I have read Jumia Form F-1 which it filed with the U.S. SEC as part of the process of becoming a public company in America. What we knew as Africa Internet Holding GmbH transmuted into Jumia Technologies AG in January 2019. Certainly, it is a better branding since most know Jumia and the obscure AIH would have confused many in the market.

 We have historically conducted our business through Africa Internet Holding GmbH and its subsidiaries, and therefore our historical consolidated financial statements present the results of operations of Africa Internet Holding GmbH. On December 17 and 18, 2018, our shareholders resolved upon the change of our legal form into a German stock corporation (Aktiengesellschaft) and the change of our company name to Jumia Technologies AG. The change of our legal form and company name became effective upon registration with the commercial register of the local court (Amtsgericht) in Berlin, Germany, on January 31, 2019.

Here are the major sections for players in the African ecommerce space to read very well. Largely, what Jumia is saying is this: we have incurred significant losses since inception and there is no guarantee that we will achieve profitability in the future. But over the years, because we have consistently raised external capital, we have been moving forward but where we are unable to bring more external capital, there will be huge risks.  Jumia in this section makes it indirectly clear that old Konga investors just gave up on Konga by not injecting fresh capital as that is what everyone is doing. Naspers which founded Kalahari had given financial sustainability as a key reason whenever it closed any of its ecommerce platforms in Africa. The decision to close is based on deciding not to inject new capital into the business.

Explaining further, Jumia notes thus – our markets pose significant operational challenges that require us to expend substantial financial resources and we have no reason to think these challenges will disappear. It then listed a laundry list which mirrors a piece I wrote in Harvard Business Review where I made it clear that winning the ecommerce sector will involve losing tons of money as there is nothing electronic in the sector. Yes, the marginal cost paralysis does not reduce with scale and until we have a solid logistics system, it will be a hard business. You come and lose money, and then you exit. 

Risks Related to Our Business, Operations and Financial Position

We have incurred significant losses since inception and there is no guarantee that we will achieve or sustain profitability in the future.

Jumia operates a pan-African e-commerce platform. Our platform consists of our marketplace, which connects businesses with consumers, our logistics service, which enables the shipping and delivery of packages, and our payment service, which facilitates transactions among participants active on our platform. We primarily generate revenue from commissions, where third-party sellers pay us fees based on the goods and services they sell, and from the sale of goods where we act directly as seller. Our revenue is, however, not sufficient to cover our operating expenses. Accordingly, since we were founded in 2012, we have not been profitable on a consolidated basis. We incurred a loss for the year of €165.4 million in 2017 and a loss for the year of €170.4 million in 2018. As of December 31, 2018, we had accumulated losses of €862.0 million.

There is no guarantee that we will generate sufficient revenue in the future to offset the cost of maintaining our platform and maintaining and growing our business. Furthermore, even if we achieve profitability in certain of our more mature markets, where e-commerce is growing rapidly, there is no guarantee that we will be able to break even and achieve profitability in other markets, where e-commerce adoption is slower. We expect that our operating expenses will continue to increase as we intend to expend substantial financial and other resources on acquiring and retaining sellers and consumers, growing and maintaining our technology infrastructure and sales and marketing efforts and conducting general administrative tasks associated with our business, including expenses related to being a public company. These investments may not result in increased revenue growth. If we cannot successfully generate revenue at a rate that exceeds the costs associated with our business, we will not be able to achieve or sustain profitability or generate positive cash flow on a sustained basis and our revenue growth rate may decline.

If we fail to become and remain profitable, this could have a material adverse effect on our business, financial condition, results of operations and prospects.

• We rely on external financing and may not be able to raise necessary additional capital on economically acceptable terms or at all.
• Our markets pose significant operational challenges that require us to expend substantial financial resources.We operate in emerging markets in Africa. While we believe that our markets offer opportunities for an e-commerce company, they are also characterized by fragmented and largely underdeveloped logistics, delivery, and digital payment landscapes, which can differ significantly in the consumer markets in which we operate. This underdeveloped infrastructure restricts and complicates the movement of people and goods, which may make our delivery service too expensive or our delivery times too long to effectively compete with offline stores, in particular outside of main urban centers. Underdeveloped infrastructure may also limit our growth prospects by obstructing access to potential consumers. Lack of an established, secure and convenient cashless payment system in many markets also poses significant challenges for sellers. From our experience, we believe that a large percentage of our consumers either do not have a bank account or do not trust online payments, which is why cash on delivery is still the preferred payment method used by our consumers.

  In order to overcome the challenges posed by our markets, we have had to develop significant logistics, delivery and payment infrastructures, which include, for example, the operation of warehouses and drop-off centers, the integration of third-party logistics providers, the establishment of our own delivery and last-mile delivery fleet in certain cities, the design of our independent technology platform and the provision of unconventional payment options. These factors make our operations more complex than those of similar businesses in more developed markets and may place a higher risk on us, for example, due to a higher number of failed orders, the risk of fraud or otherwise. The costs incurred by us to meet these challenges have, and may continue to, put a strain on our financial resources, may be unjustified in light of the benefits they bring us and may make it challenging for us to reach profitability. In particular, there is no guarantee that the markets in which we currently operate will prove to be as attractive as we currently believe them to be, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

By Nnamdi Odumody

All Politics as they say is local. Politicians in Nigeria have mastered this principle, and used it greatly to build dynasties, applying seduction and charisma to maintain cult followership among their followers.

