Little, Kenya’s ride-sharing startup, is taking its buses off the road in the meantime. With effect from January 9 , 2020, Little buses would no longer be on Kenyan highways.
In a statement, the startup says the services will resume soon but remain unsure of when they will resume operation.
Chief Executive Officer Kamal Budhabhatti
“We deeply regret to announce that the Little Shuttle service has been temporarily suspended effective immediately. We apologize profusely for the inconvenience, but the service will be back with a bang very soon,” reads a statement from the ride-hailing company.
Here Is All You Need To Know
This suspension would mark the second time the startup is putting a break to its operations since it was founded in February 2019. The first was when the National Transport and Safety Authority (NTSA) in Kenya forced it to do so in October 2019.
NTSA accused the startup of flouting the rules and regulations of the National Transport and Safety Authority.
“We have been informed that the license our partners use are not the right ones despite being properly registered,” the firm’s Chief Executive Officer Kamal Budhabhatti earlier stated.
Little, nevertheless, resumed operation in late October 2019 under new terms such as adopting the use of 7-seater vehicles like Noahs, instead of buses and 14-seater Matatus.
A Look At what Little Does
Little Shuttle was launched in February 2019 to offer alternative and technology-based transport service to Nairobi residents in the selected routes.
Little shuttles allow for public transportation, but leverages more on technology to ease the hustle that public transportation is known for.
The startup allows riders to book a seat and board at specific times starting at 6:45 am on weekdays, under a frequency of two hours.
Eight months after unveiling, the startup ran into headwinds with the National Transport and Safety Authority revoking its license over its mode of operation.
It is a direct competitor with SWVL, the 2019 most funded Egypt’s logistics startup, which recently poured over $14 million of funding into its Kenyan operations.
Little also partnered with some Matatu Saccos that on board their buses on their e-platform.
A rider will, however, pay more compared to the normal commuter fare depending on the route as the rates are 10–15 percent high.
Comments
Little suspending its operations in Kenya may not be unconnected with the tough business terrain in the Kenyan logistics sector. Recall that the startup is competing with the likes of Uber, SWVL and other matutu riders. In its latest funding round, SWVL secured a whopping $42 million from investors in 2019 to help it scale its operations across Africa and much of the Middle East, and it would be looking to pour over $14 million into its Kenyan operations. Little, founded by the Indian Kamal Budhabhatti just started its bus services in 2019 and is for now yet to secure a major VC investment. This may be a big challenge for the startup looking to challenge the likes of Uber, SWVL and Kenya’s ubiquitous public transport service well represented in cheap matatus. This is so especially given the fact that poverty rate in the East African country, at 36.1% is still high. However, one thing the startup would be banking on is the fact that the number of internet users in Kenya, at 46,870,422 people, representing a penetration rate of 89.7% is high. Little may therefore be suspending its operations to review its business models; to make room for more equity into the business; to review its compliance with government regulations; or perhaps to finally initiate measures to scale its operations into growth and profitability. Least on the guesswork is however a final shutdown or liquidation.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award winning writer.
He could be contacted at udohrapulu@gmail.com
Next January 16, in Ebolowa, South Cameroon, the European Union delegation to Cameroon will train Cameroonian SMEs to the use of its platform “Trade Helpdesk.”
“Participation in this training session is free but pre-registration is advised because there is a limited number of seats,” the delegation indicates.
Here Is All You Need To Know
According to the EU, the aim of the training is to improve access to exports-trade data and to other services.
It will also inform of the opportunities presented by the economic partnership agreement between Cameroon and the European Union.
The training is crucial because in the Central African region, Cameroon is not only the European Union’s main trading partner but also the first country in the region to implement an economic partnership agreement (an agreement that ensures that Cameroonian goods can reach the European Union’s market without customs duties) with the EU.
However, the only incentive of accessing the European Union market without paying customs duty is to guarantee a better implementation of this agreement by Cameroon ‘s SMEs.
According to the terms of the agreement, the European Union must support Cameroon in the implementation of the economic partnership agreement by offering, among other things, dedicated upgrading programs to Cameroonian companies.
World’s Customs Unions
A Look At ‘Trade Helpdesk’
The “Trade Helpdesk”, launched in 2017, is part of that agreement, the EU reveals.
