Ethiopia bars diaspora and foreign investors from first-ever IPO
Ethiopia has excluded diaspora citizens and foreign nationals from its initial public offering (IPO) for Ethio Telecom, a state-owned telco with a 95% market share. The country’s first-ever bourse, the Ethiopian Securities Exchange (ESX), is expected to start operations this month. The government plans to raise $255 million by selling 10% of the telco giant through Ethiopian Investment Holdings (EIH). However, the decision to restrict diaspora and foreign investors from Ethio Telecom’s IPO could slow the country’s development of open capital markets, which has been part of Prime Minister Abiy Ahmed’s plan to liberalise the financial sector and modernise the economy. “The offer is being made only to Ethiopian citizens who are physically present in Ethiopia. The offer is not available to any other jurisdiction outside of Ethiopia,” Ethio Telecom said in its investor prospectus. Ethio Telecom did not immediately respond to a request for comment. A capital markets expert told TechCabal that Ethiopia could limit foreigners’ involvement in telco, which it still considers critical and strategic, even as it opens for foreign capital. For decades, Ethio Telecom enjoyed a monopoly in the country’s telco market before the entry of a Safaricom-led consortium that started operations in 2022. The move was meant to open the country’s telecommunication sectors and increase access to services in remote regions. “Despite the entry of Safaricom, Ethio Telecom remains the dominant player in the Ethiopian telecommunications market, with an estimated market share of subscribers of 94.5% as at 30 June 2024, attributable to the strong customer satisfaction and high-quality services and products offered nationwide,” Ethio Telecom said. EIH, the Ethiopian sovereign wealth fund, also plans to list 10 of its biggest investments, including the Ethiopian Shipping and Logistics Services and Ethiopian Insurance Corporation. In April 2024, ESX announced it raised $26.6 million from investors to launch the bourse, which is expected to list over 10 companies by the end of 2025. The bourse is projected to attract foreign investments in sectors controlled by the state, such as insurance, banking, and telecoms. The Nigerian Exchange Group (NGX), with a 5% stake, is one of the top institutional investors in the bourse. Others are FSD Africa, a UK-backed non-profit financial institution, and Trade and Development Bank Group (TDB), the financial arm of the COMESA trade bloc.
Read More
👨🏿🚀TechCabal Daily – Glo hit hard
In partnership with Lire en Français اقرأ هذا باللغة العربية Good morning! We hope our Kenyan readers enjoyed the Mashujaa day celebration yesterday. We celebrate the hero in you! Hackers hit Nigeria’s third largest telco GTBank increases salaries by 40% but still spends way less than its peers OmniRetail acquires Traction Apps IHS secures $439 million loan The World Wide Web3 Opportunities Cybersecurity Hackers hit Nigeria’s third largest telco Image Source: Adaeze Chukwu/TechCabal Some of the biggest technology stories this year have been around cybersecurity. In May, a First Bank employee diverted over ₦40 billion ($24.4 million) to 98 bank accounts he controlled. In July, Hope PSB, a Nigerian microfinance bank, was hit by a ₦6.5 billion ($3.9 million) cyberattack. Several Nigerian fintechs were also hit by attacks this year. Nigeria cloud providers were not spared from the onslaught. In July, a Nigerian cloud provider was hit with a ransomware attack. And now, in what might be one of the most significant cybersecurity stories this year, Nigeria’s third-biggest mobile network provider Globacom was hacked, with staff members denied access to emails and other internal communication tools for months. In a year-long investigation, a scenario emerged showing hackers likely gained access to Globacom’s Domain Name System (DNS) in July 2023. Read about it here. Read Moniepoint’s Case Study on Funding Women After losing their mother, Azeezat and her siblings struggled to keep Olaiya Foods afloat. Now, with Moniepoint, they’re transforming Nigeria’s local buka scene. Click here for a deep dive into how Moniepoint is helping her and other women entrepreneurs overcome their funding challenges. Banking GT increases salaries by 40% but still spends way less than its peers Image Source: Google In his 2023 letter to shareholders, Segun Agbaje, the CEO of GTCO, boasted about the bank’s cost-effectiveness. After raising staff salaries by 40% across the board in September, the bank will still spend less on salaries than its other Tier-1 peers. If we apply a 40% increase to the bank’s 2023 personnel expenses, GTBank’s new wage will be around ₦63.1 billion ($38.7 million) annually. That is still at least ₦100 billion ($61 million) less than First Bank, Access Bank, and UBA spent on salaries last year. Much of this cost efficiency is due to GT’s fewer employees—3,300—which is less than half of First Bank and Zenith Bank’s employees. An assistant banking officer (ABO), only one level above entry-level, now earns ₦720,000 ($442), ten times the country’s new minimum wage. I spoke to four GT employees for