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Techpreneurs Must Avoid Jumia, Konga Strategies to Survive
By Prof. Evans Stevenson
E-commerce in Nigeria has often been touted as a difficult terrain and not for the faint-hearted.
This position is backed up by concrete facts and verifiable evidence, especially when one considers the well-documented struggles of several players in the sector. Despite the allure and glitter that the segment holds, one requires deep pockets and a strong dose of guts and bloody-mindedness to survive in e-commerce, especially in a very challenging market such as Nigeria.
Undoubtedly, the promise of e-commerce and its potential for investors to strike gold remains undeniable. The foregoing remains evident when you consider the predominantly youthful population that Nigeria possesses – arguably one of the most youthful in the world, the increasing exposure that education and the internet brings, growing data connectivity and teledensity rates as well as the burgeoning interest in the convenience and savvy that online commerce brings. Also worth mentioning is the rise in social commerce among youths in Nigeria, with many turning to entrepreneurs via trading on social media platforms such as Instagram and Facebook, among others.
But despite these promising markers, a few weighty obstacles remain for potential new entrants into the market, especially from a strategy standpoint.
I was a lead panelist at a recent Consumer Trends Research/Analysis session in Nairobi, the Kenyan capital where the conversation naturally dovetailed into the prospects of e-commerce in Africa. Crucially, the Nairobi event, which witnessed attendance from key experts, opened the eyes of many to some of the pressing challenges that have deterred investors from reaping the undoubtedly immense benefits from their portfolio investments in e-commerce platforms on the continent.
One of the few take-aways from the session was the fact that the Nigerian e-commerce market is unmistakably one of the biggest in Africa. This is hardly divorced from the fact that Nigeria, despite its struggles, still remains Africa’s biggest economy. Also, unlike in other African countries where you would nominally have one big e-commerce player, Nigeria has two giants in Jumia and Konga, both of which are understandably the dominant actors in a segment which also has a few other competitors.
But in focusing on the strengths of the Nigerian e-commerce market which remains very attractive to budding techpreneurs and other young people driven by the lure of wealth and privilege that entrepreneurship holds, it is critical to sound a cautionary note of warning: copying the strategies deployed by current market leaders, Jumia and Konga, may be an exercise in failure.
In breaking down this caution to future entrants into the market, it is essential to begin by, first of all, establishing that the Jumia strategy is a very expensive one, a suicide strategy, so to speak, that is very hard to sustain but one which, if it comes good, would turn its proponents into overnight superstars. Founded in 2012, Jumia initially raised $26 million from Summit Partners in March 2013. At the time Jumia did not specify how it will spend the fresh capital – a subtle indication of an absence of a clear-cut strategy – but back then, Jeremy Hodara — co-CEO of Africa Internet Group (AIG), which owns Jumia — said the funding was a validation of the company’s progress.
“We are very pleased to have been given this show of confidence, which acknowledges Jumia’s success. We consider this a recognition of the huge potential of e-commerce in Africa and the strong momentum of Jumia across the continent,” Hodara had stated back then in 2013.
Flush with cash and with no apparent strategy or clarity on what to spend it on, Jumia had embarked on a massive marketing splurge to outspend and out-hire its competitor, Konga, which had also entered the market in 2012. A year later and now backed by Rocket Internet, Jumia announced it had raised €120 million ($150 million) in new funding. The company confirmed that the round values it at €445 million ($555 million), adding that the new funding would boost its continent-wide expansion. Active in nine African markets — Cameroon, Egypt, Ghana, Ivory Coast, Kenya, Morocco, Nigeria, Uganda, and Tanzania — and also the UK at the time, Jumia’s strategy hardly altered until its rival, Konga pioneered the online marketplace structure that has become so popular today. After initially thumbing their noses at this innovative strategy as something bound to fail, Jumia later followed suit and launched its own marketplace after Konga.