The European Union (EU) is the world’s largest single market and the EU Trade Helpdesk is a one-stop-shop to access it. The EU is committed to helping exporters in its trade partner countries with the information they need to:
Make the most of the trade agreements we have put in place;
Bring their products onto the EU market.
The EU is a Customs Union — its 28 member countries form a single territory for customs purposes. This means that:
no customs duties are paid on goods moving between EU Member States
all apply a common customs tariff for goods imported from outside the EU
goods that have been legally imported can circulate throughout the EU with no further customs checks
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award winning writer.
He could be contacted at udohrapulu@gmail.com
An ambitious 27-year-old boss, an expanding army of IT engineers: in Barcelona, the start-up Glovo is continuing its international expansion beyond meal deliveries, despite harsh criticism of the working conditions of its deliverers.
Oscar Pierre, founder, Glovo
In 2015, Oscar Pierre left his first job at Airbus in Toulouse, after only three months. “The industry is a bit slow … I was looking for a different rhythm”, the former aeronautical engineer explains to AFP.
Today, the young Spaniard manages 1,500 employees in 26 countries, half of them in Barcelona, his hometown, from brand-new offices worthy of Silicon Valley: poufs, table football, cafeteria decorated with Polaroid photos of young employees .
In the entrance are the yellow backpacks used by the 50,000 delivery people from Glovo, by bicycle or motorbike, to bring restaurant meals to homes in 288 cities but also baby diapers, medicines, flowers, etc.
Because Glovo, unlike its competitors Deliveroo or UberEats, is not limited to food. “Order what you want,” offers the application.
In 2019, Oscar Pierre garnered 250 million euros in turnover, an increase of more than 200% compared to 2018, the year when sales had already jumped by 350%.
Since 2015, Glovo has raised 460 million euros from investors attracted by the development of the sector, and has just gained the envied status of “unicorn” –that is, start-ups valued above a billion dollars .
“It makes you dizzy, a lot of pressure, but at the same time we take full advantage because we know that it is quite unique to experience this,” said the smiling son of a family of entrepreneurs.
He hopes to make profits “within 18 months” worldwide, even if the activity is already profitable in Spain, Italy and Portugal.
To grow, Glovo is setting up where competition is less intense than in Western Europe: Latin America, Kazakhstan, Ukraine, Morocco, Ivory Coast, etc.
– Optimized delivery –
Another challenge: optimizing delivery times, using algorithms crafted by a hundred international engineers. Three hundred additional hires are planned for 2020.
“We must choose an artificial intelligence model capable of estimating the time to prepare an order, to ask the delivery person to arrive on the scene practically when it is ready”, because any waiting time for the courier is a waste of money, says Mustafa Sezgin, the head of the IT division.
Meals provide three-quarters of the turnover, but “we like to think that food is the start of something much bigger”, like at Amazon, which started with books, says Pierre, admirer of Jeff Bezos.
Glovo already has seven “dark supermarkets”, warehouses filled with groceries only for delivery, and plans to open around 100 in two years. Objective: ensure deliveries in 15 minutes.
The application could ultimately make it possible to book restaurants and cinemas, and offer cleaning or home repairs.
But more than these projects, it is the deliverers who have made the headlines in Spain in recent months, with several strikes denouncing a daily work pressure and insufficient working hours to obtain a decent income.
Twenty-one of them took Glovo to court, accusing him of treating them as “bogus self-employed”, subject to the same constraints as employees but without the fringe benefits from which Glovo benefits.
Courts have ruled eleven times over the deliverers and ten times over at Glovo, according to the company. Spanish Social Security is asking him for unpaid contributions for hundreds of delivery men.
For Oscar Pierre, the problem is not to know “if they are employed or independent”. “It is a new paradigm” for which it is necessary to “create a new regulation” of the sector, he says, suggesting to put in place additional social cover paid by the company.
It highlights the “flexibility” offered to couriers, 60% of whom work part-time. Would they like to work more? “I do not have this information,” he admits, confused by this question.
Affirming anxious to increase the income of its deliverers, Glovo says is working to improve the application so that they can make three deliveries per hour, against two currently. “With technology, it’s possible,” says Oscar Pierre.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award winning writer.
He could be contacted at udohrapulu@gmail.com
Egypt’s SWVL is starting this year on a good note. In Kenya, SWVL just marked its venture outside Nairobi, in what would be the longest distance ever embarked upon by the startup.
