We saw it coming; yes, “Sabi, a Lagos-based B2B e-commerce startup providing digital commerce infrastructure to Africa’s informal economy, has raised $38 million in Series B funding at a valuation of $300 million”. From local and international investors, one thing is clear: B2B ecommerce is part of the future. I have personally called B2C a hopeless business model until sub-Saharan Africa could fix its postal services.

(Note, Sabi’s market cap now is bigger than Jumia’s $283 million. Jumia runs a B2C ecommerce model which is very challenging due to logistical paralysis)

So, left and right, investors have concluded that the future is B2B ecommerce and that is what everyone is investing in. We expect two companies in this category to hit a valuation of $500 million by August of this year. The class is big with  Wasoko, TradeDepot, Alerzo, MaxAB, Chari, Omnibiz, Chari, MarketForce and Jabu. Some are asset-light while some are asset-heavy with their warehouses and logistics infrastructure. Some run hybrid.

Two companies within Tekedia Capital are growing rapidly using the B2B commerce model. TradeGrid, which is Nigeria’s largest oil & gas marketplace, is hitting huge numbers. Cinderbuild which focuses on construction and building material is also scaling rapidly.  These companies work on great models which deliver solid unit economics, guaranteeing the capacity to scale in a sustainable way.

Yes, the investors have decided what they will invest in,  and if you are paying attention, here is it: B2B ecommerce which can originate credit transactions and pick cuts on those transactions.

This was an email conversation which I think will deepen this post:

Question: I’m a bit intrigued by your take about Sabi’s fundraising on Tekedia. 

Sabi has achieved less than 15 000 downloads of its only app, on. Google Play. It’s not even a micro drop in the water. It has less than 1,000 followers on Instagram (the informal digital

selling tool of choice in Africa). It runs no ads (digital or otherwise) and there isn’t even a signup button on their website, which is completely empty. So I would be keen to understand how SAbi can raise $38m on a $300m valuation…”

My Response: You may be measuring the wrong things for the informal sector. You ought to have seen the 244 employees on LinkedIn. They have hundreds of workers who manage regions in markets. Winning Africa is having a physical presence. Those online metrics mean not much for the informal sector.

Q Response: I had seen them, actually. But then it’s not a tech startup, it’s just a wholesaler with a granular network of representatives…

My Response: If you have that argument, Amazon is not a tech company with more than 1 million workers.

You can also make the same case for Google with thousands of workers in Africa.

Labour is cheap in Africa where you can pay someone $150 per month.  You can have that person to coordinate a market for you, putting order to the central system, for all vendors in that market. You can also decide to outsource that to agent networks.

Having an app is great but more than 90% of transactions cannot come from the app. Most of those users do not have confidence in relating with apps when it comes to payments. It is a B2B ecommerce but the most critical part is offline.  If you cannot manage the vendors, you have no mission. Investors like such businesses because they cannot be automated out. 

Q response: Well, over 40% of Amazon’s profit comes from its AWS unit… and its customers actually use its digital platform.

I take your point about the importance of agent networks to organise informal markets, but that’s not a tech company, and it does not command a tech company valuation…

70% of Nigerians don’t have a bank account, but it’s mandatory to have a bank account in order to use Sabi… So I was a bit puzzled.

My Response: ” Well, over 40% of Amazon’s profit comes from its AWS unit… and its customers actually use its digital platform.”

Possibly, more than 90% of Sabi’s profit will come from its financing, and not from ecommerce margin. In other words, it can buy soap for $10 and asks customers to pay $10.01. But as that happens, it offers credit which will generate higher returns. In the Harvard Business Review, I called that a double play strategy. What makes Sabi great is not ecommerce but the banking credit operation which makes that possible. 

“but that’s not a tech company, and it does not command a tech company valuation…” – the ecommerce business is not useful as I have written for Jumia. But the credit business (which remains hidden) is where the gold is. They will not discuss that but if you see their numbers, that is the deal. If you can facilitate $100m and take 5-10% monthly as fees, you have a great business. And you have no default since the goods are the collaterals. If they do not pay, you take what remains and give it to another vendor!

“70% of Nigerians don’t have a bank account, but it’s mandatory to have a bank account in order to use Sabi… So I was a bit puzzled.”

You may not understand what Sabi does. This is a B2B business, not B2C. It does not send to end users. Its vendors are fairly businessmen and women who run operations. In a market, you may have 300 of them even as that market serves 100,000 people. So, these 300 do have bank accounts.  You cannot use the general Nigerian population because Sabi focuses on merchants and vendors and not consumers.

In TradeGrid which does a similar thing but for gas stations, it is the same model. We invested in the team and the numbers are doing great, no default or anything because you are financing inventory!

Q Response: Thanks for the very clear explanation!