this story, and while they were surprised about the raise, they were all happy to tell me about the increase. One even promised me a round of drinks at any bar. GTBank’s recent salary raise could spark a ripple effect across Nigeria’s banking sector, prompting other Tier-1 banks to consider similar raises. In an industry where employees often move between banks for better pay, competitors may feel pressured to adjust their compensation packages to retain top talent and remain competitive. Issue USD and Euro accounts with Fincra Whether you run an online marketplace, a remittance fintech, a payroll, a freelance platform or a cross-border payment app, Fincra’s multicurrency account API allows you to instantly create accounts in USD and EUR for customers without the stress of setting up a local account. Get started today. M&A OmniRetail acquires Traction Apps Image Source: TechCabal OmniRetail, a B2B e-commerce startup, has acquired Traction Apps, a payment provider for small businesses. Both parties did not disclose the terms of the acquisition. Traction co-founders Mayowa Alli and Dolapo Adejuyigbe will stay on as Director of Technology for Payments and Director of Operations for Payments respectively. The integration of both companies is expected to be completed by 2025. OmniRetail offers informal retailers access to cheaper inventory through its partnerships with fast-moving consumer goods (FMCG) manufacturers and collecting bulk orders from retailers. With the acquisition of Traction Apps, OmniRetail will be eyeing a soft expansion into more SME markets. Traction Apps provides business management services for SMEs. Retailers that want to accept cashless payments can use the company’s software point-of-sale (softPOS) technology or order a hardware POS. By integrating Traction Apps’ softPOS technology with its own embedded finance app, OmniPay, OmniRetail can better serve the SME market by offering cashless payment solutions while upselling its e-commerce platform to help retailers manage inventory and get loans. Traction Apps has over 19,000 users and charges about 4–8% on transactions that customers make across its payments, lending, and software products. Acquiring Traction will also provide OmniRetail with another source of revenue. While issuing hardware POS could lead to an overlap with Moniepoint, OmniRetail will likely consider pushing Traction Apps’ softPOS technology, which could give it an edge to reach more SME markets. However, this will require customer education to ensure adoption. Introducing Pay with Pocket on Paystack Checkout Paystack merchants in Nigeria can now accept payments from PocketApp’s 2 million+ customers. Learn more → Telco IHS Towers secures $439 million loan Image Source: Google IHS Towers, which keeps over 16,000 cell towers buzzing across Africa, has secured a $439 million loan to refinance its debt and expand operations across key markets. 58% of the funding is in US dollars while the rest is in South African Rand. The cell tower operator will use the cash to pay off a $430 million IOU from October 2022 which is not due until 2025. But by refinancing early, IHS is hoping to snag a better deal and dodge higher interest rates down the line when it goes looking for another loan. IHS is also reworking deals with MTN Nigeria, getting the telco to pay for its tower contracts in local currencies and US dollars. IHS is safeguarding itself against further financial hits that have seen the company lay off employees this year. This is part of IHS’s ongoing effort to reduce its reliance on dollar-denominated debt, a key move considering how Nigeria’s currency devaluation tanked their profits in 2023. Yet, the IHS is still walking a
Read MoreIHS secures $439m loan to refinance debt and support expansion
IHS Towers, Africa’s largest telecom tower company, has secured a new $439 million loan to manage currency risks and support its operations across multiple regions. Almost half of the loan is in South African Rand, while the other half is in USD ($255 million). IHS Towers will use the loan to pay off a $430 million debt from October 2022 which was set to mature in 2025. By refinancing early, the company may benefit from better terms, potentially lowering interest costs and extending its debt repayment timeline. This transaction is described as “leverage neutral,” meaning it won’t significantly change the company’s debt-to-equity ratio. Both parts of the loan come with a 4.50% interest rate. The US dollar portion is tied to the three-month SOFR (Secured Overnight Financing Rate), and the South African Rand portion is tied to the three-month JIBAR (Johannesburg Interbank Average Rate). These rates fluctuate with the market, which could impact the overall cost of borrowing for IHS Towers. The entire amount is a bullet-term loan, meaning IHS will repay the full amount at the end of the term rather than making periodic payments. This gives the company immediate access to the funds, but it must make a lump-sum repayment after five years. “This is a group-level financing and therefore has no direct impact on any particular market,” an IHS Towers spokesperson told TechCabal. The company laid off 100 employees in mid-2024 as devaluation in its primary market, Nigeria, squeezed its margins. Its losses ballooned to $1.9 billion in 2023, up from $469 million in 2022. IHS has been looking to reduce its dollar exposure. It renegotiated tower contracts with major clients such as MTN Nigeria, collecting fees in USD and local currency as well as adding a component for diesel costs. IHS Towers lays off 100 employees as devaluation in Nigeria erodes profits
