Later this year, the New York Stock Exchange will be welcoming Africa’s very first unicorn.
A unicorn, for the uninitiated, is a company valued at more than $1 billion.
It’s also the term for a woman who is seeking a threesome with a couple, but that’s a story for another time.
Moving on – the company in question is e-commerce business Jumia, a Nigerian-based company known as the African Amazon.
Here’s The Daily Maverick:
Jumia operates in 14 African countries, had four million customers and sales of about $149-million in 2018. This is a chunky rise from the $94-million in sales and 2.7 million customers it had 2017.
On the other hand, in a way typical of booming internet startups, the more customers it gets, the bigger it losses become; slipping from €165.4-million in 2017 to €195.2-million in 2018.
Obviously, African tech enthusiasts are rooting for the company to succeed. The company is hoping to raise roughly $1,5 billion on the listing, which is backed by big names like Morgan Stanley, Citigroup, Berenberg and RBC Capital Markets.
Goldman Sachs would normally be there, but they actually own part of the company. The other owners include a whole bunch of companies who have pumped money into the group over the past five years, including Millicom International Cellular, Orange, Africa Internet Group, a venture backed by Goldman, MTN and Rocket Internet.
This last group, Rocket Internet, is significant because they are generally looked on a bit askance in start-up circles because they were founded by some smart German entrepreneurs who decided on a business model based on which they would look out for anything that was working, and replicate it in areas where that business didn’t exist.
Jumia has become a platform with 40 000 vendors. It’s also branched out into insurance sales and financing, which it can do without having to actually deliver goods.
While it’s nice to think about an African company cracking unicorn status, it won’t come easy for the company. Some of the challenges they’ll face are very specific to the continent.
The biggest problem for African online e-commerce is that credit cards are a rare commodity on the continent. Like in India, the workaround is to have a payment-on-delivery option.
…The problem was that there was an “insufficient cash reconciliation system”. There is now an automated system that allows the company to monitor transactions on a daily basis.
…They also note a huge array of problems every African business person will recognise: Exchange rate fluctuations, exchange controls, security breaches, arbitrary changes in tax and regulation, fraud, theft; you name it, it’s there.
On the plus side, the company is seeing a rise in repeat customers.
Only time will tell.
[source:dailymaverick]
