Editor’s Note: March 14, 2019
Is African e-commerce a good investment?
Jumia, the Nigeria-based e-commerce start-up, has filed for an IPOon the New York Stock Exchange, which could value the company at $1.5bn
Ostensibly it’s the crowning achievement of a narrative around African e-commerce dating back to 2012, when Jumia was founded. It was among a number of start-ups to raise millions in funding, fueling talk of a retail revolution, and earning it the label of being the “Amazon of Africa.”
Yet the response to the news has been muted.
Part of the problem is that it hasn’t quite worked out. The realities of fragmented, expensive and unpredictable markets saw the hype fade by 2015.
This is reflected in Jumia’s financials. While it has 4m customers in 14 countries, the company reported a €170.4m loss with just €130.6m in revenue for 2018 according to its SEC filing.
The really bad news for the “Amazon of Africa” is that the giants of e-commerce, including the real Amazon, are warming to Africa. China’s Alibaba, which has a market cap of $468.41bn, has justannounced a partnership with Kenyan mobile money platform M-Pesa.
It will be hard for Africa’s e-commerce start-ups to compete.
The IPO is a bid to stay in the game, and the market will soon reveal if there’s any appetite left.
From The Continent
Africa’s travel and tourism sector grew by 5.6% in 2018 according to new data from the World Tourism and Travel Council (WTTC), second only to the Asia-Pacific region. The sector contributed $194.2bn, or 8.5%, to the continent’s GDP. More: WTTC
Business confidence in South Africa has fallen to its lowest level since Q2 of 2017, before the ousting of former president Jacob Zuma, according to the Rand Merchant Bank (RMB) business confidence index. The drop reflects concerns about policy direction under president Cyril Ramaphosa, and rising scepticism about his government’s pledge to turn around the country’s flagging economy. More: Reuters
The Daily Stat
The annual production capacity of Heineken’s first brewery in Mozambique, inaugurated on Wednesday. More: MacauHub
The Global Perspective
Italy’s Eni has announced a major offshore oil discovery in Angola, estimated to contain between 450m - 650m barrels. The find in the Agogo prospect, approximately 180km off the coast, is a potential boost to Africa’s second-biggest oil exporter, which has seen production decline due to ageing fields. More: WorldOil
French president Emmanuel Macron has pledged to invest $2.8bn into African start-ups and SMEs by 2022 during his first trip to East Africa this week. Macron visited Djibouti, Ethiopia, and Kenya as part of an effort to shift France’s Africa policy away from a historical focus on former colonies in West, Central and North Africa. More: Bloomberg