Jumia is not an African startup

https://threadreaderapp.com/thread/1117092692423512064.html

by amolo • 7 years ago

79 59 7 years ago

Interesting read. I’ve never heard of Jumia before today. The wiki page says their headquarters is in Lagos, but I didn’t see that mentioned here. Does all that mean they have an office/headquarters in Lagos but everything else is outside of Africa?

externalreality6• 7 years ago

It seems "Africa’s largest e-commerce company" is not African at all. It always pains me to see this when I visit small countries. Jobs are one thing, but if small countries find that massive resources are leaving the country in the name of those jobs then what's the point - it can be considered some form of trade at best and in the worst case colonization.

arcticbull2• 7 years ago

It's hard to say that this is problematic. Canada's largest chain of coffee shops (Tim Hortons) is owned by a Brazilian company -- is that colonization? Saks Fifth Avenue, on the other hand, is Canadian -- is that? The Mandarin Oriental is owned by Jardine Maethson, headquartered in Hong Kong, but incorporated in Bermuda, with a long history trading opium in the South China Sea area -- is that exploitation today?

That's just three random examples. Foreign investment allows companies to grow and succeed. I think there's sensitivity in this area due to past history though I don't think it's fair in this case. Owning a foreign company isn't 'exploitative.'

externalreality6• 7 years ago

Canada's largest chain of coffee shops (Tim Hortons) is owned by a Brazilian company.

You are comparing apples and oranges. In many cases larger countries are able to conduct fair trade agreements. In the case of smaller countries they usually don't have the resources (military/political influence) to enact fair agreements and are "ripped off" by companies offering jobs.

robocat• 7 years ago

Are the large majority of major companies in Africa African?

The issue isn't about a few foreign companies. Is the majority of Canadian market cap foreign?

amolo4• 7 years ago

They do not claim to be a Canadian company for PR and media attention. Thats the difference. Secondly, Jumia really exploits Africans to make a quick buck, they sell purely Chinese grade C goods all this is not benefiting Africans. This is modern day cannibalization. (and they still aren't profitable).

charlesdm• 7 years ago

They have a German holding company. The shareholders could move it to Luxembourg tomorrow if they wanted, or Belgium / Cyprus / Malta / Singapore / Dubai / etc.

This doesn't really matter, because holding companies are in their simplest form empty shells that merely hold shares of other operating entities. They group equity participations. You want a holding company to be based in a country with an established and stable legal system, of which the African continent has exactly none.

Jumia is for all intents and purposes, an Africa focused group.

brudgers• 7 years ago

Jumia was set up by Rocket Internet.

https://www.reuters.com/article/us-rocket-internet-jumia-ipo...

https://en.wikipedia.org/wiki/Rocket_Internet

deogeo3• 7 years ago

The title says 'a digital colonization thread' - so foreign ownership or control of companies is colonization? Does that apply to, for example, US-owned companies in Europe? Or Chinese-owned companies in the US?

gumby2• 7 years ago

Many people do feel that way, though I personally find the idea of any significant multinational as being from a specific country silly.

deogeo3• 7 years ago

From the recent front-page story https://www.politico.eu/blogs/the-coming-wars/2019/04/how-eu...: "Then there was Kuka, the crown jewel of German robotics, which was taken over by Chinese home-appliance maker Midea in 2016. What happened next has become part of a now recognizable pattern: Once a firm is acquired by a Chinese company, its European suppliers are abandoned for Chinese value chains."

Silly or not, Chinese firms will favor other Chinese firms. This behavior isn't limited to China.

rising-sky3• 7 years ago

If you read past the title, I think the author's point is that, this is from a legal and business perspective a patently German company that is presenting itself as African solely because it currently does its business there exclusively. US-owned or registered companies in Europe don't typically masquerade as European because they operate there

deogeo3• 7 years ago

US-owned or registered companies in Europe don't typically masquerade as European because they operate there

Yet when GM bought Opel, the branding didn't change. An uninformed consumer could easily think they're buying from a German-owned firm. And it's getting increasingly hard to keep track of the complex webs of ownership of corporations.

But yes, the author has a point.

duxup• 7 years ago

I worked for a foreign owned company. I guess I was a collaborator.