Read MoreOmniRetail acquires payment provider Traction to enhance financial solutions
OmniRetail, a Nigerian-based B2B e-commerce startup recognised as the Financial Times’ fastest-growing African company, has acquired Traction Apps, a payment provider and inventory management solution for small businesses in Nigeria. This move aims to boost financial services and trade solutions for small and medium-sized enterprises (SMEs) within the fast-moving consumer goods (FMCG) sector. By acquiring Traction’s merchant POS services, OmniRetail will integrate Traction with its payment platform Omnipay. The newly combined entity is projected to process over ₦1.8 trillion annually and facilitate loans worth ₦200 billion per year. “This acquisition is a testament to the synergies we have built with Traction. What started as a partnership to integrate Traction’s POS into OmniPay for card payments has grown into a full merger. Together, we will simplify payments, credit access, and loyalty solutions for retailers, helping them thrive in an increasingly digital market”, Rustagi Deepankar, CEO of OmniRetail said. The transaction was facilitated by Venture Platform, an investor in both OmniRetail and Traction. Both teams declined to disclose the transaction value of the deal. However, as part of the acquisition, OmniRetail will onboard both debt and equity from Traction, allowing Traction’s investors to benefit from the continued growth of the combined entity. “This will allow us to scale our solutions and accelerate our vision of simplifying payments at the retail level. OmniRetail’s ecosystem will enable us to bring our innovative solutions to a wider audience, benefiting even more small businesses across Nigeria and beyond”, Mayowa Alli, co-founder of Traction said. Founded in 2020 by Mayowa Alli and Dolapo Adejuyigbe, Traction offers payment acceptance, lending, and retail software solutions tailored for small businesses. Its founding team will join OmniRetail’s leadership, focusing on growing OmniPay, integrating solutions, and driving product development. The full integration of Traction with OmniPay is expected to be completed by the end of Q1 2025, with enhanced services rolling out to customers thereafter.
Read More
SASSA November payment dates and modalities for 2024
The South African Social Security Agency (SASSA) payment schedule for November 2024 is now available to beneficiaries. Do you receive any form of SASSA grant? It’s essential to take note of the SASSA October payment 2024 dates if you do. The agency continues to focus on ensuring that payments get to the right individuals, at the right time, and in the right place. For November 2024, the payment schedule has an outline, and this article will break down the dates and the payment modalities to help you stay informed. SASSA payment dates for November 2024 The SASSA November payment 2024 will undergo disbursement across three main categories: Older Persons’ Grants: The payment date for older persons is for 5 November 2024. This applies to all individuals who are beneficiaries of the Older Persons’ grant. Disability Grants: Individuals receiving disability grants will get it the following day, on 6 November 2024. Children’s Grants:The payments for children’s grants will get to them on 7 November 2024, which includes all child support grants, foster care grants, and care dependency grants. These payment dates ensure that all beneficiaries will have their funds in early November. allowing them to manage their expenses accordingly. Payment modalities Here are a few key points to keep in mind for the SASSA October payment 2024: Early collection: You do not have to collect your grant on the exact day it is released. Payments will remain available in your account until you access them. So there is no rush to withdraw funds on the first day. ATM withdrawals: Using ATMs or retail stores to withdraw funds is encouraged. It helps reduce congestion at physical SASSA pay points. Verification of details: Always ensure that your personal details, including banking information, are up-to-date. You avoid any delays or issues with your payment this way. Ensure you appeal as soon as possible if you notice a payment delay. Final thoughts The SASSA November payment 2024 schedule is designed to ensure that grants are distributed efficiently and without hassle. Beneficiaries are encouraged to stay informed of the payment dates and choose the most convenient method for collecting their funds. SASSA remains committed to ensuring that every eligible person receives their grant securely and promptly. For further updates, keep an eye on the official SASSA website or contact the agency via their helpline for any queries related to the November 2024 payments.
