The expansion was made through an existing partnership with telco giant MTN, the company said in a statement. tappi helps small businesses create and manage an online business profile, bringing improved visibility to showcase their products and services, engage with customers, and accept payments. 

“With a strong GDP growth rate of 6.9%, Côte d’Ivoire not only represents the ideal market to empower MSMEs primed to digitise and significantly expand their customer base but will act as a critical gateway to access Francophone Africa,” said Kenfield Griffith, tappi’s CEO and co-founder. 

Small businesses in Côte d’Ivoire will now gain access to tappi’s software-as-a-service solution and enterprise-grade tools. This will enable businesses to generate SEO-optimised websites in less than two minutes, distribute online ads, and access a range of additional digital services for an $8 monthly subscription fee. 

Through tappi’s existing partnership with MTN Côte d’Ivoire, the telecom’s customer base of 17 million subscribers will have access to Tappi’s services through integrated data bundles, enhancing their online presence and customer reach.

According to UNECA, SMEs form over 98% of total businesses in Côte d’Ivoire but despite their importance to the economy, many businesses still face major difficulties building a trusted online presence. 

This is primarily due to current tools being too complex, the requirements for an international credit card or the listing of websites in places where trust is difficult to gauge, making it harder to access and convert new customers.

The expansion comes three months after TechCabal exclusively reported that tappi raised a $1.5 million pre-seed in December 2023, which was led by Mercy Corps Ventures and Chui Ventures. Founded in 2022, the Kenyan digital commerce platform helps to digitise these small businesses by creating an online business profile or websites for them. Once a business owner creates a profile on the tappi app and supplies their business information, tappi creates a website that is SEO-optimised and indexed on Google. Tappi claims to have engaged with over 150,000 consumers who used its platform to complete transactions totalling $3 million.

Jumia cut its operating loss in Q4 2023 to $4.5 million after several significant strategic changes, but profitability remains elusive.

Metrics like Gross Merchandise Value (GMV), active customers and revenue declined compared to Q4 2022 figures, but shareholders are reacting positively to the fact that despite Jumia cutting its spend on advertising and promotions, revenue was up in constant currency terms.

One big positive in Jumia’s report is the reduction of its losses to the lowest in four years. The company has also had to make difficult business decisions in the last two years. It shuttered its food delivery business in December 2023. On Thursday, TechCabal exclusively reported that the company laid off employees in January 2024. 

CEO Francis Dufay talked about building a “leaner, more agile and more focused company.”

Macroeconomic conditions across many of its African markets has made business difficult withnflation and currency devaluation in some of its major markets like Nigeria and Egypt contributing to the reduction in the company’s GMV. 

One thing is clear: Jumia is keen on being profitable in 2024.

“We are seeing signs of stability and growth in other markets,” Dufay said on the earnings call.

“News about layoffs was shared last week but no communication was made about who was affected and you’re still expected to work,” one Jumia employee wrote on Glassdoor on February 5, 2024.

This year’s layoffs come one year after Jumia fired 900 staff as part of attempts to cut costs and guide the company toward profitability. Some other employees were moved to different roles within the company, the company told TechCabal.

“As we continue to review our investment and innovation in our operations, we are refocusing teams and resources on activities and projects to support our path to profitability,” the e-commerce giant told TechCabal in an email on Thursday.

“Based on this, we are making some adjustments to our organisational setup in several countries including Kenya to better optimise our capital and continue to seek cost efficiencies, just like any other company. We remain confident about the future of e-commerce in Kenya and Africa and will continue to offer our services to consumers and vendors through Jumia.”

Jumia eased into the discontinuation of its food delivery business by ceasing operations in Ghana, Senegal, and Egypt in early 2023.

By the end of 2023, it had fully exited the business and removed the Jumia Food app from app stores. The company said food delivery was not sustainable, as it was forced to compete with more aggressive players.

Under the leadership of Francis Dufay, Jumia has emphasised cost discipline and cutting operational costs. Its Q4 2023 report, released today, showed that the company is making progress, with operational losses down to $4.5 million for the quarter and cuts in its advertising expense.

Inflation and currency devaluation in some of its key markets continue to pose a challenge as revenue and gross merchandise value, a metric that represents the value of all goods sold on the platform, reduced.

Nevertheless, the company insists that cost discipline and some positive signs in other markets will be crucial in reaching profitability.

It also reduced its workforce and moved away from a focus on low-ticket items. Nevertheless, profitability has remained elusive in a Q4 where the company lost 500,000 active customers compared to the same period last quarter.

Key takeaways:

• Jumia’s reported revenue of $59.4 million for the quarter
• It cut its operational losses to $4.5 million 
• Quarterly active users declined to 2.3 million 

Under Francis Dufay, who was hired as CEO in February 2023, the firm continues to demonstrate impressive cost discipline and improve cash utilisation.