In Lagos State, the Centre Of Excellence, an Africa top-ten economy, and most populated megacity, the ruling All Progressives Governorship Candidate Babajide Sanwo-Olu defeated his main rival of the People’s Democratic Party Jimi Agbaje with 739,445 votes to 206,141. The APC National Leader Bola Tinubu is the Capo Di Tutti who has dominated the politics of Lagos for 20 years since emerging as its governor in 1999, to 2007 when his second tenure ended, surviving an onslaught against the then ruling PDP led Federal Government.

Tinubu devised financial engineering to increase the Internal General Revenue of the state as its federal allocation was seized by the national ruling party for years. Ever since, the former governor has installed his successors who have improved on the state’s revenue generation and infrastructural development till date. His political structure is deeply entrenched across all the nooks and crannies of Lagos State, from the civil service, traditional institution as all the monarchs in the city of aquatic splendor are party loyalists, businessmen, transport union, etc.

His oratory and benevolence which many have hailed as his key selling points, among his supporters, who number in millions, across the state, and who besiege his residence daily for their different needs, have become symbols of leadership. Tinubu’s ability to spot and groom visionary leaders have led to many calling him the next Awolowo, the former Premier of the defunct Western Region of the first Republic who transformed it with various pioneering feats.

Beyond Lagos, Tinubu is revered as the Yoruba’s political kingmaker and has successfully installed his candidates which include the current Vice President of Nigeria Prof Yemi Osinbajo, former Governor Rauf Aregbesola and his successor Alh Gboyega Oyetola of Osun State, Dapo Abiodun who won the recently held Ogun State governorship election against the preferred candidate of the outgoing governor Senator Ibikunle Amosun, among others.

Up northern Nigeria which is conservative but politically conscious in comparison to their southern part, President Muhammadu Buhari draws his key support from millions of youths across the region, who love him for his strict Islamic beliefs, and frugal lifestyle in comparison to other elite that they feel have impoverished them. A key number of governors from the zone used his name as a brand to sell themselves to the electorate and get into power.

In Kano State, Senator Rabiu Kwankwanso who governed the state for two terms created a brand ‘’Kwankwansiya’’ movement across the state with millions of members. With its trademark red cap, the talakawas (masses) see him as a demigod and the second coming of the legendary Mallam Aminu Kano who created the talakawa politics. Kwankwaso ability to understand the needs of the masses and respond was key in helping to deliver millions of votes for President Buhari’s victory in 2015. When he defected back to PDP on the floor of the Senate, the Deputy Governor, a loyalist of his, and majority members of the State House Of Assembly, followed suit.

Across several states of the federation like Delta State where the former Governor James Ibori has established a political structure that made him install his successors, the word on the streets is that it is a one party state and others are just spectators.

Nigerian businesses need to think like politicians by creating and dominating their local markets just like Aliko Dangote who understands the average consumer, and creates products which have made him attain market leadership in most sectors he plays in.

Uber plans to exit its self-driving business. That is a good thing because I do think the company should focus on controlling demand and not supply. Under digital aggregation, the companies that thrive and win are those that control demand and not necessarily supply.

 A group of investors including SoftBank are in talks with the ride-sharing company to buy a $1 billion stake (paywall) in its self-driving vehicle unit ahead of its public listing. (QZ Newsletter)

That is so because supply is largely unbounded via the web: simply, making more cars available in the market, is not what will win the future, but controlling those that will use the cars. Uber already has a first-mover advantage via its platform. I do think it should focus on expanding that over spending efforts to add more cars in the world. Cars will always be here, and self-driving will make them super-commoditized. The entities that will win the race of future vehicular mobility are those with platforms like Uber.

Uber is the category-king ride-hailing business in North America. It makes more money than all the competitors in North America combined. But Uber made a very poor strategic decision many years ago: getting into self-driving business.  Sure, Uber’s major cost element is drivers, and removing drivers will improve its margins. But that argument does not account for the fact that Uber is not the right company to bring to fruition the generation-shaping technology leap of autonomous vehicles. Simply, Uber is a cash-poor company to fund and develop self-driving cars.

The saving on labour is marginal for the risk and distraction making cars will bring to Uber operations. Simply, the firm should build the largest demand mobility operating system and then define protocols for car makers to be integrated into it. It is a great call [I wrote in Aug 2018 that Uber should exit self-driving business] that Uber is thinking along this line: the self-driving unit should go; Uber already has a great business model on its aggregation framework.

LinkedIn Comment on Feed

Sometimes when you have plenty money to play around with, you tend to forget what made you wealthy in the first place.

Uber became wealthy without owning any taxi, no significant asset base, and suddenly it felt that by investing and owning autonomous vehicles; its greatness could become grander…

We see same in many businesses: as a start-up, you tend to be nimble, agile, offering unrivalled customer experience. Then when the money becomes plenty, you get entangled and muddled in unnecessary and suffocating bureaucracies; making sure that all the good things you were known for would be forgotten.

Well, when you are poor, there is a tendency to appear humble and gentle, and when you suddenly become rich? You know how most end up misbehaving.

Maybe Uber still have time to rediscover its root, and then shun any form of ‘misbehaviour’ in its business model.

Uber Should Exit Self-Driving Business

A great worker does the best possible job, at the shortest time possible, on something with the highest impacts.