Subsequent fund raises which came from convincing its growing band of investors of the promise of investing in the potential e-commerce goldmine saw Jumia go public in 2019, listing its shares on the floor of the New York Stock Exchange (NYSE). A high point in the company’s history, Jumia would, however, fall from grace after being touted as Africa’s first unicorn. This came after it was discovered to have cooked its books and eventually being called out by a US-based firm, Citroen Research which described its shares as worthless. Also, it is important to cite the huge losses that have trailed Jumia from inception and which many experts see as a black hole it can never fill with the way the business is currently structured.
Till date, the Jumia strategy is one that has seen it refrain from building any form of infrastructure in Nigeria, its biggest market. Investigations reveal the same applies across the other countries in which it operates. Hardly can the company count on owning office spaces, retail stores, warehouses or core logistical or physical presence in Nigeria. For years, Jumia has run on a cash-intensive strategy which has seen it burn through investors’ funds at a fast rate and racking up monumental losses to boot. But while it can claim to have regularly grown Gross Merchandise Volume (GMV) – described as total value of merchandise ordered over a given period of time – it can hardly gloss over the deficits in its books.
From a revenue standpoint, Jumia currently relies on three main areas: first party revenue from direct sales business of inventory owned by the business, revenue from its marketplace (which is currently its highest earner) and other revenue, which currently includes revenue from its logistics-as-a-service activity launched in 2020.
Its recently released 2022 Q1 results show that Jumia is currently valued at about $778m, a figure which falls way short of its all-time valuation of about $5.8 billion achieved in February 2021. Also, its shares are down 32%, despite being recently up by 44%. And while it claims GMV has risen by 27% per year boosting revenue by 44% year on year – a nine-quarter high – Jumia still reported a total comprehensive loss of $41 million and has a net asset of just $413 million after a massive accumulated loss of $1.7 billion.
Clearly, the biggest gainers were Jumia’s early-stage founders and investors who cashed out in time when other investors came calling. It is clear to global analysts that Africa is a tough continent and Jumia’s strategy may now be to find a buyer, but where it fails, it will be a disaster for investors.
It, therefore, came as a surprise when news recently made the rounds of a potential acquisition of Jumia by the Zinox Group, a technology conglomerate which I understand have acquired years of outstanding experience as a leading light on the continent. Such an acquisition would only make sense if the share price crashes to record lows, justifying such an investment as Jumia, today, is unarguably a loss-making venture that would require intense work to turn it around on the path of profitability. It could also be that Konga and its backers at the Zinox Group wants to use Jumia’s current network to expand to other African countries where Jumia is still recording losses.
But has its rival, Konga, fared any better?
Marginally, yes.
When it entered the Nigerian market in 2012, same year as Jumia did, Konga was also keen on raising money from investors as validation of their standing. The management of the company also burnt through a lot of cash to remain competitive in the face of Jumia’s bullish spending. So, the first few years witnessed both brands going head-to-head and racking up huge losses in the process. To its credit, Konga was a bit more conservative in its spending but that is not to say it recorded much more significant head-way than Jumia at the time.
The company, did, however, do much better in building essential infrastructure. It launched its own internally owned logistics vehicle – Konga Express – to overcome the thorny challenge of last mile deliveries, while also securing a license from the Central Bank of Nigeria (CBN) to float its own mobile money wallet known today as KongaPay. This is in addition to pioneering the marketplace structure known back then as the Konga Mall – a first in the African e-commerce market and beyond and which was later replicated by other local and international players. Konga also stood out for its investment in warehousing structures which helped it retain huge inventory.
Successive fund raises from perennial investors Swedish-based AB-Kinnevik and South African-headquartered Naspers, however, failed to save the company from almost running aground before its current owners, the Zinox Group, stepped in.
In assessing where both latter-day e-commerce pioneers went wrong in their strategies, it is easy to cite the absence of a core understanding of the local dynamics, an almost foolhardy ignorance of the complex interplay that defines the Nigerian market. Although I am not a Nigerian, I have spent enough years in the country to be able to identify the Nigerian market as a tricky customer. You need foresight, guts, experience borne out of years of navigating policy somersaults, keen awareness of the infrastructural deficiencies and influence of state actors, as well as other peculiarities that shape this market in order to make a success of e-commerce in Nigeria.