In line with growing demands to improve the nation’s health standard and curb medical travel and tourism of public office holders, President Muhammadu Buhari has on Friday inaugurated the new State House Medical Centre to service the medical needs of the President, the Vice President and their families.

According to the Permanent Secretary, State House, Mr Tijjani Umar, the medical centre would provide services to the President and Vice-President, their families and other special guests.

Mr Umar noted that the facility reflected President Buhari’s commitment to prioritising the health and wellbeing of all Nigerians.

The permanent Secretary made the following remarks:

“ The idea was conceived in 2012 which led to the generation of a project brief, outlining its objectives, scope and specifications for its construction in 2013.

“ But, it was only in 2020 and with the guidance and approval of Mr President that a comprehensive geotechnical survey and appraisal of seven sites was conducted for which he selected this site.

“The facility occupies a floor of 2,485 square metres across one suspended floor and basement, and was awarded to Julius Berger Nigeria.

“The facility offers a wide range of specialised medical services, covering advanced diagnostics and treatment; that’s why it’s equipped with the latest medical equipment of global standard.

“Today with the glory of God all this was achieved due to the singular resolve and resilience of President Muhammadu Buhari to address this long-identified need for such facility and bequeath a worthy legacy,“ Umar said.

The First Lady, Aisha Buhari, who was also present at the inauguration event said her continued advocacy for the improvement of health and wellbeing of all Nigerians led to the establishment of the new facility.

Aisha Buhari expressed her optimism that the new well-equipped medical centre will ameliorate the problem of medical travel overseas which has become rampant among public office holders in Nigeria.

“No need for any leader to spend months and months abroad because of healthcare. This one is for the health and wellness of the First Family. They don’t need to go abroad now. They only need to maybe fly in experts to help our people” Mrs Buhari said.

A Federal High Court sitting in Kano has nullified the candidature of Abia State governor-elect, Dr. Alex Otti, and other candidates who ran for electoral office under the Labour Party in both Abia and Kano states.

Justice M. N. Yunusa, delivering his judgment, held that their emergence was not in compliance with the provisions of the Electoral Act, 2022.

“The party that has not complied with the provisions of the electoral act cannot be said to have candidate in an election and cannot be declared winner of an election; this being so, the votes credited to the 1st defendant is a wasted vote,” he said.

The judgment follows a suit marked FHC/KN/CS/107/2023, which was filed by one Mr Ibrahim Haruna Ibrahim against the Labour Party and the Independent National Electoral Commission (INEC), challenging the process of the primary elections in the states.

According to the suit, the Labour Party failed to submit the names of its members in the 35 states of the federation and the Federal Capital Territory (FCT) in both hard and soft copies to INEC, 30 days before the primaries as stipulated by the Electoral Act.

In the judgment, the court held that the 1st defendant’s failure to submit its register to the electoral body, violates the Electoral Act and thus, renders the purported primary election “null and void and of no effect.”

“The fundamentally flawed primary election of the first defendant, (Labour Party) as a result of failure to comply with the mandatory provisions of sections 77(2) and (3) cannot produce a qualified candidate,” the court rules.

However, some lawyers have faulted the judgment, saying it cannot stand. Festus Ogun, a constitutional, electoral and human rights lawyer, listed several grounds on which the ruling will not hold.

He said 1, “the Suit was instituted over a month after the election has been conducted and winners, including Alex Otti have emerged.

“2. Those whose interests are adversely affected were not joined as party to the suit.

“3. Who is Ibrahim Haruna Ibrahim? Under the Electoral Act, 2022, only an aspirant who actually participated in the primaries can challenge the candidate of any party.

“4. The issue of party membership is an internal affair of political party which the court cannot entertain.

“5. The suit is academic and the judgment cannot serve any purpose since the election had already been conducted,” he said, adding that the judgment CANNOT survive appellate scrutiny. “It will be quashed on appeal.”

Public interest and human rights lawyer, Inibehe Effiong, said the court’s grounds for the nullification, which goes against all established principles of law and fair hearing, cannot legally stand.

“How can a court assume jurisdiction in a matter that is indisputably statute barred?” he asked… “A court in Kano cannot nullify primaries outside Kano.”

“The issue of submission of a party’s membership register to INEC cannot be the basis for disqualification of candidates. It cannot be the basis for nullifying primaries across the country,” he said.

He said as a pre-election matter, the case should have been filed within 14 days of the primaries.

Effiong noted that the case was filed on the 11th day of May, 2023, while Alex Otti emerged as the gubernatorial candidate of LP during primaries held in June 2022.

“Section 285 of the Constitution states that all pre-election matters must be filed within 14 days of the event,” he said, adding that the case is also belated.

The Labour Party has not issued any statement on the judgment, but it is expected to be appealed.