E-Business
Jumia Food Exit Shows Folly of Not Following Konga Strategy
The recent announcement of Jumia Food’s exit from Nigeria, its biggest market, has set alarm bells ringing among industry watchers. Dr. Fred Bongani, a former employee and founding staff, examines the fallouts from this latest misadventure
E-Commerce, despite its potential as a goldmine, remains one of the most challenging business sectors in Nigeria and indeed, the African continent.
The obstacles that lie in the path of businesses intent on cracking e-commerce on the continent are well-documented, among which infrastructural deficiencies, logistical hiccups, skepticism for online shopping and predilection for offline retail, slow adoption of digital payment, among others, figure prominently.
Nevertheless, Africa is widely regarded by experts as the next frontier for bullish e-commerce growth.
Compelling insights from recent research by the International Trade Administration (ITA) shows that Africa represents a smart gamble for interested investors looking to reap the benefits of the wave of growth in e-commerce on the continent. Titled – The Rise of eCommerce in Africa – the study bets on the exponential boost in mobile technology that is expected to jumpstart e-commerce from its current middling status to a multi-trillion-dollar industry in the coming years.
“The logic of growth on this area is pretty much based on technology jumps that do occur within Africa because of historically missing economic infrastructure, such as banks, telecom landlines, etc. Africa is forecast to surpass half a billion ecommerce users by 2025, which will have shown a steady 17% compound annual growth rate (CAGR) of online consumers for the market,’’ the study boldly asserts.
Specifically, the research shows that Africa currently leads the world in mobile device web traffic generation, with 69% of its total web traffic consisting of mobile internet users as of 2021. Further, the continent is forecast to be almost exclusively mobile-based market by 2040.
Continuing, the study notes that: ‘‘Compared to other regions, as of 2021 the African continent leads mobile internet usage a full 13% above the global average, and almost 5% more mobile usage than Asian region markets. This should indicate a “mobile-first” approach to any business looking to sell online to the various African markets.’’
The foregoing is backed up by a 2017 Accenture Digital Consumer Survey which discovered that in countries such as South Africa, smartphone acquisition increased from 52% in 2016 and 63% in 2017. Some of the more technologically advanced nations like Kenya and Nigeria boast a smartphone uptake of more than 44% and 30% respectively. Across the continent, the number of smartphone users saw a nearly two-fold increase, reaching more than 226 million. This spike in smartphone penetration, the survey submits, is steering a digital revolution on the continent, exposing users to the endless opportunities the internet provides, top of which is e-commerce.
Considering these lofty assumptions, it therefore came as a huge shock when Jumia, a multinational African-focused e-commerce company disclosed that it will shut down Jumia Food, its food delivery business in Nigeria, Kenya, Morocco, Ivory Coast, Tunisia, Uganda, and Algeria by the end of 2023 in a new round of cost-cutting.
Jumia CEO, Francis Dufay told Reuters that the food delivery segment has challenging unit economics and big losses, while also attributing the closure of Jumia Food to increasing competition and unsustainable cost of operations.
“There is downward pressure on the commissions that we make and upward pressure on marketing costs because everyone is fighting for customers,’’ Dufay had stated.
The Jumia Food debacle represents another signpost in a seeming never-ending list of missteps and abrupt exits by the management of Jumia since it set up shop in Africa. This includes the offloading of Jumia Travel, its hotel and flight services vertical in 2019 to a rival brand, Travelstart – a move which came a few weeks after the shutdown of its eCommerce businesses in Tanzania and Cameroon and laying off staff in Kenya. Founded as Jovago in 2013, the hotels and flights marketplace became Jumia Travel after it rebranded in 2016. Earlier in 2017, the company had sold off Jumia House, its real estate subsidiary to ToLet.com.ng, a property startup, after it failed to scale.
To start with, Jumia is a German-headquartered e-commerce platform, with its technology and product team based in Porto, Portugal, and until recently, its senior leadership operated out of Dubai in the United Arab Emirates (UAE). Yet, it lays ambitious claims to becoming the African Amazon – a faulty dynamic worsened by a damaging identity crisis and the importation of business principles and strategies fit for the Western world and which the management expected to succeed in Africa, a developing continent with its myriad of teething challenges. Indeed, several critics regard Jumia as an exploitative Western company that conveniently co-opted an African identity to extract as much value as possible and profit off the continent.
