Four months after cutting nearly 65% of its staff, Konga, one of the leading e-commerce companies in Nigeria. Has been acquired by Zinox Company. Zinox is a local technology firm that manufactures and distributes computers and also manages data centers.
The procurement of konga by Zinox takes over konga’s asset. As well as its online mall which actively attends to over 10,000 merchants. Zinox also takes proprietorship of Konga-in-house delivery and Logistics Company including KongaPay its mobile payment solution and KOS-Express.
The actual total procurement price remains undisclosed. Based on what Zinox spokesman Ayogu Gideon stated the cash-for-equality deal was “way higher” than the $10 million price that has been widely noted. Africa’s most valuable company Naspers and a Swedish investment firm, Kinnevik made a great deal with Zinox to buying out ownership stakes. It is dubious that both investor made a profitable exit with Konga supposed to have raised at least $75 million since launch in 2012. Though Naspers and Kinnevik supported to some degree that is, neither Naspers and Kinnevik responded to the action prompted.
Procuring Konga is not Zinox’s first move in the Nigerian e-commerce space. It was told that, in 2008 Zinox launched BuyRightAfrica, which was an e-commerce platform. Though operated fine during the start, but after struggling—paying less attention to the issues of online payment options at the time—it stopped operations in 2013. The company was affiliated with Yudala, which is another local e-commerce company owned by the son of Zinox’s CEO. The spokesman of Zinox Ayogu made it known that Zinox does not own shares in Yudala.
Perse, the expectations that both companies will both merge will not happen. Ayogu reports that, Zinox nowowns 99% of Konga.
In Nigeria where business reality betrays the vast population size with 100 million internet user base, Konga’s operational struggles was not easy at all, ever since their startups phase.
As at 2016, Konga’s current customer base was 184,000 which is close to 1% of the country’s population. (statistics based on Kinnevik’s second quarter report that very year). Jumia which is owned by Rocket Internet became Konga’s close rival, struggled too in the tough market.
The inability of konga, one of the continent’s best funded startup to actually deliver returns on investment for both Naspers and Kinnevik proves the notion— that why there is a lack of profitable exits from African startups is because there is no proper funding—to be unreasonable. Specifically, for Naspers running internet business in Nigeria has proven difficult with several risks. As well as online marketplaces, classifieds and messaging apps, proving to be more misses than profitable hits.
Zinox is strong towards developing and improving Konga in such way that it could be expanded into other countries in Aftrica by 2019. Shola Adekoya, Konga new CEO, comfirmed that he will be staying on as CEO under the company’s new ownership. Adekoya will likely be looking to associate on Konga’s previous business model changes.
For instance, as at Nov. 2017, Konga stopped its warehouse service and pay-on-delivery option mainly due to the regularity of cancelled orders and security challenges often faced by delivery personnel.