I think the Zinox Group’s experience of the Nigerian market and Konga’s strategies in investing in sustainable assets in Africa like warehouses, delivery trucks and more, instead of pouring all her money into marketing shows a commendable understanding of this tough market. It also shows that the new owners of Konga want to be in business for a long time and this could be why they have not yet hit the market to raise money.
Perhaps, that is why it hardly came as a surprise when Konga, which was almost comatose and on the verge of exiting the market at its point of acquisition, is today and under new ownership, the first e-commerce firm to achieve profitability in Africa.
The lesson for aspiring entrepreneurs in Africa here is simple.
Copying the strategies that made Jumia and Konga popular may seem like an easy deal but it may not be sustainable in the long run. Hype is good and necessary. However, it is very important to thoroughly understand your market, while situating your strategies within the context or existential realities of the society and not just relying on importing foreign concepts or business school models. In the same vein, you must put in the hard work to fill the content or deficiency gaps, while also making efforts to own your own infrastructure, especially considering the country’s challenges in this area.
Prof. Evans Stevenson, a Kenyan-born e-commerce researcher, writes from Abuja.
By Linda Saunders Salesforce Country Manager & Snr. Director Solution Engineering for Africa
Today, every company wants to be an AI company, yet only 1% of firms consider themselves fully mature in AI adoption, according to McKinsey. As we move from chatbots to copilots to autonomous AI agents or “agentic systems,” companies that haven’t already implemented AI risk losing significant ground to competitors. This could happen faster than they think.
Autonomous AI agents go beyond pre-defined scripts to handle nuanced interactions. They can not only generate content but make decisions and take action with limited or no human supervision. The move to intelligent, scalable digital labor represents a true revolution. By 2028, Gartner forecasts that 33% of enterprise software applications will include agentic AI, enabling 15% of day-to-day work decisions to be made autonomously.
This shift has significant implications for businesses: the potential for a digital labor force to work alongside humans, reducing costs and driving innovation and scalability. For the first time, workforces can be supplemented by autonomous AI agents working around the clock boosting productivity, efficiency, and competitive advantage.
Deloitte predicts that 25% of companies using generative AI will launch agentic AI pilots this year.
Across every industry, AI agents are making a significant impact. In customer service, they offer 24/7 support, handling a broad range of issues. For inventory management, they automate tasks, optimise stock levels, and provide real-time insights. In recruitment, they streamline the hiring process by screening resumes, scheduling interviews, and conducting initial assessments, reducing the workload on human recruiters.
By taking over repetitive tasks, AI agents allow workers to focus on high-value contributions, driving creativity, strategy, and meaningful impact.
Beyond business, this technology is improving students’ academic performance by providing personalised tutoring. In healthcare, AI agents reduce administrative burdens, allowing professionals to focus on complex cases and monitor patient progress, leading to better health outcomes.
The shift to agentic AI systems brings disruptions and risks, not least around trust and data accuracy. Trusting the technology is key to integrating agents. According to Salesforce research, 93% of global desk workers don’t consider AI outputs completely trustworthy for work-related tasks. Sixty percent of consumers say advances in AI make trust even more important.]
To build trust, it’s crucial to ensure that AI systems use accurate and relevant data, maintain privacy, and operate within ethical and legal boundaries. This means implementing robust data governance and oversight.
AI agents must also be transparent and explainable, so users know when they are interacting with an AI and how it operates. Clear accountability is essential to define responsibility for the agent’s performance and trusted outputs.
The solution to increasing productivity and building trust is not as simple as implementing AI agents immediately, according to a new Salesforce white paper. The white paper lays out key design considerations for policymakers to keep in mind outlines key considerations for designing and using AI agents, and how global policymakers can adopt and unlock AI’s full potential.
To achieve a smooth and beneficial integration, businesses, governments, non-profits, and academia must collaborate to create comprehensive guidelines and guardrails.
Continuous training programs are also key. They help AI stay up-to-date and work effectively alongside humans, enhancing productivity, and allowing employees to focus on more strategic tasks.
Without proper oversight, autonomous AI can make decisions that conflict with human values or ethics, leading to loss of trust, legal issues, and damaged reputations. To avoid these risks, a multistakeholder approach is essential.