As one of the founding employees of Jumia, I had expressed reservations at the ease with which the early-stage founders of the company had been eased out of the business. Every business has its DNA which symbolizes the very essence, cornerstone or soul of the establishment. This ideal is often reposed with the visionaries of the business and consolidated over time as the business scales. In the case of Jumia, what we had was a wannabe e-commerce behemoth with a major identity crisis. This foundational ambiguity would prove to be one of the catalysts that hurt the business in the long run.
At the height of the Jumia-Konga battle for the dominance of the Nigerian e-commerce sector when both brands launched in 2012, one thing was discernible: Jumia was often quick to arrogantly ridicule or thumb its nose at any innovation or strategy pioneered by a rival brand, even if it was a masterstroke, although the lessons of history showed that it may eventually ape the strategy when it realizes there is a market advantage therein. Those early days of e-commerce, particularly in Nigeria where I was based at the time, was one full of hype and little substance as both giants embarked on a battle of attrition for the leadership position in Africa’s biggest market. It took the coming of Yudala which was founded by a fresh-faced varsity graduate and backed by Nigeria’s biggest technology group to make both rival brands sit up and become more intentional about the substance of their hyped-up efforts (more on this later).
In early 2014, Konga pioneered the marketplace structure that is now a major staple of e-commerce on the continent. In its usual fashion, the management of Jumia derided it as a DOA (dead on arrival) strategy. However, it soon ate its words after advice from some of us in the business who saw how Konga was already stealing a march on us. Five months later, specifically in July 2014, Jumia followed suit with its own marketplace.
Then came the entry of Yudala – a landmark development that shook up the e-commerce market in Nigeria. Led by Prince Nnamdi Ekeh who was 22 at the time and just fresh out of school, Yudala pioneered the composite e-commerce model with the fusion of online and offline – a futuristic piece of innovation that has now been adopted by other global players. Yudala’s emergence was a refreshing relief to the chokehold of Jumia and Konga. The brand, though big on hype as its older rivals, matched its words with true substance.
In addition to rolling out eye-catching fuchsia-pink retail stores across major cities in Nigeria, Yudala took on big projects which expanded the scope of the industry. One of these remarkable milestones was the first ever drone delivery in the e-commerce world – a feat which was achieved in 2015 and which predated any other similar efforts.
When in 2018, the management of Zinox, the technology conglomerate backing Yudala, acquired Konga from its previous owners, Naspers and AB Kinnevik, it was obvious to all interested parties that this was a development worth keeping an eye on. In my own capacity, I had also advised the management of Jumia, especially considering the renowned capacity and decades of experience and success at the disposal of the new owners of Konga, to keep tabs on their strategy and follow suit or even explore partnerships, if that would guarantee a path to profitability.
The dust had barely settled on the monumental news of the acquisition when the management of Zinox announced an operational merger between Yudala and Konga. Although I had departed Nigeria, I followed with keen interest how the new owners subsequently rebranded the new entity that emerged from this operational merger, slowly transforming it into a dominant e-commerce force.
It is important here to state that while Jumia decided to double down on its poorly conceived pan-African expansion and an ill-advised IPO founded on shady figures and cooked books, Konga chose to continue consolidating its growing dominance in Nigeria:
- KongaPay was repositioned and recalibrated, leading to its rating by Statista in 2021 as the leading provider of digital payment services for e-commerce transactions in Nigeria.
- In 2019, the brand added Konga Travel to its list of growing subsidiaries. A technology-driven, revolutionary online travel booking agency, the new entrant gained prominence and market relevance within a short period of time.
- From Kxpress, the management of Konga relaunched its delivery arm to Konga Logistics, expanding its fleet of vehicular assets and by extension, its capacity to not only handle Konga’s last mile deliveries but also cater to external customers.
- Konga Health, a digital health care distribution subsidiary joined the fray in June 2021. Today, the brand boasts exclusive distribution agreements with global brands such as L’Oreal and Livful, among others.
- Konga embarked on an expansion of its retail outlets and the set-up of massive warehousing facilities in regions across Nigeria, including what is arguably the biggest warehousing structure in Lagos located at Lekki
Amid all these major strides by its major rival, Jumia endured an embarrassing exposure of its IPO as a worthless sham by the popular US-based short-seller Citron, with its share price, which once traded as high as $60, now going for less than $4 today. The stubborn insistence of management in not borrowing a leaf from the Konga copybook has also seen Jumia continuously lose ground in Nigeria and in other less buoyant African markets.