“We believe that Jumia is now a much leaner, more agile and more focused company. We have reevaluated our portfolio and made tough decisions regarding business activities that did not bring the right value,” the company said in its statement. 

The company reduced its sales and advertising spend to $6.2 million, reducing advertising on consumer incentives like vouchers and free shipping. The drop in advertising spending is 62.8% compared to Q3 2022. Its general and administrative spending was also down to $12.3 million. 

Its Gross Merchandise Value, a measure of the value of all goods bought on its platform, declined to $233.3 million. The company blamed the reduction on currency devaluation across markets. 

“Eight out of ten local currencies in our countries of operation depreciated against the US Dollar in 2023, compared to 2022,” Jumia said in its financial report.

High inflation rates and currency depreciation impacted the purchasing power of customers. However, the firm experienced growth in commissions driven by corporate sales to local and regional retailers and distributors in some countries it operates in.

“We are seeing signs of stability and growth in other markets,” Dufay said in the earnings call that was held today after the results were released.

In terms of runway, Jumia has a cash balance of $35.5 million and a liquidity position of $120.6 million. 

A bright spot in its report is the growth in JumiaPay transactions which reached $3 million in the fourth quarter of 2023, up 41% year-over-year. Dufay said the company was exploring plans to roll Jumia Pay delivery in Nigeria as he estimates that 50% of transactions could be cashless by 2024 ending.

The B2B e-commerce startup, which was founded in 2013 and raised over $140 million from investors like 4DX Ventures and Avenir Growth Capital, first told employees about the merger in a video call attended by the MaxAB executives in early December 2023, the same month the deal was announced.

The meeting, which was not recorded, surprised many employees, although some had figured out there were plans for a merger and eventual redundancies. On January 15, Wasoko laid off over 100 employees across engineering, product, and business intelligence departments in Kenya and India.

Following the layoffs, nine employees sued Wasoko, claiming they were unfairly fired. They argued the company did not give them sufficient time to prepare for their exit and that while Wasoko said it would follow local labour laws during the layoffs, it was a way out of paying them sufficient severance.

The severance package compensated employees based on how long they had worked with the company, how many leave days they had accrued, and the number of days left before their January 15th exit. The former employees told a court that the severance package favoured those who had been with Wasoko for an extended period.

The court has blocked Wasoko from firing the nine employees.

Other employees said they had taken bank loans, believing their work with the e-commerce platform was secure. Wasoko said it would discuss the matter with its banker, Standard Chartered, and ease repayment for six months, said one former employee. It also promised to provide health insurance coverage until March 2024.

“We initiated notice of intention to declare redundancies for a portion of our staff on December 5, 2023 as previously announced.” Wasoko said in a statement to TechCabal. “Impacted employees were provided with the legally mandated period of notice and are receiving the required severance packages as stipulated by applicable employment law.”

However, the company declined to comment on specific claims since the matter is already in court.

Following the lawsuit, Wasoko has prepared an exit document barring employees from suing the company after receiving their exit packages, one person told TechCabal.

The case will be heard in court on February 13th. 

“One of our biggest challenges has been that a lot of people don’t understand how credit works and think it is about owing people,” one employee who asked not to be named told TechCabal. “Most customers would rather wait until they have the complete amount of money to pay than get one now and pay in instalments,” the person added.

The company confirmed the decision to pause its BNPL offering to TechCabal and said it “had a couple of things to figure out.” The company claimed that “resuming the service is in the works” without sharing any specific timelines. 

Zilla was launched in 2021 by Tolu Abiodun and has about 100 merchants that provide various products and services that customers can pay for in two to four instalments.

Despite sluggish adoption, two categories that performed fairly well were electronics and beauty products from high-end stores, as these are typically too expensive for the average consumer to pay for at once, said one person close to the business. 

But even these high-performing categories provided a problem: customers wanted more than the maximum four months Zilla provided to finalise payments.

“The economy is tough, and people need more time,” said Joshua, who runs a gadget store registered with Zilla. “Customers who want to buy now and pay later for phones or laptops prefer to use other services like CDCare, as they give you a chance to pay for as long as a year.”

Victoria, a vendor who sells wigs and other beauty products, has had about five customers use Zilla in the two years since she joined the BNPL service. Two of those five customers eventually asked Zilla for a payment extension as they found completing payments after four months challenging.

Pivoting to cross-border payments?

Zilla’s new product, Zillawire, processes foreign transactions with suppliers on behalf of merchants. According to information on their website, merchants are required to upload their invoices as well as the account information of the supplier for this service.

On the reason for building a cross-border payment product, the employee shared that the company noticed that a lot of their merchants were having some issues with their international payments for their products and wanted to do something about that. According to her, Zillawire, which launched in August 2023, performed better than expected and so the company is focusing on that now. 

