Reports that Jumia, an ecommerce giant with major operations in many African countries, plans to list on the New York Stock Exchange (NYSE) has had many tech entrepreneurs and media houses in Africa buzzing. For the startups, it is that feeling of “One of our own is well on its way to winning the coveted price of a unicorn”.
However, the revelation that Jumia is filing on NYSE as a German company, and not as a Nigerian company where it first launched its operations, has called to question the company’s ‘Africanness’.
For startups on the continent there is every reason to be inspired by Jumia’s IPO move. Portraying Jumia as an authentic African startup is a morale booster for startups who aspire for IPO status, although, one may wonder why Jumia is not raising its first IPO in any of the stock exchanges on the continent.
Maybe it does not matter
There is some merit to Jumia’s claim to Africa. First the company is driven by an African focused mission to improve the quality of life on the continent by leveraging technology to deliver innovative, convenient and affordable online services to consumers. Second, it was launched in Nigeria’s commercial capital, Lagos in 2012 and has since expanded to 14 other countries including Egypt, Morocco, Ivory Coast, Kenya, South Africa, Uganda, Tanzania, Ghana, Cameroun, Algeria and Tunisia. In essence, 100 per cent of Jumia’s customers are in Africa.
“Jumia is a German company founded by two French men (Jeremy Hodara and Sacha Poignonnec) in Africa,” Adedeji Olowe, founder of Trium told BusinessDay. “Which nationality to give Jumia shows the conundrum of the connected society, and frankly, does it matter? For those who think it is disingenuous to call it an African company, just ask in reverse – is a company formed by a Nigerian but registered and operating out of America a Nigerian company?”
Flutterwave and Paystack are both Delaware LLC companies (a type of business entity that is created by filing the proper Certificate of Formation with the Delaware Secretary of State, in the US). Andela also falls into the category of companies that were founded outside Nigeria but operates exclusively in Africa. However in the case of Andela, one of the six founders is a Nigerian.
Segun Adeyemi, founder of Amplify Pay agrees with Olowe. On a LinkedIn post he noted that the debate whether Jumia is an African company or not has become tiring. He paints a scenario:
“Let’s ignore the entire legal infrastructure, tax, regulatory, PR, etc narratives for a while. If as a Nigerian, I visit the US, identify a gap and see a market opportunity there, I set up a company to fill the gap. I register the holding company in Nigeria but have an operational head office in America for on the ground execution. I situate my tech team in Kenya and put up my executive team (made up of mostly Nigerians and a few Americans) in London. My investors are global, but my customers are 100 per cent Americans. Is the company a Nigerian or an American company? What makes a company African or Nigerian?” Adeyemi said.
Maybe it does matter
Apart from being founded by two German nationals and is part of the Rocket Internet group based in Berlin, Jumia also has its headquarters in Germany, its technology centre is in Portugal while its top management have their offices in Dubai.
Ndubuisi Ekekwe, chairman of Fasmicro, a technology company said Jumia’s nationality does have implication for startups founded in Africa. In recent times, the quest for a first African unicorn has grown with predictions varying from one tech startup to another on the continent. Ekekwe argues that by filing as a German company, Jumia does not meet the “key factor” to fly the continent’s flag as the first unicorn, “because it is not African, legally.”
Victor Asemota, African partner, Alta Global Ventures suggested in a Twitter response that companies like Jumia may be leveraging the designation “African” company because it is a “good brand that sells outside Africa”.
Bosun Tijani, co-founder of the Nigeria’s premier innovation hub, Co-Creation Hub (CcHUB) says the trend where companies like Jumia are used as poster child for tech businesses in Africa does not favour startups on the continent.
“We are simply mortgaging the future of the continent all over again,” says Tijani. “We truly need people to speak to this issue at the top. I keep talking about it. The next generation won’t forgive us.”
Rebecca Enonchong, founder and CEO of AppsTech said key identifiers of an African company include African founders, African top management, African tech team, head office in Africa etc.
“Even Andela does not describe itself as an African company,” Enonchong said.
What really matters most?
Yele Badamosi, founder of Microtraction and director at Binance said it is not the origin of Jumia but the value the company is creating on the continent that should be the focus.
“The question to ask is, “Are these companies creating value and solving a problem on the continent? Are they creating jobs and economic opportunities on the continent?” That is more important than the semantic definition of an African company,” says Badamosi.