Amazon of Africa: Jumia raises $200m despite huge losses

Despite hefty losses, Africa-based and focused Jumia’s ecommerce IPO was a success.

credits: the Crunchbase Daily

Last week the company priced its IPO mid-range, selling 13.5 million shares at $14.50 each, the midpoint of its range. That’s worth just under $200 million. Tack on the 2,0250,000 more shares available to underwriters and the company’s possible total raise grows to $225 million.

And Jumia may raise the full 225 after its IPO was given a rapturous reception. After listing on the New York Stock Exchange, Jumia’s shares closed at $25.46, up 75.6 percent. It has risen further since.

There are two ways to read that result. The first is as a success; Jumia raised hundreds of millions of dollars, floated its shares, and managed a huge first-day gain. And you can read it as a failure; Jumia could have theoretically sold fewer shares at a higher price to raise its capital, lessening dilution of extant shareholders.

But in the IPO hierarchy of results, having a big first-day pop is better than over-pricing shares and seeing your equity quickly slip under its IPO price. So, Jumia had at least a pretty good day, even if you want to (fairly, I’d say) reckon that its IPO was underpriced.

We bring all this to you for two reasons:

• Jumia’s IPO shows that there is plenty of appetite on U.S. exchanges for high-risk shares in tech companies still losing lots of money;
• That ecommerce isn’t category non grata among public investors.

The first point is true in Jumia’s case despite being a dramatic example of the trend. As we reported when Jumia filed to go public, it has workable growth but huge losses, measured as a percent of revenue:

The numbers are simple enough. Revenue grew from 94.0 million Euro in 2017 to 130.6 million Euro in 2018. That’s 38.9 percent growth. During the same two periods, however, the firm’s “loss for the year” rose from 165.4 million Euro to 170.4 million Euro.

So, what gives? I would bet a dollar that Jumia’s status as the “Amazon of Africa” has something to do with its success in the face of such deep unprofitably. After all, Amazon famously lost money for years before becoming one of the biggest companies in the world. And as Jumia has a strong presence in Africa, a continent with around 1.2 billion people, it has huge growth potential.

Do its losses matter, then, so long as Jumia is building the continent’s future online shopping, shipping, and last-mile delivery network? Maybe not. At least that appears to be the public investors’ wager.

It’s the same bet that private-market investors made in the company to the tune of hundreds of millions of dollars. Supposedly smart money on both sides of the public-private market divide has proven more than willing to power Jumia. Now it’s up to the company to tighten up its losses and show that it can expand without the crutch of external capital.

But don’t think that we’re only judging Jumia along those lines; most unicorns going public this year are shedding cash faster than is healthy. The whole class of companies will need to curtail costs while still driving growth.

“The currency of the future is going to be coding,” says Akinwumi Adesina

 At the just concluded Ibrahim Governance Weekend by the Mo Ibrahim Foundation, African Development Bank President Akinwumi Adesina, pleaded for Africans to embrace technology, and governments to urgently move away from “investing in the jobs of the past, but rather in the jobs of the future. A future that is just around the corner.”

The former Nigerian Minister of Agriculture addressing a debate entitled: The New Tech Era: Job-killer or Job-creator?organised by The Africa Report and Jeune Afrique as part of the2019 Mo Ibrahim Governance Weekend. 

“The people who control data, will control Africa. Coding must be compulsory, at all levels. The currency of the future is going to be coding,” Adesina said. “Information technology must not be the exclusive privilege of the elite, we must democratize technology,” he added.

Panelists included Pascal Lamy, board Director of the Mo Ibrahim Foundation and past Director-General of the World Trade Organization; Eric Kacou, an Ivorian businessman and co-founder of ESP Solutions; Chioma Agwuegbo, a Nigerian tech specialist and Zyad Liman, publishing director of Afrique Magazine.

In his welcome remarks, Mo Ibrahim urged the panelists to think about ways to address the “tsunami of young people entering the job market.”

In response to that call to action, Kacou insisted on the need for “a change in mindset to move from BBC or Born Before Computers to rethinking education to teach people how to learn and help them solve problems.”

Panelists acknowledged the critical role the tech industry can play in Africa’s economic transformation through the continent’s digitization. However, they agreed on the urgent need to upgrade the skills of the past, to do it fast, and move away from the social fear of technology.

Research has shown that if governments harness the full economic potential of just the internet, Africa could add $300 billion to its GDP by 2025. Also, 70% of all jobs will have an ICT component by 2020.

Opportunities to transform Africa through technology are endless.  In agriculture, drones can monitor crops, Artificial Intelligence can speed varietal selection, and the Internet of the Things can control smart irrigation systems. Block chains can also aid food traceability.

“We must grab the opportunities…We must democratize technology. Africa should prepare itself. Digital technologies, including Artificial intelligence, big data analytics, blockchains, 3D printing, are already upon us,” Adesina concluded.

The three-hour interactive session ended with members of the audience calling for accelerated policy reforms and creating an enabling environment for innovative technology to thrive. The issue of data protection, identity protection and fake news and how to turn population into assets, topped discussions.