The merger is already being touted as the largest private tech deal in Africa. Wasoko was last valued at $625 million after it raised $125 million last year. The firm says it has received $113 million out of that investment. El-Megharbel of MaxAB declined to disclose the valuation at which his firm raised $40 million in October 2022. Both executives declined to comment on their valuation expectations for the new company.

“This is not a new discussion; this is really about a friendship and partnership that has been ongoing for years, and for us, it’s about taking things to the next level,” Yu said, adding that the combined company will have more “runway with tens of millions of dollars on the balance sheet.”

The deal will be structured as an equity consideration, which means that existing shareholders simply get a share of the new company upon completion of the merger. It gives wiggle room for investors who backed both companies and potentially allows VC firms to preserve most of the valuation at which they purchased their stake in either of the firms. According to Daniel Yu of Wasoko, independent investors and board members on both sides are part of the talks. Wasoko and MaxAB have raised almost $245 million from venture capital investors.

“This is a super tough business to crack. It requires a specific type of talent and well-capitalised companies to be able to crack it,” MaxAB’s El-Megharbel told TechCabal. “Before 2001, over 10 companies were trying to do what Amazon was doing. After a crisis hits there usually emerges a clear winner,” he added. Bringing both firms together would help them maximise their chances to come out tops.

Between 2019 and 2022, venture capital investors poured money into entrepreneurs building tech companies that focused on bringing Africa’s informal wholesale market for consumer goods online. Dubbed ‘B2B e-commerce’ as opposed to the direct-to-consumer e-commerce model of Jumia and Souq.com (acquired by Amazon), B2B e-commerce was described as more suited for the African experience because its primary customers were street shops and small retailers in African cities and towns.
More recently, B2B e-commerce has struggled, and to startups in the space, including Wasoko have laid off hundreds of staff and paused expansion plans.

In social media chatter on X (formerly Twitter) and private conversations on WhatsApp and Telegram seen by TechCabal, investors and founders speculated that one or both firms were struggling, hence the merger.

El-Megharbel and Yu dismissed those concerns. “The market is used to these deals happening in these specific incidences, so this is they just haven’t seen another way of doing this,” El-Megharbel said, “We and Wasoko have approached this at a point when we did not have to do it because once you have to do it, the companies are struggling at that time. Daniel and I are mature and humble enough to figure out that if we wait longer than this, it would probably be uglier for both companies or at least for one of them. The sooner, the merrier for this deal to happen.”

“Shareholders on all sides are extremely excited about what is happening,” Wasoko’s Yu said. “This is a 1 plus 1 equals 3. This transaction will establish us as the clear B2B e-commerce leader in Africa.”

Jumia, an African e-commerce company, will shut down Jumia Food, its food delivery business, by the end of 2023 in a new round of cost-cutting.

The unprofitable e-commerce company, which lost $19 million in Q3 2023, has changed its strategic focus and doubled down on its ambition to reach profitability since it named Francis Dufay as CEO last year. 

Dufay told Reuters that the food delivery segment has challenging unit economics and big losses. He also blamed the closure of Jumia Food increasing competition and 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.”  He also described the segment as not offering the same “upside potential” as the company’s physical goods business

Dufay is choosing pragmatism 

“Our priorities need to change,” Dufay told TechCabal in September.

Since then, Jumia has laid off 900, or 20%, of its employees and moved 60% of its top management team from the United Arab Emirates to the respective African countries to save costs. It has also drastically cut its advertising and marketing spend. 

Closing Jumia Food, an unprofitable business segment since its launch in 2013, is another push to focus on business segments that can drive profitability. 

While Jumia began focusing on small-ticket everyday items in 2021, Dufay has changed that, and he has also begun a push into smaller Nigerian cities. 

Jumia Food’s struggles 

By the end of Q3 of 2023, Jumia Food has a gross sale of $63.9 million—11% of Jumia’s overall gross merchandise value. However, the food delivery business has never been profitable in any of the 11 North, East and West African countries it operates in.

The shutdown of the food delivery arm has been years in the making. Before this complete shutdown,  the e-commerce giant discontinued food delivery in Egypt, Ghana, and Senegal “where this activity was sub-scale, resulting in unit economics dilution with limited consumer lifetime value upside.”  In Jumia’s press release about the shutdown, Antoine Maillet-Mezeray, EVP of Finance & Operations of Jumia, said, “Food delivery remains a business with very challenging economics, in Africa and across the world, and we want to focus our efforts on our physical goods e-commerce business in the eleven markets where we operate.”

The company, with a liquidity position of $166.3 million per its Q2 2023 reports, is cutting off the food delivery segment to allocate its resources to more promising segments like its core physical goods delivery and payment service, Jumia Pay. 