Read More
GTBank increases staff salaries by 40% but still has the lowest personnel cost among Tier-1 banks
GTBank, Nigeria’s most cost-efficient commercial bank, quietly raised staff salaries by 40% in September 2024, responding to the ongoing cost of living crisis, four GTBank employees told TechCabal. “There was no prior communication before the increase. Even though there were speculations, I was not expecting the increase,” an assistant banking officer (ABO) who now earns ₦720,000 ($442) told TechCabal. An ABO is just one level above entry-level staff in GTBank’s employee structure, which has fewer staff levels than other Tier-1 banks. The bank, which prides itself on its low cost-to-income ratio, spent only ₦0.25 to make ₦1 in 2023 as it maintained its stance as Nigeria’s most profitable Tier-1 bank. The salary raise will do little to affect GTBank’s standing among Tier-1 banks, as it now spends ₦0.26 to make ₦1. In 2023, the bank spent ₦45.1 billion ($27.7 million)* on salaries, at least three times less than other Tier-1 banks. Despite raising salaries by almost half, which brings GTBank’s total personnel cost to ₦63.1 billion ($38.7 million), the bank still has the cheapest salary bill among other Tier-1 banks, according to the 2023 financial reports of all Tier-1 banks. GTBank did not immediately respond to a request for comments. President Tinubu’s economic reforms, including two currency devaluations and the removal of fuel subsidies, have caused the naira to lose nearly 70% of its value against the dollar and driven inflation up to 30%, putting significant pressure on Nigerian pockets. While the bank is responding to these economic changes, GTBank’s salary raise could have been made to prevent other banks from poaching employees. The bank doubled the salaries of its technology team in 2022 when multiple employees left GTBank for other banks and countries. The technology team still earns more than other employees in other divisions; a technology employee on the same level as an ABO earns roughly ₦1 million ($613), claimed one person with direct knowledge of the bank’s pay scale. The salary raise affected all 3,300 GTBank employees, a shift from the common banking sector practice where only head office staff enjoyed such benefits. This is the first salary increase in 2024 but the second in two years for GTBank staff. *Exchange rate used: $1 = ₦1630 The Globacom breach: How hackers held Nigeria’s telco giant hostage
Read More
New 2024 recruitment at the Nigeria FIRS and application details
The Federal Inland Revenue Service (FIRS) is opening its doors once again, providing an opportunity for young professionals across Nigeria. This news was made available via the official X handle of the tax body on the 21st of October, 2024. Are you passionate about contributing to Nigeria’s tax system and working within a reputable institution? The FIRS recruitment in Nigeria 2024 presents a chance to take your career to the next level. FIRS is actively seeking qualified individuals for the role of Tax Officers (Officer I and Officer II) in multiple locations around the country. If you have strong problem-solving abilities, analytical skills, and can communicate effectively, this could be the perfect role for you. Key qualities the 2024 FIRS recruitment in Nigeria requires The 2024 FIRS recruitment in Nigeria aims to attract candidates who exhibit the following qualities: Integrity and professionalism. Strong analytical thinking. Effective communication and problem-solving skills. Courage, ambition, and a desire to serve Nigeria. Working with FIRS means you will be joining a team that is integral to maximising the country’s revenue and simplifying tax processes. This is a role that calls for dynamic individuals who are ready to face challenges head-on and make meaningful contributions to Nigeria’s financial infrastructure. How to apply for FIRS recruitment in Nigeria 2024 The application process for FIRS recruitment in Nigeria 2024 will soon be made available on the official FIRS website. Here is a step-by-step guide on what to expect: Visit the FIRS official website: Candidates should regularly check the FIRS website for the release of the official application details, including deadlines and specific instructions. Review requirements: Once the application details are posted, ensure you review all requirements for eligibility. You will need to prepare relevant documents such as your CV, academic qualifications, and any other required paperwork. Submit your application: When the portal opens, candidates will be expected to submit their applications online by filling out the form, attaching necessary documents, and providing personal details. Monitor application status: After submission, keep checking the FIRS recruitment portal or email for updates regarding the next stages of the recruitment process. Why work at FIRS? Working at the Federal Inland Revenue Service provides a host of career benefits: Professional development: Being part of a team that plays a pivotal role in Nigeria’s economy means constant growth and learning. Competitive benefits: FIRS offers its employees excellent compensation packages. Job security: The role of a Tax Officer at FIRS provides long-term job security within one of Nigeria’s most important federal institutions. Final thoughts FIRS recruitment in Nigeria 2024 promises to be highly competitive, so it’s essential to stay informed. Regularly check the official website, reputable platforms like TechCabal, and FIRS social media channels to ensure you don’t miss key updates about the application timeline and requirements.