The current exit of Jumia Food leaves a sour taste in the mouth, particularly for those of us who number among ex-employees of this once-grand e-commerce pioneer. In addition to remaining unprofitable over the years, Jumia is still shipping huge losses, as high as $19 million in Q3 2023.
With its share price tumbling down by the day and investors now potentially hedging their bets on the brand, how much longer can Jumia keep its head floating above murky waters in Nigeria before calling it a day for its remaining core physical goods delivery segment and struggling payment service, Jumia Pay?
The jury is out on that.
Contrary to popular belief, using cutting-edge artificial intelligence tools slowed down experienced software developers when they were working in codebases familiar to them, rather than supercharging their work, a new study found.
AI research nonprofit METR conducted the in-depth study, on a group of seasoned developers earlier this year while they used Cursor, a popular AI coding assistant, to help them complete tasks in open-source projects they were familiar with.
Before the study, the open-source developers believed using AI would speed them up, estimating it would decrease task completion time by 24%. Even after completing the tasks with AI, the developers believed that they had decreased task times by 20%. But the study found that using AI did the opposite: it increased task completion time by 19%.
The study’s lead authors, Joel Becker and Nate Rush, said they were shocked by the results: prior to the study, Rush had written down that he expected “a 2x speed up, somewhat obviously.”
The findings challenge the belief that AI always makes expensive human engineers much more productive, a factor that has attracted substantial investment into companies selling AI products to aid software development.
AI is also expected to replace entry-level coding positions. Dario Amodei, CEO of Anthropic, recently told Axios that AI could wipe out half of all entry-level white collar jobs in the next one to five years.
Prior literature on productivity improvements has found significant gains: one study found using AI sped up coders by 56%, another study found developers were able to complete 26% more tasks in a given time.
But the new METR study shows that those gains don’t apply to all software development scenarios. In particular, this study showed that experienced developers intimately familiar with the quirks and requirements of large, established open source codebases experienced a slowdown.
Other studies often rely on software development benchmarks for AI, which sometimes misrepresent real-world tasks, the study’s authors said.
The slowdown stemmed from developers needing to spend time going over and correcting what the AI models suggested.
“When we watched the videos, we found that the AIs made some suggestions about their work, and the suggestions were often directionally correct, but not exactly what’s needed,” Becker said.
The authors cautioned that they do not expect the slowdown to apply in other scenarios, such as for junior engineers or engineers working in codebases they aren’t familiar with.
Still, the majority of the study’s participants, as well as the study’s authors, continue to use Cursor today.
The authors believe it is because AI makes the development experience easier, and in turn, more pleasant, akin to editing an essay instead of staring at a blank page.
“Developers have goals other than completing the task as soon as possible,” Becker said. “So they’re going with this less effortful route.”
Kaspersky GReAT (Global Research and Analysis Team) experts have discovered open-source packages that download the Quasar backdoor and a stealer designed to exfiltrate cryptocurrency. The malicious packages are intended for the Cursor AI development environment, which is based on Visual Studio Code — a tool used for AI-assisted coding.
The malicious open-source packages are extensions hosted in the Open VSX repository that claim to provide support for the Solidity programming language. However, in practice, they download and execute malicious code on users’ devices.
During an incident response, a blockchain developer from Russia reached out to Kaspersky after installing one of these fake extensions on his computer, which allowed attackers to steal approximately $500,000 worth of crypto assets.
The threat actor behind these packages managed to deceive the developer by making the malicious package rank higher than the legitimate one. The attacker achieved this by artificially inflating the malicious package’s downloads count to 54,000.
After installation, the victim gained no actual functionality from the extension. Instead, malicious ScreenConnect software was installed on the computer, granting threat actors remote access to the infected device.
Using this access, they deployed the open-source Quasar backdoor along with a stealer that collects data from browsers, email clients, and crypto wallets. With these tools, the threat actors were able to obtain the developer’s wallet seed phrases and subsequently steal cryptocurrency from the accounts.
After the malicious extension downloaded by the developer was discovered and removed from the repository, the threat actor republished it and artificially inflated its installation count to a higher number – 2 million, compared to 61,000 for the legitimate package. The extension was removed from the platform following a request from Kaspersky.
“Spotting compromised open-source packages with the naked eye is becoming increasingly difficult. Threat actors are using increasingly creative tactics to deceive potential victims, even developers who have a strong understanding of cybersecurity risks — particularly those working in the blockchain development field.
