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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.

Business

Angola awards fuel tender to Total, Trafigura

Angola was hit hard by the 2014 oil price crash, which pushed its economy into recession

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Angola awards fuel tender to Total, Trafigura

Sonangol, Angola’s state-run oil firm says it had awarded contracts for its refined products for the next 12 months to Total and Trafigura. In the arrangement, Total will supply Angola with petrol or gasoline while Trafigura will supply diesel and marine diesel.

This came due to the longest run of fuel shortages that hit Angola in years, which led to the sacking of Sonangol chair, Carlos Saturnino earlier this month.

According to Sonagol, the shortage was blamed on difficulties accessing hard currency as well as unpaid debts owed to the energy company by industrial clients.

Heavily reliant on oil sales for government income, Angola was hit hard by the 2014 oil price crash, which pushed its economy into recession and created foreign currency shortages that crippled business.

In the statement on Tuesday, Sonangol reported that it had issued the tender in February with nine companies bidding for the supply contracts.

The tender result marks a return to Angola for Trafigura, which for many years, enjoyed an effective monopoly on lucrative fuel supply deals with OPEC member Angola.

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Nigeria’s central bank holds benchmark interest rate

This reduction is the first since November 2015.

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Nigeria's central bank holds benchmark interest rate
A photo of the Nigerian Central Bank in Abuja, Nigeria. (Photo by Pius Utomi EKPEI / AFP)

The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele has maintained the interest rate at 13.5 per cent. From the last Monetary Policy Committee(MPC) meeting in March, a 0.5 per cent cut was made in the interest rate.

The decision comes a day after Nigeria’s bureau of statistics reported that economic growth had slowed in the first quarter of 2019, dropping to 2.01% from 2.38% in the previous quarter as the country’s dominant oil sector shrank.

This reduction is the first since November 2015. The rate had been held at 14% since July 2016 to support the naira and curb inflation.

Earlier this month, Emefiele, became the first Nigerian Central Bank governor since the return to democracy in 1999 to be given a second term. The CBN had predicted that growth this year would come in at 2.38 per cent.

Nigeria emerged from its first recession in 25 years in 2017. Higher oil prices and recent debt sales have helped it accrue billions of dollars in foreign reserves, but growth remains fragile with inflation edging up in April to 11.37% from 11.25% a month earlier.

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MTN pays off bulk of $1.5 billion Nigeria fine

MTN, which began operation in Nigeria in 2001, is the country’s largest operator with 53 million subscribers.

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MTN pays off bulk of $1.5 billion Nigeria fine

South African telecoms giant MTN has paid more than three-quarters of a record $1.5 billion dollar fine levelled by Nigeria for failing to disconnect unregistered subscribers, the government said late Tuesday.

Africa’s biggest wireless operator was initially fined $3.9 billion in October 2015, after failing to disconnect 5.1 million subscribers -amid concerns the lines were being used by Boko Haram insurgents.

After series of negotiations, the fine was reduced to $1.5 billion, or 330 billion naira.

“MTN has so far paid 275 billion naira to the federal government,” the Nigerian Communications Commission (NCC) said in a statement.

With more than 80 per cent paid, the agency said MTN has until the end of May to pay the rest.

MTN, which began operation in Nigeria in 2001, is the country’s largest operator with 53 million subscribers.

It generates almost half of its revenue in the oil-rich west African nation, and last week floated on the Nigerian Stock Exchange (NSE).

The $6 billion flotations on the Nigerian bourse was part of the agreement to resolve its disputes with the Nigerian authorities over some infractions. 

Last December, MTN agreed to pay a separate $53 million fine after being accused of illegally repatriating $8.13 billion to South Africa.

The decision to impose fines shocked MTN and its foreign investors, with four commercial banks involved in the transfer also sanctioned.

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