A Kenyan court sitting in Nairobi has given Twiga Foods, Kenya’s most funded e-commerce platform, and Incentro, a Google Cloud reseller, five months to resolve their dispute over how much Twiga owes Incentro. Incentro claims Twiga owes it $450,000 in unpaid bills and a delayed bonus from Google. But Twiga claims it only owes $94,000. 

According to Incentro, Twiga fell behind on monthly payments on a three-year contract for cloud services as the e-commerce firm shifted from high growth to try to become profitable. 

After both parties missed an earlier court deadline to reconcile their invoices last week, the court will now hear the case on March 13, 2024. The $3 million contract at the heart of the dispute committed Twiga to using Google Cloud Services over three years through Incentro, a Google Cloud reseller.

In October, TechCabal reported that Incentro was demanding up to $261,878.75 from Twiga in owed bills. Incentro says its claim has now gone up to more than $450,000. The amount includes $92,000 which Incentro says it was supposed to receive from Google for additional services that are part of perks Google offers to large customers. Google did not pay this bonus because Twiga failed to sign off on the work on time. In a 158-page affidavit filed at the Milimani courts last week, Incetro alleged, among other things, that Twiga paid more than 559,000 Kenyan shillings (roughly $3,900 at the time) in value-added-tax based on unpaid invoices which totalled more than $239,000. 

But Twiga denies owing Incentro this much. The tech startup, which still uses Google (but not through Incentro), says it is in talks with Google Ireland Limited, the primary provider of Google Cloud Services. 

“There is an amount Twiga believe we owe and there is an amount Incentro believe Twiga owe,” Twiga CEO Peter Njongo told TechCabal via text. “As a sign of good faith, Twiga has paid a deposit of 50% of the amount we believe we owe.” Incentro said it did not receive the transfer but got a letter the evening before the court case saying Twiga had paid $47,000. According to Incentro, the payment notice showed the transfer was made to an NCBA account which it had closed.” Incentro claims it has not yet received the payment.

Companies in countries where Google’s invoice billing is not available use Google Cloud through resellers in order to better control spending on cloud services instead of being billed directly. They still pay the same as if they enabled direct billing via a debit card, but also get additional services and more support. Incentro says the contract it entered into with Twiga means it has to pay Google Cloud’s Africa distributor DigiCloud the balance of the $3 million if the contract is not cancelled by Twiga and Google Cloud. 

“We are mindful that should we not hear from Google Digicloud that [sic] will have no option…but to demand full repayment of the outstanding total commit value,” part of a letter dated October 12, 2023, from Digicloud CEO Gregory MacLennan, read.

The letter which was filed as an attachment to an affidavit pointed out that Digicloud will only release Incentro from the payment obligation if Google cancels the agreement; otherwise, Digicloud would pass on any default penalties to Incentro “in order for Incentro to pass on the same quantum release (and/or associated penalties) to Twiga”. 

Recall that last week, Twiga Foods announced that it had raised “significant capital” from existing investors, including Creadev and Juven. This new capital was supposed to be used to pay 100 vendors Twiga is indebted to. Twiga has previously raised more than $150 million from 25 investors since it was founded in 2013 making it one of the most VC-backed tech companies in Kenya.

Editor’s note: A previous version of this piece had wrongly said the amount Incentro is claiming includes $209,000 in bonuses from Google. The correct amount is $92,000. This article was also updated to clarify that Incentro says it still has not received any payment despite Twiga claiming to have made payments.

Massimiliano Spalazzi, CEO of prominent e-commerce business Jumia Nigeria will be stepping down in December 2023 after working with Jumia Group for 11 years. Spalazzi, one of Jumia’s pioneer employees, will be replaced by Sunil Natraj,  Jumia Ghana’s CEO, who was appointed last year. Natraj will start in his new role in January 2024.

Natraj’s appointment was announced by Francis Dufay, the CEO of Jumia Group, at a media parley that was held today in Yaba, Lagos, Nigeria. 

“Jumia wants to be a Nigerian company and not a Lagos company. We want to continue what Spalazzi started,”  Natraj said at the event. 

He shared that  Jumia plans to expand to more Nigerian cities. 

Akure and Ilorin are two cities Jumia is considering. The e-commerce firm is also eyeing cities on the way to Ibadan, Warri and Benin in the first quarter of 2024. 

The broad plan is  to build a network that will cover the country in entirety. 

“We are targeting cities with a population of more than 20,000 people,” Dufay said. He explained that expanding in this manner has worked for a few countries in Ghana, Cote d’Ivoire and Senegal. For him, Nigeria is Jumia’s biggest market. The CEO said the company has had its own fair share of challenges. Part of those challenges involved the reduction of its workforce in the fourth quarter of 2022, and cutting its advertising budgets by 73% in Q3 2023. The group also moved away from a focus on delivering low-ticket items.