As we expect adversaries to continue targeting developers, it is recommended that even experienced IT professionals deploy dedicated security solutions to safeguard sensitive data and prevent financial losses,” commented Georgy Kucherin, Security Researcher with Kaspersky’s Global Research and Analysis Team.
The threat actor behind the attack published not only malicious Solidity extensions but also another NPM package, solsafe, which also downloads ScreenConnect. A few months earlier, three additional malicious Visual Studio Code extensions were released — solaibot, among-eth, and blankebesxstnion — all of them have already been removed from the repository.
Kashifu Inuwa CCIE, the Director General of the National Information Technology Development Agency (NITDA), has reaffirmed the Federal Government’s unwavering commitment to achieving 95% digital literacy across Nigeria by the year 2030, with an ambitious milestone of 70% by 2027.
This disclosure was made in total alignment with the present administration’s priority areas of reforming the economy for sustained inclusive growth and accelerating diversification through industrialisation, digitisation, creative arts, manufacturing, and innovation.
Making this known during a collaborative meeting hosted by the Universal Basic Education Commission (UBEC), Inuwa highlighted the government’s strategic prioritisation of human capital development as central to its national transformation agenda.
“We started this journey in 2023 when President Bola Ahmed Tinubu came on board and he made it clear that economic diversification and inclusivity are part of the administration’s agenda,” he noted.
“And the president outlined this in 8 priority areas to achieve the vision, with priority number 7 specifically focused on accelerating industrialisation, digitisation, creative arts, manufacturing, and innovation,” he added.
Recognising the importance of digital fluency in achieving this agenda, he stated that NITDA is committed to investing in the digital empowerment of citizens through the development of the National Digital Literacy Framework (NDLF), a strategic blueprint aligned with international best practices.
He added that to tailor the framework to Nigeria’s specific needs, 6 core competency areas were incorporated to include device and software operations, information and data literacy, communication and collaboration, content creation, safety, and problem solving.
He explained that the framework would address all levels of digital fluency, from basic, intermediate to advanced levels, to make digital skills accessible to every Nigerian, from primary school pupils to working professionals.
According to Inuwa, despite data limitations, NITDA estimates that Nigeria’s digital literacy rate currently stands at 50%, up from 44% in 2021, based on extrapolations from the World Bank’s Better Life Report.
The NITDA DG disclosed that the agency has been working closely with the Nigerian Educational Research and Development Council (NERDC) in developing a curriculum for digital literacy, which can be infused into formal education. Stating that the visit is a continuation of NITDA’s ongoing engagements with key education stakeholders, including the Federal Ministry of Education, the National Universities Commission (NUC), and the Nigerian Educational Research and Development Council (NERDC), all aimed at advancing digital literacy across all levels of learning.
Inuwa also revealed ongoing collaborations with global platforms such as Coursera to train teachers using AI-powered lesson generation tools and provide scalable online training.
It is worth recalling that late last year, NITDA partnered with the Nasarawa State University in collaboration with CISCO in launching the Digital Learning for NSUK (DL4NSUK) initiative to enhance digital literacy in tertiary institutions, and equipping graduates with the skills needed to be digitally proficient and globally competitive.
While stressing that the entire process, from curriculum development to classroom delivery, would require a whole-of-government and whole-of-society approach, Inuwa said, “This is not a journey we can walk alone; we must bring everyone on board, education stakeholders, technology providers, state governments, and international partners.”
In response to the DG’s remarks, UBEC Executive Secretary, Hajiya Aisha Garba, confirmed that the Commission has officially received the digital literacy curriculum developed by NITDA and NERDC and has commenced internal review processes.
She acknowledged the curriculum as robust and forward-looking but stressed the need for simplification to suit early learners and teachers, citing challenges such as curriculum overload, limited teacher capacity, and inadequate infrastructure as key barriers to effective implementation.
She pledged that UBEC, in partnership with the State Universal Basic Education Board (SUBEB), will lead efforts to equip schools with computers and solar-powered infrastructure to support real learning.
“We’re committed to working with NITDA and NERDC to refine the curriculum, train teachers, and ensure effective delivery. Let us align the technical vision with grassroots realities to make a lasting impact,” she concluded.
To formalise the implementation of the meeting’s resolutions, a joint inter-agency committee was established to develop strategic plans that will ensure the effective rollout of the digital literacy initiative, to equip young Nigerians with the essential digital skills required to thrive in an increasingly dynamic and technology-driven global landscape.
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