Read More
The Globacom breach: How hackers held Nigeria’s telco giant hostage
On the night of July 13, 2023, staff of Globacom—the Nigerian telecoms company that disrupted the industry in 2003 with ”per second” billing—could not access their emails or use work applications. Employees on the night shift didn’t panic because these glitches had become a pattern for at least two weeks. They spent the time talking, unaware this wasn’t another routine glitch. The July 13 disruption was the beginning of a major cyber attack that left Globacom’s staff unable to do any work. The scale of the disruption was impossible to ignore. Emails could not be sent or received, and vital work applications were inaccessible, leaving employees across multiple departments unable to get work done, said nine Globacom employees who asked not to be named. Image credit: Adaeze Chukwu for TechCabal The customer service team was the first to feel the heat. “Calls from customers were either not coming through or were being dropped,” said one person with direct knowledge of the matter. “We could not interact with customers.” Six Globacom employees confirmed customers could not call or email customer support for at least three weeks. One user posted on X on July 16, “I’m unable to reach Glo through emails, calls, or customer service numbers. The answer is always, ‘invalid number, or your call cannot be completed.” Image credit: Adaeze Chukwu for TechCabal Internally, messaging tools like Microsoft Teams went down, severing communications between Globacom’s teams. The Human Resource Management Information System (HRMIS) was unreachable, halting basic administrative functions like leave requests, overtime logs, and payroll processing. “We were coming to the office every day to sit around,” said an employee, describing work weeks with no updates from leadership or timeline for when systems would be restored. The worst news came later: according to three people familiar with the incident, hackers also accessed customer data. Conversations with over 30 people who asked not to be named discussing a sensitive company matter, revealed a picture of hackers likely gaining access to Globacom’s Domain Name System (DNS) in mid-2023. The Nigerian Communications Commission (NCC) and the National Information Technology Development Agency (NITDA) both confirmed the attack on Globacom but did not share specifics. Nigerian cloud provider hit with ransomware attack as government agency works to “swiftly resolve incident” According to a cybersecurity expert who requested anonymity, the attack on Globacom had been weeks in the making. The intermittent outages Globacom experienced leading up to the July 13 attack weren’t technical glitches–they were tests. The method of attack suggested a Domain Name System (DNS) hijack–a type of attack that redirects traffic from legitimate websites to malicious ones. In Globacom’s case, according to the expert, the hackers likely infiltrated their DNS, effectively gaining control over email servers and the work applications connected to them. “For four months, they didn’t know what happened and still don’t know,” said one former Globacom executive who asked not to be named. “Any customer data that was exposed has not been recovered, so there are many customers whose data might be sitting in the hacker’s hands.” According to the Nigeria Data Protection Act 2023, Globacom is required to notify the telecoms regulator, the Nigerian Communications Commission (NCC), “within 72 hours of becoming aware of a breach which is likely to result in a risk to the rights and freedoms of individuals.” Globacom didn’t report it; the commission approached them instead. “The attack was not reported by Globacom initially, but the Commission, through its Cybersecurity Emergency Response Teams (CERT), had monitored the impending attack and brought it up [with the company],” the NCC told TechCabal in a statement. The Data Protection Act allows the Nigeria Data Protection Commission (NDPC) to impose penalties on companies that fail to comply, including a fine of up to ₦10,000,000 or 2% of the company’s gross revenue if it’s a data controller of major importance. The NDPC did not respond to multiple requests for comments. Hackers like those responsible for the attack on Globacom are motivated by financial gain and the opportunity to expose vulnerabilities in large organisations. Four Globacom employees claimed the hackers demanded a ransom to restore access to