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.
The Minister of Communications, Innovation and Digital Economy, Bosun Tijani, has called for the urgent adoption of digital technology in Nigeria’s agricultural sector to boost food production, curb rising prices, and reduce the country’s dependence on food imports.
Speaking on Thursday in Abeokuta at the Ogun Tech Forward Innovation & Startups Roundtable session, Tijani stressed that Nigeria’s vast arable land and large population could only be effectively harnessed through technological intervention.
He warned that without embracing innovation, traditional farming practices would remain inefficient and expensive, putting food security at risk.
“Technology innovation has already contributed 16 to 18 per cent, but we are aiming for 21 per cent. We need to introduce our technology into agriculture to produce enough food to feed ourselves
“Without technology, countries like Nigeria cannot practise agriculture effectively. We have the vast land, but without technology, we won’t do it well,” the minister said.
Tijani noted that the continuous rise in food prices and the country’s dependence on foreign exchange to import grains that can be grown locally is unsustainable.
He emphasised that leveraging tools such as mobile apps, drones, sensors, and data analytics could transform Nigeria’s farming landscape by enabling precision agriculture and providing real-time insights on soil conditions, pest control, crop health, and intruder detection.
He maintained that the deployment of such technologies would not only enhance farming efficiency and sustainability but also lead to higher yields, lower production costs, and ultimately, more affordable food for Nigerians.
The minister also made a broader case for inclusive innovation across the country, cautioning that Nigeria’s technological future cannot be shaped by a few urban centres alone.
He said the federal government would support emerging tech ecosystems, especially in states like Ogun, to ensure grassroots participation in the digital economy.
Tijani declared, “We can’t leave innovation in the hands of just a few cities. Every part of Nigeria, including towns and rural areas, must be part of the digital journey. The more people we carry along, the stronger we become as a country.”
Tijani, however, revealed that the federal government would back Ogun Tech Hub’s initiative aimed at creating 300 jobs through business process outsourcing as part of a broader vision to transform Nigerian states into ‘talent cities’.
He said, “If we don’t invest in our own people, we’ll keep depending on others for solutions. We must create space for local ideas to grow and become real businesses.”
The minister further called for the integration of emerging technologies such as artificial intelligence, robotics, and drones into key sectors, particularly agriculture, while advocating for the adoption of generative AI in education to support personalised, accessible learning across communities.
In his remarks, the President of the Ogun Tech Community, Adekunle Durosinmi, called on the federal government to provide strategic support to accelerate the growth of the state’s digital ecosystem.
He urged the minister to facilitate the establishment of a functional innovation hub and a permanent secretariat to nurture local startups.
Durosinmi highlighted the critical role Ogun State plays in Nigeria’s economic framework, describing it as a major industrial hub and strategic transport corridor linking Lagos with the rest of the country and West Africa.
He said that with 57 per cent of its 7.1 million projected population in the working-age category, Ogun State possesses immense potential for digital innovation, job creation, and youth development.
“Ogun State is uniquely positioned to become a national leader in technology and entrepreneurship. We have more than 29 tertiary institutions—more than any other state in the country—which makes us a natural home for innovation,” he said.
Since its launch in February 2022 and formal registration with the Corporate Affairs Commission, Durosimi stated that the Ogun Tech Community has organised various initiatives aimed at strengthening digital literacy, cybersecurity awareness, and grassroots tech engagement.
He noted that the community has created 19 active clusters, ranging from developers and mentors to women in tech and agritech specialists, all working together to drive inclusive growth in the tech space.
He reiterated the community’s alignment with the National Digital Economy and E-Governance Bill 2024, stressing that its programmes, governance structure, and advocacy are geared toward promoting digital literacy, supporting startups and SMEs, encouraging e-government services, and fostering responsible digital innovation.
He also stressed that collaboration between government, industry, academia, and the tech ecosystem is key to achieving national development goals.
He expressed appreciation for Tijani’s presence at the roundtable, describing it as a clear indication of the federal government’s commitment to inclusive innovation.
“We want to see such solutions replicated across the country. To accelerate this, we need your support. Ogun urgently needs a fully functioning physical secretariat and, importantly, a dedicated innovation hub to nurture and grow even more startups,” he said.
National Office for Technology Acquisition and Promotion (NOTAP) has signed an agreement with Revass System limited to strengthen technology acquisition compliance through its regulatory framework and boost sustainable capacity in the country.
Speaking during the signing of the agreement in Abuja, Dr. Obiageli Amadiobi, director general and chief executive officer, NOTAP, said that the agreement is to reinforce NOTAP’s core mission of ensuring that technology imported into the Country serves the broader interest particularly in advancing local content development, nurturing indigenous capabilities and ensuring sustainable job creation.