2019 Africa Prize for Engineering Innovation Shortlists in Cape Town

The shortlist for the Africa Prize for Engineering Innovation 2019 has been announced in Cape Town, South Africa, recognising the most promising entrepreneurial engineers from across sub-Saharan Africa. The 16 shortlisted innovations come from six countries, with five female engineers among them.
 

 See the list below

 1.Prof Dele Sanni, 53, an agricultural engineer from Nigeria with 3-D-3-P, a unique industrial dryer that gives Nigerian farmers and producers an affordable, local option for drying feed, sawdust and cereal grains.

 2. Muzalema Mwanza, 34, a civil engineer from Zambia with Baby Delivery Kits, a collection of essential tools to assist midwives in delivering babies at home or in under-resourced clinics across the country.

Lusaka

 3. Collince Oluoch, 27, a self-taught software developer from Kenya with Chanjoplus, an affordable digital tool for health workers to identify, register and track vaccinations, without requiring internet connectivity.

4. Kenneth Guantai, 33, a mechanical engineer from Kenya with Elo-Cart, electrified handcarts that use regenerative energy to ease the load carried by vendors, hospital workers and airport staff.

5.Dr Lukas du Plessis, 46, a mechanical engineer from South Africa, with a hybrid, five-axis machine tool that gives local manufacturers an affordable option for shaping metal, wood and other materials.

 6. James Ochuka, 23, a mechanical engineer from Kenya with JuaKaliSmart, an online portal that connects juakali – artisans of Kenya’s informal manufacturing sector – directly to customers.

 7.Chukwunonso Arinze, 25, a mechanical engineer and physicist from Nigeria with KAOSHI, a foreign exchange market where users swap currencies, eliminating bank charges and long queues.

Abuja

 8.Beth Koigi, 27, a project planner from Kenya with Majik Water, which harvests water from the atmosphere in especially arid areas, and sells affordable and clean water to communities through unmanned ATMs.

9.Neo Hutiri, 30, an electrical engineer from South Africa, with Pelebox Smart Lockers, which dispense chronic medication securely, helping patients in public health systems avoid queues, and easing pressure on clinic staff.

10.Roy Allela, 25, an electronics engineer from Kenya with Sign-IO, a smart glove that translates sign language into speech in real time; to help children with speech and hearing impediments.

 11.George Chege, 27, a biosystems engineer from Kenya with Smart Brooder, a system that automates gas heating on chicken farms, takes the guess-work out of the equation and reduces reliance on coal.

 12. Anne K. Rweyora, 31, an industrial designer from Uganda with Smart Havens Africa, which builds smart, off-grid homes from affordable and sustainable materials, sold to new home owners on a rent-to-own model.

 13. Safiatou Nana, 26, a renewable energy engineer from Burkina Faso with SolarKoodo, an off-grid solar irrigation system for farmers in semi-arid areas with a low water table, aimed at co-operatives with low equipment budgets.

14.Paul Matovu, 29, a forester from Uganda with The Vertical Farm, a farm-in-a-box vertical garden to grow microgreens in urban settings, custom built for users with little space for garden.

15.Dr Obi Igbokwe, 46, a medical doctor from Nigeria with WellNewMe, an online assessment that identifies health risks from user data, to help prevent illnesses like cancer and diabetes.

16. Elizabeth Kperrun, 32, a business graduate from Nigeria with Zenafri, a series of apps that teach toddlers and young children basic numeracy and literacy skills in their native tongue, using local folklore.

The Africa Prize encourages ambitious and talented sub-Saharan African engineers from all disciplines to apply their skills to develop scalable solutions to local challenges, highlighting the importance of engineering as an enabler of improved quality of life and economic development. Crucial commercialisation support is awarded to a shortlist of innovative applicants through an eight-month period of training and mentoring.

Following this period of mentorship, finalists are invited to present at an event held in Africa and a winner is selected to receive £25,000 along with three runners-up, who are each awarded £10,000.

24 Year Old Ugandan won the Africa Prize in 2018

A 24-year-old Ugandan software engineer has won the Africa Prize for Engineering Innovation. Brian Gitta is the first Ugandan to win the prestigious Africa Prize, and the youngest winner to date.

Gitta and his team developed Matibabu, a device which tests for malaria without drawing blood. Matibabu, which means ‘medical centre’ in Swahili, is a low-cost, reusable device that clips onto a patient’s finger, requiring no specialist expertise to operate. The results are available within one minute on a mobile phone that is linked to the device.

The team win the first prize of £25,000. At an awards ceremony in Nairobi, Kenya on 13 June 2018, four finalists from across sub-Saharan Africa delivered presentations, before Africa Prize judges and a live audience voted for the most promising engineering innovation.

The Africa Prize is generously supported by The Shell Centenary Scholarship Fund and the UK Government's Global Challenges Research Fund.

Historical sponsors have included Consolidated Contractors Company, The Foreign and Commonwealth Office's Africa Prosperity Fund, ConocoPhillips and the Mo Ibrahim Foundation.