It’s no longer a question of whether AI agents should be integrated into workforces – but how best to optimise human and digital labor working together to reach desired goals.
Although AI agents are the latest technology breakthrough, the fundamental principles of sound AI public policy that protects people and fosters innovation remain unchanged: risk-based approaches, with clear delineation of the different roles in the ecosystem, supported by robust privacy, transparency, and safety guardrails.
By addressing these concerns, we can envision a future with new levels of productivity and prosperity, driven by a digital workforce that continuously learns and improves.
By Aliyu Gaya
One exceptionally commendable fact about the Bola Tinubu presidency is that it is not lacking in ambition and audacity. Courage defines the leader and Tinubu has it in good measure. Think about this: Tinubu wants to grow Nigeria’s net worth to a $1 trillion economy by 2030. While this shows ambition, it is much more a demonstration of audacity in leadership.
To achieve this, Tinubu says Nigeria must lean on and encourage local production. He believes that achieving food security is the sine qua non for advancing the nation’s economy through heavy investments in the agriculture value chain. He is pushing a Nigeria First, Buy-Nigeria policy. Some of his ministers and appointees are also singing the same local production hymn.
A quick fact-check shows that this is not new, especially since the commencement of the 4th Republic. President Olusegun Obasanjo, it has to be emphasised, laid a solid foundation to promote indigenous production of goods and services. He did not chime Buy Nigeria, he lived it, implemented it and the results were profound. The results of Obasanjo’s Buy Nigeria policy manifested in diverse ways. Local patronage of indigenous fruit drinks and ban on imported ones; local production of airtime cards for GSM service providers; local patronage of locally assembled computers that gave a huge boost to local production of the same, such that some ministries, departments and agencies (MDAs) standardised their IT operations on indigenous computer hardware and software.
Sadly, despite the traction gained by indigenous products, the succeeding governments did not even sustain the Buy-Nigeria momentum. Tinubu seems determined to do so. However, to achieve the noble ambition of a $1 trillion economy, President Tinubu must listen to key Nigerians who are not only employers of labour but are deeply committed to indigenous production as the key to unlocking the huge potential of the nation’s economy.
One of such Nigerians Tinubu must take heed to his advice is Aliko Dangote, the President of Dangote Group whose refinery is the biggest single infrastructure project in Africa. Dangote, a major indigenous manufacturer, is not happy with the manner local companies are treated in Nigeria.
Dangote recently advocated for policies that protect indigenous industries and nurture them into mega corporations capable of generating jobs and fostering prosperity. Addressing a gathering of manufacturers and investors in Abuja recently while delivering a keynote on ‘Rethinking Manufacturing in Nigeria’ at the Nigeria Manufacturers’ Summit, Dangote advocated a reversal of government policies that expose local players to vulnerabilities including continued importation of goods and services that are also produced in Nigeria. Such a lack of protection of indigenous players, usually in the form of a lack of patronage from the government and Nigerians, stunts the growth of these local players.
He cited countries where governments had to take drastic measures to protect their respective local markets. These include the blocked sale of US steel to Nippon Steel of Japan, the blocked sale of six US port management companies to Dubai Ports World, restrictions on Chinese cranes at US ports, and the US imposition of tariffs such as 100% on Chinese EVs (electric vehicles), 50% on semiconductors, medical products, and solar panels.
There are other instances, including the restriction of Russia gas supply to Europe, which led European countries to increase coal usage despite opposition to fossil fuels; and the US government’s distribution of $39 billion in subsidies to incentivise local microchip production. The above cases clearly show how respective governments deliberately protect their local players, not only to give them a head-start over competition but also to help them scale up on the path to profitability. Nigerian governments have been short on this.
Leo Stan Ekeh, Chairman of Zinox Group, an African ICT unicorn, is yet another voice Tinubu should give ears to. Ekeh, much like Dangote and others, has been a victim of serial blackmail and corporate bullying despite his undeniable sacrifice to create a digital culture in the Nigerian marketplace including education, media, banking, oil and gas, agriculture and other aspects of the economy. His Computerise Nigeria project became the cornerstone for the establishment of digital hubs in the nation’s tertiary institutions.