SWVL general manager, Kenya Shivachi Muleji
“Long distance travel is a viable business segment for us and you will see a lot more investment into it as we get into this year,” SWVL general manager, Kenya Shivachi Muleji said.
Here Is All You Need To Know
Eldoret becomes SWVL’s latest town in Kenya after the ride-sharing startup launched its commuter services to Naivasha, Meru and Nakuru routes days to the Christmas holidays.
Also added to the multiple routes from Nairobi’s central business district, are the Ruai, Kiserian and Ngong routes. These new routes would add to the startup’s previous 55 connections.
SWVL reduced its operations over the Christmas holidays citing low demand, resuming full operations on Monday.
The fare from Nairobi to Eldoret is Sh1,200 ($11.9) while travelling to Nakuru or Naivasha from the capital city costs Sh1,000($10) on each of the routes.
“When you think about the level of travel between Nairobi and Nakuru, for example, on a daily basis, you start to see why we would invest in it. Our core market will always remain the Nairobi commuter, but we will seek growth in new business areas.” Shivachi Muleji said.
Back From Suspension
In October 2019, Digital public transport services SWVL and Little Shuttle were asked to cease operations or face arrests for operating under Tour Service License but engaging in commuter services.
SWVL has since resumed service after this period of disruption that followed the firm’s move to have the buses comply with the National Transport and Safety Authority rules
The company was required to have the buses using its platform registered and adhere to matatu regulations. These include having a public service vehicle licence, a yellow line on the buses and displaying route name and number. Its users book trips on phone and are notified of the nearest pick-up point, price and timing.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award winning writer.
He could be contacted at udohrapulu@gmail.com
The Senegalese government has given startups in the country the green light to excel. The country has become the second African country after Tunisia to pass a dedicated Startup Act after 90 per cent of parliamentarians voted in its favour recently.What this means is that startups in the West African country may most likely now have access to startup funds that will help them raise the funds they need.
Jon Stever, co-founder and managing director of Impact Hub Kigali and catalyst at i4Policy
Here Is All You Need To Know
The Senegal Startup Act — tagged bill number 17/2019 — among other things, seeks to promote innovation in the country’s economy towards achieving the country’s “Digital Senegal 2025” strategy.
Seizing the momentum and capitalizing on support from relevant public institutions, in July 2018 key ecosystem players in Senegal including start-ups, hubs, and investors launched a Policy Hackathon115 to draft in a participatory, bottom-updriven manner a Senegal Start-up Act, which covers areas, such as financing mechanisms, fiscality, access to digital infrastructure, skills and training opportunities, tax policies, or labeling of start-ups, the promotion of data collection and sharing so that entrepreneurs can develop better business plans.
The draft was submitted to the authorities, who are strongly committed to follow the examples of other economies, notably Israel (1991), United States (2011), France (2013), India (2016), and Tunisia (2018), in adopting specific start-up focused regulations.
President Macky Sall’s Council of Ministers early November, 2019 considered and adopted the bill, and it has now been approved the the country’s National Assembly.
This move now makes Senegal the second African country to pass a Startup Act, after Tunisia.
“I think that in a few years the question will be, “how many countries don’t have Startup Acts?”,” Jon Stever, co-founder and managing director of Impact Hub Kigali and catalyst at i4Policy said. “This year, Smart Africa’s board, comprising 26 African heads of state, requested the Tunisian government to package and share learnings from their Startup Act. Moreover, the work of i4Policy signatories to support policy reforms is multiplying, as are our resources to support the work.”
The Senegalese start-up ecosystem remains fragile and embryonic and its further development is inhibited by several critical constraints, particularly by insufficient support at the regulatory level.
Despite important incipient progress, Senegal still ranks 140th of 190 economies in Doing Business 2018 and 103rd of 137 countries in the 2018 Global Entrepreneurship Index, suggesting that deeper reforms and additional investments are warranted to fully transform the country’s business environment and entrepreneurship ecosystem.
Specific measures are necessary to support start-ups that face significant and, in many ways, unique challenges that limit scale-up opportunities. These challenges include high initial investments, long development periods to break even, the necessity to protect intellectual property, insufficient material assets, impediments to access finance, and weak access to markets.
Senegal ’s Startup Act Looks Similar Compared to the Tunisian Startup Act.
