of overstating certain financial metrics in its April 2019 IPO prospectus and omitting adverse information about the number of returned, undelivered, or canceled orders from the prospectus.
In standard global practice especially for e-commerce investors, such facts are usually made available to guide prospective investors. On the strength of this information, Jumia’s share price crashed. It was considered by analysts as a bad day for Africa. But CNBC and other commentators were quick to deflect the Jumia NYSE fiasco from Africa, insisting that Jumia is a German company trading in Africa, and never an African company.
Acting on the Citron Research reports, Kirby McInerney LLP had put out a notice to concerned shareholders to fill out a contact form which it intends to aggregate to discuss the rights or interests of the shareholders with respect to the matter at no cost to the investors. Kirby McInerney has a rich history of litigation on behalf of investors in securities. The firm’s efforts on behalf of shareholders in securities litigation have resulted in recoveries totaling billions of dollars.
The Citron Research report alleged that it has the “smoking gun” that shows why Jumia equity is “worthless.”
“In 18 years of publishing, Citron has never seen such an obvious fraud as Jumia,” the report said.
A report by marketwatch.com, quoted Citron as dismissing Jumia as an e-commerce fraud which came into the market claiming what it is not. The report said most of the claims of Jumia that allowed it into the global stock market were outright falsehood including claims of efficiency in delivery, customer numbers and quality of service and products. The Jumia (mis)adventure in the highly lucrative and strategic US market is largely seen by e-commerce pundits as a dampener for hordes of e-commerce start-ups coming out of Africa and eyeing the global market.
Africa’s ICT blogger and market evaluator, Ray Umukoro, warns other e-commerce firms out of Africa to learn from the Jumia fiasco. It’s a lesson the likes of Konga, Takealot, Kilimall, Bidorbuy, etc. should take to heart. The challenge is who will truly fly the Africa e-commerce flag with global trust, dignity and integrity. The odds stack in favour of Nigeria’s Konga.
Africa with 54 countries and estimated population of 1.25 billion people currently boasts average Internet penetration of 40 percent with most of the connected audience hooked on mobile devices. And with growing internet penetration, the African e-commerce market is predicted to head north as more efficient e-payment platforms and network efficiency are thrown into the mix.
Nigeria’s huge population of over 195 million people, a vibrant and tech-smart youth population, a progressive-minded middle class and largest economy status by gross domestic product (GDP) gives Konga a head-start over competition.
Nigeria in terms of e-commerce market size towers over South Africa (population of 55.5 million) and Kenya with a population of 48.5 million. These are market indicators that will combine to make Nigeria’s Konga a clear dominant player on the continent and a competitive global player in years ahead when it pushes to list on the international equity bourse. Konga’s unique composite market mix of both online and offline experience, a model now being adopted by two major players, Amazon and Alibaba, put it at a great advantage.
To take the lead in Africa e-commerce, Nigeria must get her act right. It must avoid the lethargy that made foreign firms dominate her telecom and satellite TV markets. Nigeria’s telecom market is the toast of global players but it is a market dominated by foreign firms. In the digital satellite TV market, South Africa’s Multichoice rules the roost in a near-monopoly. It is only just now that the Nigerian government is mulling the idea of breaking the monopoly. This is not smart for a country that is truly the largest market in Africa.
The world is one huge market with the buzzword word, globalisation. But the newest and now more commonly adopted word and economic strategy is glocalisation. It simply means think global but start local; it also means grow your local market first or put your local interest uppermost before the global interest. China thinks China first. China gives you loan to execute Chinese contracts in your country usually with China infrastructure and personnel. Donald Trump has taught Americans to think America first; Britain is in the midst of a badly managed Brexit crisis which her leaders initiated to better British interest in a diverse Europe marketplace. South Africa thinks South Africa first, gradually edging small Nigerian businesses out of her space. Ghana is doing same. In all of this, the respective governments in these countries are consciously and quietly pushing and promoting the interests of their private equities in the international markets. That’s what governments do these days to beat competition.
Nigeria must think Nigeria first. Here, I applaud President Muhammadu Buhari push to grow local content and deepen Nigerian market with Nigerian products. The same policy and strategy should extend to tech economy. Nigeria is by far the biggest single African market. Whoever dominates Nigerian market in any sphere dominates Africa and by inference flies the African flag in the global marketplace. Promoters of Konga, Nigerians and Nigerian government should follow in the stead of America, Britain, South Africa, Ghana among others to put and sustain Konga in the commanding height of Africa e-commerce market. Only Nigeria and Nigerians can make Konga the e-commerce king in Africa. Konga’s pedigree of integrity, quality of goods and services, its peculiar composite strategy and thorough understanding of the Nigerian market put it at a vantage position to lead Nigerian market and by extension, African market.
The insult and impudence visited on Nigeria by the so-called multinationals in all sectors including oil and gas should make Nigeria change her template of bilateral relations. It must be a relationship that promotes Nigerian interest both at home and abroad. E-commerce is the current game-changer in consumer behaviour and Nigeria must consciously take the lead and not wait until a foreign firm does so thus adding to the nation’s capital flight issues.