Ekeh believes that achieving a $1 trillion economy is possible but stressed that the current state of power delivery nationwide (an average of 4 hours per day according to the latest NBS data) cannot support the type of bullish industrialisation and local production that will bolster the nation’s economic trajectory to the trillion-dollar mark. He warned that a situation where genuine players in local production and service delivery are bullied and blackmailed by unscrupulous private sector fringe players and public sector operators does not bode well for economic growth. He urges more protection from government for the progressive and proven indigenous companies. He says the concept of Buy-Nigeria should be enforced, especially among MDAs.
While expressing confidence in President Tinubu’s ability to address the issue of blackmail, he suggested that Tinubu should aggressively pursue a policy that promotes patronage of indigenous manufacturers and service providers as a way of reflating the economy.
He said: “It is evident that the core of the myriad challenges afflicting the nation today is our failure to develop local capacities. We must embrace self-sufficiency by consuming what we produce and supporting indigenous players across various sectors.”
He regretted that in spite of several local content policies established by the Federal Government, such policies are consistently disregarded by government employees and appointees, wondering why “we send our children to the world’s best institutions, where they excel, yet we overlook the products they create.”
He gave the example of the government of India, which effective November 1, 2023, placed restrictions on the importation of laptops, tablets, all-in-one personal computers and ultra-small computers and servers with immediate effect. This, according to him, was to boost local productivity both by multinationals operating in India and indigenous Indian companies to create more jobs, encourage proficiency, and discourage capital flight.
“Mr. President, I humbly appeal to you to be deliberate and decisive in encouraging indigenous producers and service providers across all sectors. This way, we create a market for indigenous products, build confidence in our economy and easily attract international investors. The way we treat our local investors will determine how many foreign investors we can attract,” he stated in an open letter to the President earlier this year. The voices of Dangote and Ekeh echo the voices of other indigenous players who have continued to deliver value amid vicious headwinds.
Speaking at the inaugural Domestic Investors Summit in Abuja recently, the Minister of Industry, Trade and Investment, Dr. Jumoke Oduwole, reaffirmed Tinubu’s determination to achieve the trillion-dollar economy. She outlined targets for 2025, including $6 billion in foreign direct and portfolio investment, $6.5 billion in non-oil exports, a 20 per cent increase in trade value, and the creation of 200,000 export-led jobs. This is grand. But the major pulley that will drive this growth is the recommendation of Dangote, Ekeh, and other indigenous players, which is that the government should, as a priority, protect local investors and entrepreneurs through patronage, a policy shift that encourages growth, and categorising such investors’ assets as national assets deserving of preservation.
Gaya, a public policy analyst, writes from Kano.
By Chukwuemeka Fred Agbata (CFA)
Today, we celebrate a leader whose unwavering commitment to “Everything Technology, Technology Everywhere” is turning bold ideas into real impact for Ndi Anambra.
As someone privileged to lead the Anambra State ICT Agency, driving e-governance initiatives, and now the Geeks & Founders Alliance for Soludo (GEFAS), a coalition of tech professionals, founders, and enthusiasts advancing technology and championing the re-election of Governor Soludo, I see first-hand how Mr. Governor’s vision keeps challenging us to push boundaries: from digitizing government operations to expanding free Solution WiFi, deploying smart solutions, and driving public-private partnerships that create jobs and make Anambra truly work for the people.
Today, under his visionary leadership, the combination of solid physical infrastructure, livable cities, and a growing digital backbone is fast positioning Anambra as an attractive hub for talent, investment, and innovation- a destination and not a departure lounge
Leadership is not about lofty speeches but clear action, and Governor Soludo has shown us that bold decisions, like removing Right of Way charges to drive connectivity, can transform an entire ecosystem.
As we mark his birthday, we rededicate ourselves to this vision: a smarter, more connected, and prosperous Anambra that works for all.
Happy Birthday, Mr. Governor, Oluatuegwu!
Here’s to more impact, more solutions, and a future that keeps rising.
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