I agree that I think a bit too much weight is being put on who owns it. When I worked for that foreign owned company the only folks who cared about such things was when they called support.... that I was in the US if only because the service level was better, and a few customers for security reasons had such concerns. Otherwise I don't think anyone cared.

dmix2• 7 years ago

People have been sold a certain 18th-century German myth that the value a company provides is strictly limited to who owns shares in the parent company. Which demonstrates a severe misunderstanding of how businesses generate economic value to the regions it operates in through salaries to locals, improving locals lives by providing value through some service/product, taxation of property + salaries + VAT/retail sales tax + customs + municipal fees (parking, business licenses) + etc, etc, etc.

Additionally most of the revenue businesses make is reinvested into the company. For most startups that means 100% of the money. They are only extracted from startups to original investors at IPO or acquisition. But even then the company is merely just transferring ownership to other people. The entire business value mentioned earlier is still being generated.

neximo642• 7 years ago

Is Naspers an African company or does that not count either because of its roots

EtienneK• 7 years ago

Furthermore, since Tencent’s largest shareholder is African, does that make Tencent and African company?

This question is rhetorical.

amolo4• 7 years ago

https://en.wikipedia.org/wiki/Naspers

Naspers was founded in South Africa so yes its African. Its services and activities benefiti Africans so yes, it its African. Jumia on the other hand, unless you are from around here and have used Jumia, you will understand my point. Read my other comments for reference.

neximo642• 7 years ago

South African 'Afrikaans' isn't African if you're following the same logic as Jumia

chirau5• 7 years ago

An "African company" does not necessarily mean a company registered in Africa or owned by Africans.

When us Africans refer to something as African, it can mean several things. Allow me to call it a FUBU approach. That means "For Us, By Us". It can also mean "For Us or By Us"

This means the entity does not necessarily have to be of African origin, it can just be a result of its focus on Africa. Jumia operates exclusively in Africa, and by virtue of that and our Ubuntu mentality, it is for all intents and purposes, one of us. Though not officially.

When Africans supported the French soccer team last year at the World Cup as "our African team", do you really think Africans are not aware that France is not in Africa and was not representing Africa either. It's just a social construct that gives us something to cheer about, historically we haven't had much.

The same FUBU mentality is also why a lot of Africans considered non-Africans "African heroes". Where I come from, Fidel Castro is an African hero for educating our doctors for free and sending doctors of their own. It's not because he is African. It is simply because of FUBU and Ubuntu.

Edmond• 7 years ago

I am afraid you're making quite a statement there on behalf of all Africans...This African completely disagrees :)

rising-sky3• 7 years ago

Exactly, so do I

chirau5• 7 years ago

And that is totally fine. I am sure my opinion does not represent 100% of Africans.

rising-sky3• 7 years ago

As a converse example, Apple operates globally, no one is going to mistake them for not being an American company, let's not make excuses for what can arguably be described as a usurp on African identity.

From the standpoint of a corporate entity, they are not incorporated in Africa nor have substantial corporate representation in Africa. Everything else is secondary.

As the author points out Coca-Cola has immense presence in Africa, and is definitely a far more recognizable brand than Jumia even with current exclusivity, that does not translate into being an African company

chirau5• 7 years ago

Neither Coca Cola nor Apple are exclusive to one region. Jumia's WHOLE operation is in Africa. That is a very important difference, don't overlook it

externalreality6• 7 years ago

I think this comment misses the point by speaking of Ubuntu in the face of the incompatible idea of capitalism. The company is not an African company in the sense that it is not owned (and thus likely not operated) by Africans. Africa is almost entirely owned by foreign entities in the most exploitative fashion. Ubuntu is a enlightening concept of fundamental good and sharing but it should not be used as a tool to allow foreign interests, who follow no such concept, to take more than they are giving back. I am really skeptical as to whether you are really an African. If you are an African I would go as far as to say your "Ubuntu mentality" is not an Ubuntu mentality at all but a neo-colonial one.

Barrin92• 7 years ago

I think the French soccer team case is an interesting example because the team itself, and its players who are of African heritage, didn't want to consider themselves African. Which is understandable given the long tradition of a civic, race-blind national identity in France.

So there is clearly a conflict there that is less benign than appears. African people from the African continent might believe in a sort of global 'Africanness', while others clearly don't share that attitude. (And I don't just mind on a individual level, but also a cultural one).