Unarguably, Tunisia leads other African countries in bold startup legislations. The Tunisian Startup Act, passed in May, 2018, also reveals the following similarities with the Malian Startup Act.
Tunisian Startup Act defines startups as an entity having legal existence not exceeding eight (08) years from the date of its constitution,while Mali’s makes provision only for startups less than four years.
More than two-thirds (2/3) of Tunisian startups’ capital must be natural persons, venture capital investment companies, collective investment funds, investment, seed money and any other investment body according to the legislation in force or by foreign Startups to qualify as startups under the Act.
The business model envisaged by the Tunisian Startup Act is one that is highly innovative, utilizing cutting-edge technology.
Under the Act, any individual promoter of a Startup, public agent or employee of a private company, may benefit from the right to Startup Leave for creation of a Startup for a period of one year renewable once
Any promoter of a Startup may benefit from a Startup scholarship for a duration of one (01) year. Only three (03) shareholders and full-time employees in the relevant Startup may however benefit from the scholarship awarded.
Young graduates who create startups are free from taxation for three years.
The profits from the sale of the securities relating to the shares in the Startups are exempt from the capital gains tax.
The Era of Startup Act
The first specific startup law globally was passed in Italy in 2012, and Africa is increasingly catching on. A host of countries, with Mali also at an advanced stage, are working towards Startup Acts.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world
Egypt ’s ride-sharing space is undoubtedly going to be hotly contested in 2020. It seems like Uber Egypt just got its new year gift. Egypt’s competition authority has gone ahead to approve the deal breaker. The Uber’s $3.1 billion acquisition of regional rival Careem, announced in March, 2019, has now been sealed, subject however, to regional approval from similar competition authority across, although there is huge price tag to it. As part of its concession to the approval, Uber would still have to meet a set of commitments meant to reduce harm to competitors.
“We welcome the decision by the Egyptian Competition Authority (ECA) to approve Uber’s pending acquisition of Careem,” a spokesman for Uber said. “Uber and Careem joining forces will deliver exceptional outcomes for riders, drivers, and cities across Egypt.”
Here Is The Deal
The deal is expected to close in January, depending on regulatory approval in various territories of which Egypt is among the most significant. Egypt, with a booming population seen swelling to 100 million, is the biggest in the Middle East for ridehailing services.
Under a series of commitments Uber has made to the ECA, the San Francisco-headquartered company has agreed to abandon exclusivity provisions with partners and intermediaries and reduce barriers to entry into the market.
An independent monitoring trustee will be nominated by Uber and approved by the ECA to ensure adherence to the commitments. Uber will share random samples of trip data with the trustee monthly to ensure compliance.
The commitments must be adhered to for five years from the date the transaction closes, or when one or more ride-hailing providers achieves 20% of weekly rides individually or 30% collectively in overlapping areas excluding Cairo and Alexandria, Egypt’s biggest cities.
Excluding surge pricing and promotions, Uber will cap its yearly fare increases beyond inflationary costs at 10% for Uber X and Careem GO, the most popular services in Egypt.
Surge pricing, a mechanism that raises prices when demand far exceeds supply, will also be capped on Uber X and Careem GO at 2.5 times. Surge prices will be applied to a maximum of 30% of annual trips on the two services.
A Quick Look At How The Acquisition Started
The Careem acquisition was announced in March after more than nine months of stop-start talks between the two companies, handing Uber a much-needed victory after a series of overseas divestments.
Careem will become a wholly owned subsidiary of Uber but will continue to operate as an independent brand with independent management.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world
The Alibaba Business School in partnership with the Ethiopian Ministry of Innovation and Technology will be hosting the first Alibaba Netpreneur Training program for entrepreneurs and business owners from Ethiopia in March 2020, according to a press statement released on Wednesday.
Ethiopian State Minister of Trade and Industry, Mesganu Arga Moach
The Chinese e-commerce giant, Alibaba Group signed a memorandum of understanding (MoU) last month with Ethiopia for the creation of Electronic World Trade Platform (eWTP), which is believed to be a game-changer initiative with the digital economy of the East African country.
As part of the agreement signed between Ethiopia and Alibaba Group, the applications for the first Alibaba Netpreneur Training program for entrepreneurs and business owners from Ethiopia kicked off on Wednesday, Dec. 18 to stay open until Jan 19, 2020.