In a statement made available to journalists by Raymond Ogbu, assistant chief information officer, NOTAP, the DG said that the major purpose of the agreement was for Revass Systems limited to design, develop, deploy and manage a secure and efficient digital revenue collection system for NOTAP that will be in compliance with NOTAP Act, Central Bank of Nigeria CBN financial guidelines, NITDA policies, and other applicable Nigerian laws.
The DG said that the app should enhance transparency, accountability, and operational efficiency in revenue collection and management as well as build the capacity of NOTAP staff through structured training and technology transfer initiatives.
Dr. Amadiobi stated that the agreement reflects a strategic approach to safeguarding Nigeria’s economic and technological independence by ensuring that every technology transferred into the country delivers tangible value to Nigerians.
“This partnership represents a pivotal step in ensuring that technologies coming into Nigeria are not only in compliance with Nigerian laws but also aligned with the country’s developmental priorities”.
“The goal of the agency is to ensure that every agreement NOTAP registers, contributes meaningfully to critical skills development, job creation and growth of local enterprises” she said.
The Director General reaffirmed that the milestone is in consonance with the strategic vision of the supervising ministry, the Federal Ministry of Innovation, Science and Technology (FMIST) as well as the Renewed Hope Agenda of President Tinubu to transform the country into a knowledge-based economy driven by local capabilities, productive collaborations, and build globally competitive talents.
“No meaningful developments could happen in critical areas of our economy without the deployment of technology hence the office is making every effort to deploy technology in all its operations to ensure efficient and timely service delivery” she added.
Nigerian Export Promotion Council (NEPC) and Nigerian Bureau of Statistics (NBS) have signed a Memorandum of Understanding (MoU) to facilitate data collection from Informal Cross Border Trade.
Nonye Ayeni, executive director/CEO of NEPC, at the signing ceremony held in Abuja, Nigeria’s Capital said the event marked a major turning point in Nigeria’s quest to grow its export trade through the capturing of data in the informal sector.
“Existing trade data primarily capture activities within the formal sector, offering limited visibility into informal export trade transactions, despite their significant volume and economic impact. In 2024, formal export trade records indicate that 7.291 million metric tons of non-oil products valued at US$5.456 billion, were exported from Nigeria. This figure excludes informal export trade data”, she added.
She stated that the Informal cross-border trade is not just a distant, peripheral activity but real trade that fuels livelihoods, strengthens regional supply chains, and contributes significantly to our national and continental economic resilience.
According to her, “Informal export trade representing millions of dollars in goods and services has remained largely outside our official records. Informal export trade data collected by NEPC State offices from major corridors in Kano, Jigawa, Kebbi, Zamfara, Katsina, Sokoto, Lagos, Ogun, and Adamawa reveal transactions valued at over $31.8 million in some months of 2024”.
Ayeni disclosed that reports from the National Onion Producers, Processors and Marketers Association of Nigeria (NOPPMAN), shows that over 1.6 million bags worth of the commodity were traded informally to neighbouring countries such as Ghana, Cote D Ivoire, Benin, Cameroon, Congo, and Niger Republic.
The NEPC boss pointed out that these impressive achievements were not captured in the national export trade statistics thus portending real implications for economic planning for the country.
“It weakens Nigeria’s voice in regional and global trade negotiations, it denies informal traders the recognition and support they need to thrive as well as diminishes Nigeria’s economic potential, especially the vital contributions of women, youth, and MSMEs”.
Ayeni explained that the collaboration between the Council and the NBS was borne out of the desire to correct the imbalance and capture the full spectrum of Nigeria’s export trade activity.
Adeyemi Adeniran, statistician general of the Federation, noted that the meeting of key players from national and sub-national agencies, regional institutions, international development partners, and the organized private sector, reflects the strong spirit of collaboration required to address one of the most pressing challenges in Nigeria’s trade data architecture, capturing and integrating data from informal trade and trade in services into the national framework.
Adeniran was of the view that the data gap severely impedes evidence-based policymaking, limits capacity to engage in fair trade negotiations, and undermines the accuracy of macroeconomic indicators adding that traditional trade measurement systems have long focused on formal, large-scale transactions while overlooking the vibrancy of informal trade routes.
He disclosed that informal trade in Sub-Saharan Africa contributes between 20 to 40 per cent of intra-African trade, with Nigeria accounting for a significant share due to its long and porous borders.
“These are not just gaps in data, rather, they represent gaps in our understanding of economic life and the well-being of millions of Nigerians who engage in these activities daily”, he said
Adeniran said the collaboration with NEPC, presents a timely opportunity to update and harness current trends, identify new opportunities, and design data-informed strategies to support trade formalization, enhance competitiveness, and ultimately foster inclusive economic growth.
“Capturing informal trade data will also help us design smarter border policies, enhance food security, facilitate small and medium enterprise development, and monitor regional integration efforts,” he added.
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