the company’s systems. While the exact amount demanded remains unclear, Globacom did not pay. Globacom has not responded to three requests for comments since TechCabal first reached out in September 2023. With no internal communications tools, teams began communicating on Whatsapp, which continued until early 2024, six people with knowledge of the situation said. TechCabal saw several of those internal company messages. When TechCabal contacted three senior managers in September 2023 and requested their email addresses, two asked to speak on WhatsApp. The third person said they had “technical issues” with their email. “Usually, my account manager verifies my transactions via email for record purposes.” said one enterprise partner who has worked with Globacom for three years said. “In July 2023, my account manager said Globacom was having issues, and my transactions were verified on Whatsapp; I couldn’t reach my account manager through email for a month.” As the company continued to be locked out of its email, it moved to webmail, two people with direct knowledge of the situation said. The cyber attack on Globacom wasn’t an isolated incident–it’s part of a growing trend across Africa, where companies and institutions face unprecedented attacks. According to recent data from Check Point, African companies now face an average of 3,370 cyber attacks per week, the highest in the world. The report also showed a 74% increase in cyber attacks worldwide, showing that these attacks have become more sophisticated. In August 2023, another Telco giant, MTN Nigeria, experienced a DDoS attack. The NCC told TechCabal in a statement that “MTN systems proved to be robust as customer-facing services and customer data was not compromised as a result of the incident; hence, there was no need for the Commission to intervene.” According to Wikipedia, a Denial of Service (DoS) or DDoS attack is like a group of people crowding the entry door of a shop, making it hard for
Read MorePaidHR in talks for $1.5million seed round; introduces new cross-border payroll
PaidHR, a Nigerian startup that helps businesses manage their HR functions, is in talks with investors to raise a $1.5 million seed round. The company, which claimed it processed ₦11 billion in salaries in 2023, raised $500,000 in February 2023 from investors like Zrosk IML, Zedcrest Capital, Microtraction, Expert Dojo, and Resilience 17. Founded in 2020, the startup is raising new funding to expand into new markets and scale its new product: a cross-border payroll that allows employees to be paid in multiple currencies. The cross-border payroll, which supports 49 currencies, will allow companies with employees in different countries to pay in their local currency. It is an important part of PaidHR’s expansion strategy. PaidHR’s cross-border payroll solution features a wallet that allows employees to convert their pay into any preferred currency and spend directly. To ensure regulatory compliance, PaidHR doesn’t hold customer deposits but partners with licensed financial institutions for transactions. PaidHR will earn transaction fees. “We are building HR management with an African context and some of our users have requested this feature,” said PaidHR CEO Seye Bandele. “We are building a cross-border solution but for the employed.” Pade processed ₦11bn in salaries in 2023 after landing Flutterwave as client PaidHR’s cross-border payroll adds to its suite of product which helps organizations with onboarding, HRIS, payroll, compliance, performance management, asset management, disciplinary actions, and exit processes for their employees. Last year, the startup introduced Earned Wage Access (EWA) which allows employees to access a portion of their earned wages before payday. “Before creating the wallet feature, we thought of a way to help users spend from where they earn,” Bandele said. The introduction of cross-border payroll will also serve as a buffer for Nigerians—who account for 80% of PaidHR’s clients—seeking to hedge against the naira by converting their salaries to FX of choice. The nation’s currency has been devalued by 70% since May 2023 forcing citizens to find alternatives. The new feature is expected to contribute significantly to PaidHR’s revenue. The startup, which currently serves 20 businesses with 60,000 employees, claims it has processed over ₦20 billion in salaries since the start of the year. The company is looking to expand into three new markets by Q2 next year.