This could be seen when Noah on the Daily Show ridiculed the whole discussion by declaring it innocent or backward, which ended with a quite heated exchange with the French ambassador.

The Ubuntu mentality is not unlike the American mentality which often mixes ethnic origin with nationality, but in many other countries this is not so, and an explicit race-blindness is seen as a big achievement.That the French soccer team did not really get a say of their own in this affair and was simply declared to be African by mostly American commentators seemingly, is somewhat problematic.

briandear• 7 years ago

Doesn’t FUBU represent the very tribalism that has contributed to some of the dramatic troubles within Africa? Do people have pride in being from a specific continent? Given the vast diversity of Africa, I am not sure I understand the mindset. Algerians are far more different from Kenyans than Mexicans are from Argentinians. Would a Tunisian success be celebrated by Botswanans? I am going to plead ignorance — I genuinely don’t understand.

As far as Fidel being an African hero, we can forget another hero to many Africans: George W. Bush: he did more to stem the tide of AIDS in African than any other non-African leader.

yawboakye• 7 years ago

100% agreed. I'm African. But the real order of my identity is Asante (by birth and heritage), Ghanaian by British demarcation, African by continent. The tie gets looser at every step of the way. No, I don't have or share an African identity. I won't celebrate a Kenyan breakthrough (assuming I hear about it) the same way I'll celebrate, say, an Indian breakthrough in malaria medication. This FUBU, Ubuntu, global Africanness that the OP alluded to doesn't exist in reality. It's a pity.

chirau5• 7 years ago

I also forgot to mention in my original comment that Jumia DOES actually have African founders.

The company was originally founded as Kasuwa by Tunde Kehinde(Nigeria) and Raphael Afaedor(Ghana) but for legal reasons had to change its name to Jumia. It is shortly after that that they received funding from Rocket Internet who brought on financing and two other German co-founders for the new entity that was Jumia.

The two African founders have since left the company, though.

amolo4• 7 years ago

To be honest. It was set up by Germans with Africans as the face in order to easily penetrate the African market. PR everywhere.

amolo4• 7 years ago

Why would Africans setup a company and incoorporate it in Germany and call it a Nigerian company

deesep3• 7 years ago

"Let’s also be honest here. Jumia didn’t succeed because it was “African”. Jumia owes part of its success to a marketplace that doesn’t believe in domestic brands. It’s heavy lifting to build a successful local brand, because you’re viewed suspiciously."

I live in Ghana, and I don't shop on Jumia[1] because i don't believe in domestic brands. It's a ridiculous claim. This[2] is a local brand that has made 10,000+ successful sales via Jumia. The major challenge of doing E-commerce in Africa is that excluding some affluent parts, many towns and cities don't have functioning address grids. It's a complete mess and one requires the use of landmarks and long descriptions to locate places.

Jumia representatives always call to ask for directions to your location. If they get lost, you could have them give the phone to anyone nearby who is familiar with the neighborhood. You can then have the stranger direct them(Jumia delivery reps) to your location. It may be unconventional, but works.

I and millions of people who shop on Jumia do so cause it's convenient and provides a needed service. Until a few days ago, I had no idea it's a German company and its founders are french. Calling it an African company when it's not may be deceptive, but please don't say it's successful because Africans don't love local brands.

[1] https://www.jumia.com.gh/ [2] - https://www.jumia.com.gh/white-label-woven-kente-fabric-6-ya...

externalreality6• 7 years ago

You shop on Jumia because it's convenient. It's also convenient for foreign interest to setup an Amazon like business to skim millions off the top of an economy that can scarcely afford it. The point is, Jumia is not good for Ghana, a domestic company would create more jobs and keep hundreds of millions of dollars of wealth from leaving the country. Its not about whether or not you get your 1st world products delivered on time, its about pulling yourself out of the 3rd world and Jumia is not helping you with that.

Many people forget that when Japan first started producing cars they were so bad at it some models didn't even operate in the rain. Or that American steel, originally, was supremely subpar to British steel. Its about doing whats best for the country - and having some foreign entity control a good portion of the commerce in the country (especially when it is so easy to build your own) is not a good idea for an emerging economy.