The 10-day program to be held at Alibaba’s headquarters in Hangzhou, China, is aimed at ambitious entrepreneurs and business leaders in Ethiopia who are committed to harnessing digital technology to transform local businesses for lasting success.
The program aims to teach attendees to accelerate the digital development of their business and work with related parties to build success cases that will become the building blocks of their local communities and, ultimately, the larger digital economy.
Speaking to a high-level gathering that deliberated primarily on the private sector and digital economy last week here in Ethiopia’s capital Addis Ababa, the Ethiopian State Minister of Trade and Industry, Mesganu Arga Moach, hailed the eWTP to have a pivotal role in availing global market opportunities and linkages for Ethiopian Small and Medium-sized Enterprises (SMEs).
The state minister, who described Ethiopia’s latest electronic world trade platform as the second in Africa after Rwanda, “will enable Ethiopia to provide smart logistics and services, conduct cross-border trades with a focus on small and medium-sized enterprises.”
The Alibaba Netpreneur Training program content highlights including, gaining a fundamental understanding of how new technologies and the capabilities of a digitally enabled business environment; experiencing key insights into the evolution of Alibaba’s ecosystem and learn best practices from Alibaba’s founders and business leaders; and hearing about key learnings from traditional businesses within China from a wide range of industries who recently underwent digital transformation.
It also includes joining field trips to meet leading businesses within Alibaba’s ecosystem to gain first-hand insights into technology innovation; and gaining a foundation of strategic thinking that will enable entrepreneurs to make improvements in their own business and industry.
The eWTP was proposed by Jack Ma, founder of Alibaba, in 2016. It aims to set up an open platform for private enterprises and coordination among international organizations, governments, and social groups which focus on the development of SMEs as well as trade. It was included in the communique of the G20 Summit in Hangzhou.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the worl
Jumia is shutting most of its operations across Africa. From Cameroon to Tanzania, the next on the line is Jumia Foods Rwanda. According to Jumia Technologies the suspension of its food and drinks delivery service Jumia Foods Rwanda takes effect from December 9, 2019. The suspension comes after Jumia said it had shut its e-commerce business in Tanzania in late November, and in Cameroon in the middle of the same month.
“We have made the difficult decision to suspend our on-demand services in Rwanda effective on … December 9th, 2019,” the company said in a statement.
“While decisions like these are always difficult, it is more important now than ever to put our focus and resources where they can bring the best value and help us thrive.”
Here Is All You Need To Know
With an e-commerce business similar to Amazon’s and a classified portal like Alibaba’s, Jumia sells its own stock and takes a cut of third-party transactions on its website.
But that business model has yet to pay off. Jumia missed revenue estimates for the second time in three quarters, according to results announced in November.
The closure however, did not start today; it began in 2014 amid allegations of fraud which cost the business up to $1 billion. The closure of Jumia Food Rwanda operations is the fourth in a row after the online retailer first closed its entire Rwandan e-commerce business in 2017 over quality issues, focusing on its food delivery services in the country.
The closures bring Jumia’s footprint in Africa to 11 countries and point to the difficulty of running an ecommerce business across a continent with weak infrastructure, under-developed logistics and a general lack of trust in online shopping.
It also puts a dent in what the Rocket Internet-backed company has long touted as one of its key advantages: scale.
Sacha Poignonnec, co-chief executive, said the exits were routine, as the company reassesses its markets, products and services. He noted that in the past, it had left countries such as Mozambique and closed its ride-hailing business. On Tuesday, Jumia also said it is in effect shutting its travel website.
“It’s a continuity of recent changes and the strategy is very much for us, it’s very simple, we are engaged in taking Jumia to profitability and drive penetration of JumiaPay,” he said, referring to the company’s payments platform. “Sometimes we make decisions to change the scope of countries or categories . . . but it is in the normal life of a company to adjust the focus, but the strategy remains very much the same.”
Mr Poignonnec emphasised the need to control costs. Losses grew to €54.6m in the third quarter from €40.6m a year earlier, while revenues missed analyst estimates for the second time in three quarters. Jumia has run up more than $1bn in losses since launching in 2012 in Nigeria.
But Mr Poignonnec cited the success of Amazon, China’s Alibaba and Latin America’s Mercado Libre as proof that the model Jumia is pursuing can work. He pointed to Jumia’s rising customer and seller numbers as positive signs.