Tony Elumelu Foundation Entrepreneurship Programme to empower the next generation of African entrepreneurs with USD$100 million capital

In business the role luck plays in success and personal achievement is rarely discussed. If luck is mentioned, it is done with slight condescension, and usually dismissed as a product of hard work, not deserving significant attention. While hard work is paramount – and I have written extensively about the importance of working hard – history and my own experiences show that there is often a large element of success that hard work alone can not explain. It is simply not true that “you make your own luck.”

I started my career as a salesman, a copier salesman to be specific, young, hungry, and hardworking, but the reality was that I was just one of thousands of young Nigerian graduates, all eager to succeed. How did I get from there to where I am now? Of course, hard work, resilience, a long-term vision – but also luck.

A year later after earning my Master’s degree in Economics from the University of Lagos, I applied to join a new generation bank, Allstates Trust Bank. The bank’s one-page newspaper advertisement demanded a minimum 2:1-degree, but I applied regardless, submitting a cover letter and filled out application with my 2:2-Economics degree.

By a stroke of luck, my application was reviewed by the Chairman/CEO, a painstaking man who carefully read my cover letter and was drawn to the confidence in my words. “I know I may not have met the qualifying criteria for the advertised roles, but I am intelligent, driven, ambitious and I will make the bank proud. My 2:2 degree does not demonstrate the full extent of my intelligence and ability, and I know I can do so much more.” He read those words and took a chance on me. Though “unqualified”, he decided to throw me a lifeline, an opportunity.

I was invited to join the shortlist, followed by a long series of interviews and even more tests. At the end of a very rigorous process, I received good news – I had a place as an entry level analyst. Even now, I wonder: What if the Founder had not personally gone through my application? What if my application was rejected at the very beginning? What if I never got the opportunity to work at Allstates Trust Bank?

The story continues: within 12 months at the bank, aged 27, I went from analyst to branch manager – the youngest ever bank branch manager at the time. I was hard working, energetic, creative and prioritised getting things done, but it was also good fortune that my bosses Toyin Akin-Johnson and Ebitimi Banigo took notice, and then, believed in me. They took a chance on me by appointing me as branch manager after an incredibly short time in the bank. They recognised in me the raw materials needed to make a good leader and were prepared to invest in me and my ability. My rise to Branch Manager within a short period is a great story but I know in my heart, I was lucky, as well as deserving.

This position of branch manager was a solid platform which launched me into several top leadership roles. When we, a small group of hungry, determined, young outsiders, took over struggling Crystal Bank, it was as a direct result of the preparedness and exposure that we received early from our superiors and mentors. Without the intervention and goodwill of these people in my career, I would not have been prepared as I was to take on far greater roles. These learning opportunities laid the pathway to future achievements. Put simply, I was lucky enough to be identified and trusted so early on in my career, and this put me on a unique road to success. I keep this in mind – it is humbling and also drives much of what I do today.

When I left UBA as Chief Executive Officer (CEO) in 2010 to pursue other interests, I made a vow that through the Tony Elumelu Foundation, I would “institutionalise” luck and democratise access to opportunities for young Africans. I promised to leverage the success I have enjoyed, to spread luck and hope, provide opportunities and to empower the next generation of African entrepreneurs to succeed. Without luck in my early career, I would not be the man that I am today. I am a leader and philanthropist today because I encountered people who gave me a chance early in my career. It has been a lifetime goal to pay this forward in a transformative and impactful way.

Over the past three decades I have spent as a banker, investor, and turnaround expert, I have had the opportunity to meet thousands of entrepreneurs, like me. Many of them young people, with incredible dreams and business ideas but without the experience or the access to mentoring and support required in order to build successful businesses. But most importantly, they have not yet been exposed to the right opportunity.

Our entrepreneurs are hard at work across the continent, identifying gaps in the market for specific products and services, and bridging these gaps with their innovation and ingenuity. Yet, many of these budding entrepreneurs often lack the capital, the networks, the training, the support to take their small business to national or regional scale. All they need is a helping hand, some luck, someone to believe in them and take a chance on them.

This is what the Tony Elumelu Foundation offers: a platform that empowers African entrepreneurs– from business management training, to mentoring, to funding to networking – championing their cause and giving them a global voice to actualise their ambitions. This is precisely why I launched the USD$100 million Tony Elumelu Foundation Entrepreneurship Programme to empower the next generation of African entrepreneurs. Indeed, these may be the next UBAs (United Bank for Africa).

So, when I am asked, “Tony, why are you and your family doing this? What is in it for you?” I smile and recount my own story of luck. Luck is real, it is powerful, and I am committed to spreading it as far as I can. I am a beneficiary of luck, and I am passionate about sharing it across the continent, to all 54 countries.

I want our young aspiring entrepreneurs to apply. I want you to be a part of this global movement for good. I encourage you to be bold enough to let luck find you. There will be 1260 places open from January 1, 2019. Will you be among the lucky ones this year? Take a chance on yourself. Your future may begin today. Apply now at TEFCONNECT.COM