Remember, also, that Jumia will have the same control over market that Amazon does which is immense power and why the United States is considering limiting Amazon's power over the market. Basically, if Jumia begins to not only control the market but participate in the market as well it will be bad for these small nations.

chias• 7 years ago

I know this is not your intent, but your tone comes across as fairly patronizing in this comment. There may be a point to be made in what you wrote, but I suspect that as-is it will do more to put people on the defensive than to convince them of views they don't already have.

deesep3• 7 years ago

Jumia does have competition from home grown African companies. A good example is [1]Hubtel. The difference between Jumia and its competition is funding. They managed to reach a billion dollar valuation thanks to funding rounds from AXA, a french insurance company and Goldman Sachs. There are very bright developers here who have awesome ideas but getting access to funding can be very difficult. That said, technology is helping Africa leapfrog. M-PESA is a service that allows people send money from their phones. It's widely used and developed in Kenya.

I believe in producing what i consume and consuming what i produce but it will be impossible to shut out foreign investment while we build our own.

[1] https://hubtel.com

kevinventullo• 7 years ago

I'm curious, what is your take on addressing systems such as Google's Plus Codes?

deesep3• 7 years ago

Never heard of it. I just looked it up. I am am weary of always feeding googles manufacturing process with my behavioral data so turn of location services on my phone. Probably why i never saw it on google maps. I know about What3words though.

[1] "Nearby places have similar codes, and the code structure allows grouping areas together. The code gives the equivalent of the street name and number. Additional information like floor, suite, etc. can be provided as per the local convention. "

I love it and will look into it. in 2017 The Ghanaian government rolled out a digital address system called [2]GhanaPostgps. Unfortunately it hasn't gained widespread adoption. The app was rushed, not properly tested. I think they've fixed some of the bugs, but most people just haven't warmed up to it. To force widespread usage, the government wants to make it mandatory for residents to provide a their GhanaPostgps address when applying for certain services. So i guess it will take some time but eventually most people will use it.

Digital address systems will help accelerate economic progress. Everyone knows that. But some people don't trust the government so very reluctant to give out too much detail about themselves. We are told to pay a little bit more, and to tigthen our belts a little bit more, yet parliamentarians magically unite when it's time to increase their salaries. If people believe their hard earned monies aren't being mismanaged by corrupt politicians, they would gladly contribute.

I am aware that Nigerias postal service makes use of What3words. So digital address systems will eventually become widespread in Africa -If done right.

[1] https://plus.codes/developers [2] - https://ghanapostgps.com/

ntrly• 7 years ago

All companies are entirely their shareholder's so unless a national government has a controlling stake in a company no company is any country's company much less a continent's one. You might say Jumia is an African brand, brands are fictions created by companies specifically for the purpose of being associated with something potentially valued by consumers in a given market.

anovikov• 7 years ago

What's bad about it? This is one big field startups have to disrupt yet: colonization. Africa probably can't work on its own, we just have to really figure out colonization. Yes people largely gave up on it in 1960s because it didn't make money, but they just didn't have that Google moment there, web search also didn't make money in 1990s. Many places in the world would benefit from proper adult oversight.

Politicians can't say it because they need votes. But why businessmen should lie to themselves?

MetalGuru• 7 years ago

Can someone explain to me why Amazon can’t be the Amazon of Africa?

luminati• 7 years ago

I understand the spirit of the tweet storm - but please let me lulz myself a bit => Tencent is an African majority owned company ;)

dmix2• 7 years ago

They each hold just over 2% of the company’s shares.

Wow, 4% foreign ownership of stock by founders who operate a business entirely in Africa /s. Is this really the substance of this expose?

Especially considering founder stock isn't how the vast majority of how value is returned to society in day-to-day business operations. But rather through the value delivery of the businesses to consumers and paying peoples employees.

Even the founders living and operating in Africa would mean a massive chunk of their dividends/salary would be going back into the African economy.

There are a million ways companies can generate value to a region/continent. The idea that a company is entirely extracting capital/value from other countries, because the (4% minority ownership) founders are foreign-born and the corporation was registered in Europe is not how that works.

Just like how saying a couple guys from Boston, with a company registered in Delware, but their entire operations and business-model is based in California ...is not primarily generating value for California but Boston/Delware.

At most this could only potentially reduce the narrative about individual success potential of African business owners. But that doesn't make it any less an African business and a model that businesses can work locally. Which is all investors care about. Even in SV 90% of investors won't look at you until you've somewhat proven your business-model OR you have had past success + network. Rarely do they invest blind unless it's a trendy highly-well timed startup they are looking to gamble on in a first-to-market type investment... but even that is rare.

