In Africa, eCommerce Is Suddenly Big Bucks

In a huge investment coup for an African company, representing one of the largest technology company fundraising tallies on the continent, Africa Internet Group has garnered €225 million from a series of investors.

Africa Internet Group is the owner of the region’s largest eCommerce company, Jumia. The latest fundraising, said the Financial Times on Wednesday night, comes from a consortium of backers including Goldman Sachs, with other investors having been with the company for a while, including MTN, a telecom firm based in South Africa, in addition to Rocket Internet, a startup incubator based in Germany.

Rocket had been a founder of both Africa Internet Group and Jumia back in 2012. Since the founding, Jumia now operates beyond its initial purview of Nigeria, and has a presence in Egypt, Ghana, Ivory Coast and Uganda, among other nations.  The newest fund flows will be earmarked to boost the company’s presence in those markets and enter new ones.

The latest investment, said The FT, brings the valuation of the firm to $1 billion, which would bring the firm to the vaunted pantheon of tech unicorns.

Africa Internet has been a favorite target of fund flows recently, as just a few weeks ago the firm gathered up €75 million from French Insurance giant Axa, which got, in return, an 8 percent stake in Africa Internet.

Certainly the growth profile fits what would be of interest to private investors: Total top line for the group were up a heady 282 percent year over year in 2015 though profits have proved elusive (yet the firm targets black ink on the bottom line within the next three to five years).

In an interview with The FT, Africa Internet Group’s co-chief executive Sacha Poignonnec said that his firm and Jumia have “huge growth potential” to be buoyed by an increasing migration of shoppers in Africa moving online to do their buying.  One market that is in the firm’s sights: the Democratic Republic of Congo, with 68 million potential customers.  And, an IPO may be in the offing, said the executive.

Looking at the overall landscape, it seems there is indeed potential for hyper growth in eCommerce throughout the continent.  One estimate comes from McKinsey, noted The FT, where only a third of the population across Africa has Internet access – yet that number should grow strongly to as much as 50 percent within the next decade, buoyed by smartphone owners that should number as many as 360 million, said McKinsey.

The latest funding for the eCommerce play is a huge push beyond anemic investments that had marked the region within the last year, with eCommerce firms in Africa raising a paltry $18 million in 2015.