Fintech, the New Profitable Model?
Jumia ’s closure in Cameroon, Tanzania and its gradual winding down in Rwanda cannot just be disregarded. The New York-listed company has made it clear in recent times that it is shifting more of its focus on its payment platform, Jumia pay while cutting back on the e-commerce business. Indeed, unconfirmed sources say Jumia is contemplating pulling out of its Congo and Gabon operations too. Consequently, the company now maintains presence in 13 African countries including Kenya, Ghana, Senegal, Nigeria, South Africa, Egypt, Morocco, Uganda, Tanzania, Rwanda, Ivory Coast, Tunisia, and Algeria.
Could the new focus on fintech be a major indictment on eCommerce in Africa?
Recall that Konga, a similar eCommerce company, recently gave up the ghost earlier than expected and got swallowed up by Zinox Group, a deal that was quoted in some quarters to be worth $32.4 million, which was grossly a sad event for an e-commerce company that was once valued at $383 million by Naspers.
From disclosures made in the Prospectus to the Initial Public Offering, it does not also appear that Nigeria, Jumia’s primary market, is seriously considering investing significantly in the eCommerce business. As a matter of fact, about 60.5% of Jumia’s shareholding before going on its first public offering consisted of European nationalities, while South Africa takes a staggering 29.7% of the shareholding at the said time. Even before Konga was acquired by Zinox Group, Kinnevik (Swedish) and Naspers (South African owner of Multi-Choice, M-Net, OLX) had a combined shareholding of 89.4%. Perhaps the fear would lie in the humongous losses sustained by these companies.
Jumia’s losses increased by 60% from €41.9 million (KSh4.8 billion) in first half of 2018 to € 66.7 million (KSh7.6 billion) in the first half of 2019. The Berlin-based company also recorded a loss of KSh 6.2 billion in Q2 of 2019, a 60% increase from 2019 Q1 losses.
Citron Research (the American research firm that publishes reports on firms that Citron Research founder, Andrew Edward Left thinks are overvalued or are engaged in fraud) had earlier in 2019, in the aftermath of Jumia’s IPO, said, in a twelve-page document, that it had never seen such an obvious fraud as Jumia’s first Initial Public Offering, held from the 11th of April, 2019, in its 18 years of publishing.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world
The Nigerian road will see more bike hailing services from next year. Apart from MAX, Gokada and Oride, the latest launch is the Ugandan motor cycle hailing startup Safeboda . Aside from Uganda where it started, Safeboda has expanded to Kenya, making Nigeria its third market in Africa.
Safeboda had announced in May, 2019 that it would launch in Uganda. This was followed by a massive recruitment of top talents and appointment globally as far as Europe for several high-profile individuals to join its team in the country. Everything happened so fast that it seemed like the Uganda-birthed start-up was coming to oust existing players in Nigeria’s motorbike-hailing ecosystem.
Safaboda enters a Nigerian market that has a busy tech ecosystem. This year its biggest competitors in Nigeria like MAX, has raised $7 million and plans to add electric motorcycles to its fleets, Gokada raised $5.3 million in Series A funding, ORide launched and accrued a large portion of the bike-hailing market share, with a pool of over $170 million in new funding.
In August this year, a friction between the SafeBoda Nigeria management team, executives, and investors regarding what operational model to go to market with was reported. It was understood that SafeBoda investors wanted to commence operations in Nigeria sticking to the “Aggregator Business model” that worked for it (SafeBoda) in Uganda and Kenya.
Aggregator Business Model is a network model where the firm collects the information about a particular good/service providers, make the providers their partners, and sell their services under its own brand.
Motorcycle transit ventures are vying to digitize a share of Africa’s boda-boda and Okada markets (the name for motorcycle taxis in East and West Africa) — representing a collective revenue pool of $4 billion (now) that’s expected to double by 2021, per a TechSci study.
Uber began offering a two-wheel transit option in East Africa in 2018, around the same time Bolt (previously Taxify) started motorcycle taxi service in Kenya.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world
Twiga Foods, the Kenyan agri-tech startup trying to disrupt Kenya’s food demand and supply chains, understands that Kenyans need food, and need it badly. About 36.1%, representing nearly over 18 million of Kenya’s 48 million population are hungry. This figure is worsened by the facts that:
Peter Njonjo
Over 3.4 million people face acute food insecurity in the country; and
Agricultural productivity has been stagnating in recent years due to frequent droughts, floods, and climate change, leading to only about 20 percent of Kenyan land being suitable for farming.