The authors claim this is merely dismissible by the founders 'melanin' levels doesn't really hold up to scrutiny. https://twitter.com/tmsruge/status/1117106622357299200

michaelmrose2• 7 years ago

They hold 4% how much of the remaining 96% is foreign owned?

wilsonfiifi• 7 years ago

Actually Jumia was founded by 2 West Africans but it seems it’s history is being rewritten [0][1]. Unless there are two Jumias.

This article [2] in particular, written in 2013, is no longer available and doesn't appear to be available in the wayback machine.

edit:

Seems there's a more in depth article from 2014 [3]

  [0] https://vc4a.com/blog/2013/09/03/online-retail-becomes-a-reality-in-africas-biggest-market-behind-the-scenes-with-nigerian-internet-startup-jumia/

  [1] https://techcabal.com/2014/01/30/jumia-confirms-exit-tunde-kehinde-raphael-afaedor-announces-new-ceos/

  [2] https://vc4a.com/blog/2013/08/09/jumia-nigeria-how-a-local-e-commerce-startup-became-a-multimillion-dollar-company-in-less-than-a-year/

  [3] https://ynaija.com/how-tunde-and-raphael-got-here-a-profile-of-jumias-million-dollar-ex-ceos/

csomar• 7 years ago

Let’s also be honest here. Jumia didn’t succeed because it was “African”. Jumia owes part of its success to a marketplace that doesn’t believe in domestic brands. It’s heavy lifting to build a successful local brand, because you’re viewed suspiciously.

In Tunisia, the Jumia brand is synonymous with shittiness. I used them for food delivery a few times. It was bad. Then one time, they didn't deliver. I called the customer service and after giving her my order number, she just hang up.

They "succeeded" here because they are the first to "invest" and already have a platform for e-commerce. I don't think they'll be around much longer.

adz_6891• 7 years ago

when a European company casually runs roughshod over that identity [of being an African company] and trades in it, it’s a slap in the face. It effectively lays a beachhead for digital colonizers in the space. “With enough millions you too can claim to be an emerging “African” growth co

I applaud the directness of this article. It's an important issue, there are big market opportunities in Africa and entrepreneurs who are African nationals deserve better access to them.

However, it's important to note there are very successful 'tech' companies part owned by African nationals and incorporated in Africa (as far as I can make out). E.g. SportsPesa [0] which has a mix of Kenyan/European/US founders [1] and looks like one of the most profitable East African companies right now [2] (it blows Jumia out of the water). It's a company doing well enough to sponsor a premier League football club shirt.

I wonder whether the more serious barriers to young African entrepreneurs are their governments & regulatory environments. Incorporating a company, setting up bank accounts and so on in many African countries feels like a challenge in itself. And many African founders may look for US/European founders simply to incorporate entities elsewhere which will likely increase their chances of investment and security. This is where the "beachhead for digital colonizers" metaphor becomes multifaceted. I think the beachhead goes both ways, because there is value to an African national registering an entity, e.g in the UK [3]. This isn't really to do with identity, it's to do with practicality and trust. It's hard to trust institutions in a lot of African countries, and that's a disservice to the people and young entrepreneurs that live there. The smart ones probably won't wait around, they'll figure out the safest foundation for delivering tech products and services to people in Africa.

I'd be interested to hear from any African entrepreneurs working in Africa here on what the practical barriers/solutions have been to setting up companies and getting them working.

[0] https://www.bloomberg.com/research/stocks/private/snapshot.a... [1] https://samrack.com/who-owns-sportpesa-here-is-a-list-of-the... [2] https://businesstoday.co.ke/sportpesa-float-ipo-nse-next-yea... [3] https://beta.companieshouse.gov.uk/company/10682750/officers

mruts• 7 years ago

This article seems to be pretty racist to me. I’m white and live in Africa and am a citizen of Tanzania. But by his standards I guess I’m not African and never will be? Sounds like a double standard.

NotPaidToPost• 7 years ago

Jumia operates exclusively (or close to) in Africa. It draws investments to Africa, it puts Africa on the tech map, and it helps its African customers.

That's seems very positive for Africa.

Jumia is not an African startup

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