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How viable is Africa’s E-commerce space?

The Amazon of Africa”, a tag it shares with rival e-commerce platform, Konga. But does this translate to success of these start -ups?

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The e-commerce sphere in Africa made headlines last week with Jumia’s listing on the New York Stock Exchange. The $326 million funding from AXA, Goldman Sachs and MTN set a foundation that matured into a $1billion valuation.

According to a report on McKinsey’s Lions go digital, online shopping has been projected to account for up to 10% of retail sales (with a value of around $75 billion) by 2025- a fact propelled by more Africans gaining access to the internet across the continent. Jumia has been called “The Amazon of Africa”, a tag it shares with rival e-commerce platform, Konga.

But does this translate to success of these start -ups?

Jumia

Founded by Harvard Business School Alumnus, Tunde Kehinde, Rapheal Afaedor and their partners, Jeremy Hodara and Sacha Poignonnec, Jumia became a middleman- linking buyers with sellers. It had integrated other business units into its arsenal with logistics, Jumia Pay and other offerings to further enhance its offering since its initial introduction in 2012 with the merger of Kasuwa and Sabunta.

Promising reviews however became cold and almost unforgiving as customer reviews and complaints on inconsistency surfaced over-time.

Jumia’s IPO launch in NYSE, would boost investor confidence and earnings but the service delivery and customer observations need to be taken into consideration more than before. Prospect of growth looks positive if service is improved.

Konga

Sim Shagaya’s Konga -the 2012 start- up that came a year behind DealDey, has lasted longer than most of its generation from a Lagos metropolis- only e-commerce site that specialized in baby care and cosmetics line. The online platform grew over the years into a major online retailer / marketplace.

By 2015, KongaPay came online- bringing  about a safe and convenient payment system that tackled the issue of trust in Africa when it comes to online payments. It also provided a basis for the Pay on Delivery (PoD) model, which was, and still is, a factor that encourages online shopping.

Investments and growth still looked optimistic with South African media conglomerate, Naspers, investing US $50 million in 2014 for a 50 percent stake in the business.

Takealot

This is a pioneer in the online retail start-up business since its inception in 2002. The simplicity of its broad catalogue and variety of products -books,games, computers and TVs – providing its ever-growing customer base with the latest products in the market, coupled with an up-to-date product specification.

Funding had been a major booster to this success story. For instance in 2017, Takealot got boosted with Tiger Global Management’s US $100 million and then Naspers invested US $69 million. These earned both firms 34 percent and 53.5 percent stakes in the promising business.

The vast array of product and customer service makes it a business that should grow firmer across the sub -region and indeed the continent.

Kilimall

This is a relatively new start up, Kilimall has created a large following from East Africa to West Africa, specifically Kenya, Uganda and Nigeria since it came online in 2014.

This firm also provides a large and growing variety of new products from smartphones, books cosmetics range etc.

It has a unique selling proposition of a 7-day free return policy that had and still does endear it to its growing customer base.

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South Africa’s Foschini to halt Kenya, Ghana operations

South African retailers have recorded poor performance in the last year, due to slow economic growth and currency devaluations

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South Africa's Foschini to halt Kenya, Ghana operations
(File photo)

South African fashion retailer, the Foschini Group is considering shutting down its Kenya and Ghana businesses.

The firm’s Chief Executive Officer, Anthony Thunstrom, affirms that at least, six stores will be affected in both countries.

South African retailers have recorded poor performance in the last year, due to slow economic growth and currency devaluations that had hit sales.

In July, department store chain, Woolworths pulled out from West Africa for a second time.

The Foschini Group will review economic growth, legislature and lease negotiations in Kenya and Ghana before making its decision.

Come September, in its home market, Thunstrom says The Foschini Group will launch a smaller format Sportscene store that will enjoy entertainment features such as a basketball court and a DJ booth, in an effort to lure millennials into its stores and away from online players such as Naspers’ majority-owned Superbalist.

The store will be launched in September in Johannesburg’s upscale Sandton shopping and financial district.

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Total Mozambique gas project will go on despite insurgency

Total will also acquire US energy giant Anadarko’s assets in Algeria, Ghana, Mozambique and South Africa

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Energy major Total on Friday said it remained committed to a Mozambique liquefied natural gas project on the country’s northern coast despite deadly Islamist insurgent attacks.

Total will become the operator of the $25 billion Rovuma LNG Project whose construction began on August 5 in the Afungi Peninsula.

The company is also set to acquire US energy giant Anadarko’s assets in Algeria, Ghana, Mozambique and South Africa, strengthening Total’s position in Africa.

But the area where the project is located has been targeted by jihadists since October 2017, claiming more than 300 lives.

Attackers in February launched an assault on a convoy of vehicles from an Anadarko contractor, killing one worker and injuring others. 

This led to the suspension of operations for a few months, with activities only resuming after the government announced the deployment of armed forces.

Several hundred suspected attackers have been arrested, according to authorities, but sporadic assaults continue.

On Friday Total’s CEO Patrick Pouyanne reaffirmed Total’s commitment to the LNG project saying it “is a unique asset which perfectly fits our strategy and our skills.

“Please be assured of the commitment of Total to bring the best of our human, technical and financial capacities to further strengthen the project execution … in the interests of all those involved, including the government and people of Mozambique,” he said in a statement.

The project is expected to be transformational for Mozambique, creating an estimated 5,000 direct jobs and 45,000 indirect jobs.

The country’s gas deposits are estimated at 5,000 billion cubic metres and would make Mozambique a major exporter of liquefied natural gas.

The use of natural gas is on the rise globally as countries struggle to meet energy demands and shift away from using coal.

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Kenya plans to tax OTT services like Youtube, Netflix

The over-the-top services (OTT) will soon be required to declare the incomes they derive from Kenyan consumers

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Kenya plans to tax OTT services like Youtube, Netflix

Kenya’s Information Communication and Technology (ICT) ministry is working on completing a new tax scheme.

This framework, reports say, will be used to tax foreign online streaming media services such as YouTube and Netflix.

The over-the-top services (OTT) will soon be required to declare the incomes they derive from Kenyan consumers.

OTT services include all applications that offer voice, video and messaging services over the internet.

Communications Authority Director-General, Francis Wangusi says online content providers exploit the Kenyan industry. Yet, neither the government nor artistes benefit from them.

According to Wangusi, “many countries have policies that guide these services and that is where we are heading as a country”.

He adds that technologies that will facilitate taxation of OTT services are available.

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