Interestingly, Kenya’s agricultural sector contributes about 26% — more than one-quarter — to Kenya’s entire Gross Domestic Product. This is even as about 75% of Kenya’s entire workforce, mostly spread out in rural areas, is engaged in the agricultural sector.
Africa’s Food Security Index: Click To ExpandThese facts are the reasons Twiga Foods would be the startup of the future. The startup is going after Kenya’s food sector to break the jinx of inefficiencies presently in the sector, and to ensure that the limited resources available in Kenya’s agricultural sector are well-utilised.
Its simple business model is to aggregate all food retailers and dealers, from the banana vendors buying in bulk to the avocado retailers selling in stock, and then connecting them to Kenyan farmers producing quality farm produce. This is a classic example of a business-to-business (B2B) model, so that vendors looking to purchase agricultural produce don’t have to travel miles to meet local producers of the produce, thereby saving them the transportation and logistics cost, increasing the productivity and demand for the produce of the farmers, at the same time reducing food waste.
These metrics are what TLCom Capital looked out for when it invested in Twiga Foods.
“TLcom’s general investment thesis for Africa is that given the high penetration of mobile, there are very large markets where demand is already proven and technology can play a true role in offering a superior value proposition over existing solutions,” said Ido Sum, partner at TLCom Capital which syndicated Twiga Foods’ recent $30 million fund raising led by Goldman Sachs.
Quite noteworthy is the fact that TLCom Capital is often strategic with its investments, going mostly for early comers with the huge potentials. It went for Nigeria’s Kobo360, a startup pioneering digital trucking in Nigeria through the Goldman Sachs-led $20 million investment. It also went for Andela, one of Africa’s well-funded startups. Hence, that Venture Capitalist TLCom Capital preferred to invest in tech companies in their early to growth stages, such as Twiga Foods, shows that the startup is, to a large extent, home to disrupt.
The same is also said of Goldman Sachs, America’s leading investment banker which is recently interested in Africa and international institutional firms and VCs looking to invest on the continent at a time when other international investment banks such as Credit Suisse and Barclays have cut down or exited their African operations altogether. Goldman Sachs’ investment in Twiga Foods marks its first major deal in a Kenyan firm.
In view of all these, we therefore discuss a few strategies gleaned from Twiga Foods’ quest to disrupt the Kenyan food market.
Prove A Point First But Know That Scaling Is Important
First CEO Grant Brooke simply had to find a way to scale Twiga Foods, a startup in the often neglected African startup ecosystem — agritech. Of the whole investment made into Africa’s startup ecosystem in 2018, agritech got a meagre $20.2 million, out of which Twiga Foods got $10.2 million. Compared to fintech’s $284.6 million, this is discouraging for new comers to the agritech sector.
From all indications, these figures are a representation of the fact that even though Africa has a yawning food sufficiency gap, startups who take the path of agri-businesses often face low investment appetite from investors. Nigeria’s agritech startup Farmcrowdy, one of Africa’s top-funded agritech startups for instance, has been able to raise slightly above $2 million in funding from VCs since its founding in 2016.
Of course, investors are not to blame: entering early stage startups in Africa’s agritech startup ecosystem appears foolhardy, with all the risk associated with crop yields, partly brought about by changes in climate and diseases.
So Twiga’s strategies were to first avoid the crop production stage, in preference of the post production stage when crops are ready to be harvested; and to eliminate the final consumers from its model. Consumers in the African food markets are highly dispersed, making it grossly difficult to aggregate them. They are also highly unpredictable. Pursuing them would increase cost per acquisition for any startup, at the same breath, creating unnecessary competition from dispersed local markets where they are used to buying and selling from.
Therefore, by targeting the middleman between the farmer and consumers, Twiga found an easily large market to scale. The startup already has more than 17, 000 producers for direct delivery to more than 8,500 vendors.
