The listing of e-commerce startup Jumia on the New York Stock Exchange over the past week has been a major case study for the bankability of African brands globally. However, instead of celebration, the landmark occasion of Jumia becoming Africa’s first ‘tech unicorn’ has largely raised eyebrows and in many cases provoked anger from Africans on social media. How did a company made up of Europeans, that has never made a profit, with a cumulative loss of almost $1 billion dollars become Africa’s first global tech giant?
The positioning of Jumia as the African start up that grew to become an industry leader on the continent was met with contention from discerning citizens. Cameroon-based Rebecca Enonchong, founder and CEO of AppsTech, said she questions Jumia’s African credentials, pointing out that the company is registered in Germany, has its headquarters in Dubai and its technical development in Portugal.
Conflicting accounts about the founding of Jumia
The exact origins of Jumia are sketchy at best. Several sources state that Jumia was originally founded by Nigerian Tunde Kehinde, Ghanaian Raphael Kofi Afaedor, and Frenchmen Sacha Poignonnec and Jeremy Hodara. These accounts state that they received investment from German Internet incubator company Rocket Internet, and the millions of dollars pumped in brought their original concept to life.
However, opposing evidence reveals that the owners of Rocket Internet, the Samwer brothers came up with a vision to build an “Amazon on steroids” in Africa. This was at a time when Amazon was growing exponentially in America, and Alibaba was doing the same in Asia. After first launching Kasuwa – an e-commerce platform for general merchandise, and Sabunta – an e-commerce platform for fashion in Nigeria similar to their South African platform Zando, Rocket Internet decided to merge both businesses and engage local experts who understood how to make these models work in their own terrain.
Whether as founders or as employees, Kehinde and Afaedor were key minds in the formation and strategic roll-out of what is now being celebrated as the continent’s first unicorn.
Who are the Samwer Brothers?
The Samwer brothers, owners of Rocket Internet, are often described as some of the most vilified entrepreneurs in the tech industry due to their reputation as ‘clone kings’. They have gained a reputation for being experts in copying existing high growth web companies. “The Samwer brothers are despicable thieves. How do they sleep at night?”, once tweeted American serial entrepreneur Jason Calacanis. One of the brothers Oliver once told Wired Magazine “We are builders of companies, we are not innovators. Someone else is the architect and we are the builders.”
One thing is certain about the Sawmer brothers, they believe strongly in the power of PR. “Many people think that it doesn’t pay back,” Marc Samwer told the Google Zeitgeist conference in 2007. “We tested it, first with $10,000, then with $100,000, then with $1 million. In 2005, we spent $70 million in one quarter on television advertising worldwide.” So, when speculation peaked that differences had developed between Kehinde and Afaedor’s partnership with the Sawmer brothers, the unceremonious dismissal of Jumia’s Head of Marketing seemed plausible evidence that the boat was rocking.
At this point, Jumia had a 30-man marketing team, and thousands of dollars allocated for daily advertising. With
Parting ways
The Samwer brothers are no strangers to controversy concerning their human resource management style in their companies globally. Oliver Samwer once had to publicly apologise for a memo to his senior staff at a furniture company that leaked to TechCrunch. “I will die to win and I expect the same from you.” He wrote, “The time for the blitzkrieg must be chosen wisely, so each country tells me with blood when it is time. I am ready — anytime!… I do not accept surprises. I want this plan confirmed by all three of you: you must sign it with your blood.”
It was no surprise to those familiar with the brothers’ history when news of massive staff turnover was downplayed after the dismissal of Jumia’s Head of Marketing. It is said to have been a major source of pressure for Kehinde and Afaedor who at this point had lost most executive control to their European investors. The duo sold their stakes for millions of dollars and moved on. Their executive roles were filled almost immediately with foreign faces – Nicolas Martin and Jeremy Doutte took over the reins. Since then, the shareholding structure has evolved to include MTN as a major shareholder. In 2016 French Insurance company AXA also acquired an 8% stake in the business for $83 million. However, to the world Jumia was still the African e-commerce success story.
Banking on an African Brand
The Jumia brand and the Jumia financials tell 2 different tales. As of Dec 31, 2018 Jumia has accumulated a loss of almost $1 billion, and analysts report that it doesn’t seem likely that their losses will stop anytime soon. Speaking on the IPO, Enonchong feels that it is a “desperate exit for existing investors who are obviously running out of cash. Obviously, they couldn’t find new institutional investors.”
The Jumia investment prospectus states “We possess extensive local knowledge of the logistics and payment landscapes in the markets in which we operate, which we consider to be a key component of the success of our company,” They largely attribute their losses to political instability and underdeveloped infrastructure.
The IPO is a repetition of the initial strategy that brought the Jumia brand the success it enjoys today on a global scale – an extensive PR drive selling the age-old African success story against all odds. Only this time, there are no African faces in the equation and all the spoils will be repatriated to foreign lands.
When will locals benefit from these deals?
With the just concluded Conde Nast Luxury Conference in Cape
The views expressed in this piece are the author’s own and do not necessarily reflect News Central’s editorial stance.
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