Read More
Next Wave: Kenya’s silent e-commerce takeover
Cet article est aussi disponible en français <!– In partnership with –> First published 20 October, 2024 In the past decade, malls have become dominant retail hubs in Nairobi, Kenya’s capital, promising all-under-one-roof shopping, dining, and entertainment experiences. For real estate developers, the burgeoning urban middle class and foreign ex-pats have encouraged them to build more extensive and upscale malls, each promising a better experience. The belief that malls are the future of shopping has attracted investors and banks.p> The COVID-19 pandemic and the collapse of major supermarkets like Nakumatt and Tuskys–which were anchor tenants for most shopping malls—slowed the sector momentarily. A struggling middle class, the rise of e-commerce, and the fact that there were too many malls contributed to a footfall decline in shopping centres, with some, like Rosslyn Riviera in Nairobi’s diplomatic district of Gigiri, offering rent waivers of up to one year. Between 2020 and 2022, VC-backed e-commerce startups like Copia, Marketforce, iProcure and Sky.Garden promised to kill in-person shopping. In response, retail stores like Naivas, Quickmart, and Carrefour–the three biggest supermarket chains–developed online shopping apps. Most of the champions of online marketplaces, like Copia and Marketforce, have since been buried in dust and shadows, giving a false impression that e-commerce has failed to take off in Kenya. Next Wave continues after this ad. PalmPay is a leading fintech platform focused on driving economic empowerment across Africa. Trusted by over 35 million Nigerians and 1.1 million businesses. Start enjoying a 99.9% transaction success rate with Palmpay. Sign up here. According to the Central Bank of Kenya’s Financial Stability Report, Kenya’s brick-and-mortar retail could be in a slow decline. For two consecutive years to 2024, the country’s real estate has remained subdued because of low demand for commercial and residential units as merchants shift to online selling and organisations consider remote work. The sale and rental of retail and office spaces slowed in 2023 and the first half of 2024 compared to 2022, CBK said. Investors are now shunning big real estate developments like malls, even as landlords try to ensure they have a future. The mall model has been signing up one or two anchor tenants to bring foot traffic and rent remaining spaces to smaller retailers keen to capture hundreds of shoppers who visit daily. This model has declined as small retailers shift to selling directly from home. Malls come with high overhead costs–rent, utilities, and maintenance–which weigh heavily on small business owners. One small retailer told TechCabal that selling on social media platforms like WhatsApp and Facebook cuts all these costs and helps sustain profits. Social media platforms have become popular marketplaces where retailers can list products and interact with buyers at a much lower price than maintaining a physical mall outlet. Many small retailers are finding success in building direct relationships with their customers. Selling from home allows them to offer personalised, one-on-one service, which is highly valued. Customers appreciate the flexibility of home deliveries, a level of attention they often don’t receive in mall settings. With increased smartphone penetration and the convenience of mobile money platforms like M-Pesa and Airtel Money, Kenyans are becoming more comfortable with online shopping. Kenya’s logistical network, particularly outside major cities like Nairobi, is underdeveloped, making it costly to deliver products to customers. Unreliable postal services make deliveries slow and expensive, which established e-commerce platforms like Jumia and Kilimall struggle with. However, social sellers reach customers in regions where last-mile delivery remains challenging. Next Wave continues after this ad. Join us at the Bluechip AI & Data Summit 2024 on December 2nd in Lagos! Explore the future of Africa through AI and data-driven solutions. Connect with industry leaders, attend expert panels, and discover innovations reshaping finance, healthcare, and beyond. Don’t miss this opportunity. JOIN US While challenges such as trust issues and unreliable delivery systems remain, the growing influence of social media selling is slowly eroding in-person shopping. Kenyan consumers are price-sensitive, and many prefer to buy from local markets where they can bargain and inspect products in person. Social sellers have perfected this, giving customers room to negotiate in chats, an experience that mainstream e-commerce platforms do not offer. The return and warranty policies of big e-commerce platforms have been criticised for being cumbersome. Social sellers give customers the option of returning immediately to maintain the relationship with the buyers. As malls struggle to remain relevant, the future of retail in Kenya lies in smaller, more flexible operations. To stay competitive, small retailers have turned to technology, social media, and home-based businesses. While the death of shopping malls is not absolute, it reflects a broader global trend where shoppers seek convenience and business owners push to reduce operational costs. Some outdated shopping centres in downtown Nairobi have been converted to pick-up points, renting shelves to sellers. Adonijah Ndege, Senior Reporter, TechCabal. We’d love to hear from you Psst! Down here! Thanks for reading today’s Next Wave. Please share. Or subscribe if someone shared it to you here for free to get fresh perspectives on the progress of digital innovation in Africa every Sunday. As always feel free to email a reply or response to this essay. I enjoy reading those emails a lot. TC Daily newsletter is out daily (Mon – Fri) brief of all the technology and business stories you need to know. Get it in your inbox each weekday at 7 AM (WAT). Follow TechCabal on Twitter, Instagram, Facebook, and LinkedIn to stay engaged in our real-time conversations on tech and innovation in Africa. If you liked this edition of Next Wave, please share with your friends. And feel free to reply with thoughts and feedback. We welcome those. 18, Nnobi Street, Surulere, Lagos, Nigeria View in Map You received this email because you signed up on our website or made purchase from us.If you know longer wish to recieve these emails, please unsubscribe
Read More