Africa’s Agritech Startups Who Solve The Inefficiency Problem In The Agric Supply Chain May Win
Twiga’s other strategy is simple: find an efficient way to deliver to final consumers at lower costs. Inefficiencies in the supply chain have been blamed for high food prices in African cities, where close to 90 percent of the supply comes from informal retail outlets. Kenyans spend 45 percent of their disposable incomes on food, compared to 14 percent for South Africans and 10 percent for citizens of most European countries. To solve this problem, Twiga followed a simple pattern:
Get a farmer to sign up to join Twiga.
Twiga visits and assesses the farm, then adds farmer onto system.
Twiga issues a purchase order to book the produce and indicate date of harvest.
Twiga harvests and weighs farmers produce and issues you with a receipt.
Farmers receive payment within 24 hours.
All produce is gathered at over 30 Collection Centres across Kenya from the farms.
Produce goes to the Packhouse for processing, grading and dispatch to over 60 sales routes.
A vendor signs up to join Twiga.
Twiga sales representative visits vendor and registers them onto system.
Vendor places order with sales representative.
Twiga delivers produce directly to vendors shops.
Through this, the farmer benefits from: guaranteed market; transparent pricing as seen on price boards; farming advice;resources and access to credit from Twiga’s partners. On the part of vendors, the benefits include quality produce; free delivery; assured food safety through easy tracking; access to credit from Twiga’s partners; and fair prices for produce.
The end implication of this simple process is that Kenyans would spend less to purchase food produce. This would in turn encourage them to budget more on food.
Can Using Corporate Expertise Like Twiga Foods Assist Startups To Grow Faster?
To beat the glut in investment in Africa’s agritech startup ecosystem, Twiga quickly appointed Peter Njonjo to take over from founder Grant Brooke. Although the startup has previously raised $10.3m from investors and secured $2 million in grant funding from organizations such as USAID and the GSMA in 2017, followed by a 2018 $10m investment from the International Finance Corporation (IFC), TLcom, and the Global Agriculture and Food Security Programme, bringing Njonjo onboard the startup may seem more or less a strategic move to capture more market and scale quickly.
“Starting new ventures is really my skill-set and passion, while proficiently running institutions is Peter’s skill-set and passion. Twiga has an aggressive growth plan and this transition leverages on our respective expertise, ” Brooke said.
Njonjo was the most senior Kenyan at Coca Cola Company where he worked for 21 years, leading the multinational’s West and Central Africa business unit as President.
Peter Njonjo’s appointment, noted Mr Brooke, presents a first; with a senior executive in a Fortune 500 Company joining an African startup, a “clear testament of the increasing capacity of venture capital in funding and solving significant problems and harnessing opportunities on the continent.”
“If my leadership was the period in which Twiga was proving a point that there’s a better way to build food safe and secure markets, Peter’s leadership will be about institutionalizing this way of doing business and scaling it. Peter’s experience in building efficient supply chains and last-mile distribution in over 33 African countries makes him uniquely suited to lead us,” said the outgone Twiga Foods CEO Grant Brooke.
Currently, the startup has reached more $50 million in total funding since 2014 when it was founded, over $35 million achieved under Njonjo’s leadership.
Critically speaking, Twiga’s success could largely be attributed to Grant Brooke, who has built a career researching Kenya’s informal retail market, an experience dating back to his home city, Texas, in the United States. Njonjo’s appointment could be analysed as finally giving Twiga Foods an African outlook. Therefore, it is safe to say that Twiga Foods still has a long way to go in qualifying as a contemporary agritech startup founded and run by an African. Mr. Njonjo’s Africa’s first ever corporate touch at Twiga and its eventual success may however still be a lesson in strategy for African startups.
Twiga Foods: Bottom Line
To put Africa’s food needs into perspective, Kenyans have more certainty of having food than Ugandans, Rwandans, Togolese or Nigerians. This is a dire situation for the population of these countries combined, and a huge opportunity for many more African agritech startups to come onboard.
Twiga Foods has obviously found a large market for its business model. Africa’s farmers are still obscure, and remotely isolated from the large market. Twiga has started a show of allowing them to play a significant part with some force. It does this by collecting them together with technology and helping them to deliver their products to final consumers, in a safe, cost-effective and efficient way.
These are the lessons Twiga Foods has taught us in Africa’s complicated food supply chain, and why Twiga Foods may be Africa’s next unicorn (and indeed the first agritech startup to achieve such feat) in ten years to come, if it gets its processes and team right.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world
