Foreign-owned start-ups are driving an African tech revolution — and prompting old fears of exploitation
Credit: Paul Garland © Paul Garland
In 1886, barely a year after Europe’s great powers met in Berlin to carve up the continent of Africa, Queen Victoria granted Sir George Goldie a charter for his Royal Niger Company. The charter gave Goldie, a moustachioed, waistcoated gentleman of Scottish descent, the right to administer the Niger Delta and its hinterland. Like most of his peers, he was motivated by extraction, which in those days meant kola nuts, peanuts and palm oil.
There were many variations across sub-Saharan Africa, but the pattern of exploitation was basically the same. Europeans arrived with power and technology, and left with goods and profits. First, they took slaves — the original sin — before turning their attention to commodities including gold, cocoa, rubber and coffee. Chartered companies would in due course give way to formal empire and Goldie’s was no exception, transferring its rights to the British government in 1900.
Much has changed in Nigeria since independence in 1960. But here, as elsewhere in Africa, the economic template established by the Europeans has proved difficult to shift. Trade continues to be conducted through political elites with access to resources. Most value is added to commodities after they leave the continent. The perennial puzzle of African development in the postcolonial era has been how to break the mould — how to extract Africa from its history of extraction.
For some, the great leveller of new technology offers a solution. The technological revolution sweeping the world is beginning to have a profound impact on the continent. Many have put their faith in “leapfrogging”, the idea that Africa can escape its poverty and colonial heritage by skipping whole stages of development. The biggest example of that has been Africa’s jump straight to mobile phones, almost entirely bypassing fixed-line technology.
People working at the online store Jumia in the commercial district of Lagos © Reuters
Behind such hopes, however, lies a familiar anxiety over ownership and control. What if Big Tech, far from being a liberating force, turned out instead to be a new kind of colonialist?
On April 12 this year, Juliet Anammah, chief executive of the Nigerian operations of a company called Jumia, stepped forward to ring the opening bell of the New York Stock Exchange. Anammah was one of several senior executives there to celebrate the initial public offering of an e-commerce company that had been dubbed the “Amazon of Africa”. Jumia, which operates in 14 African countries from Nigeria to Egypt and from Ivory Coast to Kenya, this year became the first entirely Africa-focused e-commerce company to be listed on the prestigious US stock exchange.
There is, however, one problem with the Jumia story. No sooner did the company complete its New York listing than a backlash began. Jumia, say its detractors, is not an African company at all.
Jumia does fit squarely into the narrative of a technological solution to Africa’s problems and a path towards a future in which commerce, not extraction, becomes a motor of African growth.
With a combination of online technology and strategic offline infrastructure — including warehouses and fleets of motorbikes — Jumia promises an expanding African consumer class the opportunity to have goods delivered directly to their homes. Customers are able to order anything from an iPhone or an LED television to a chicken korma at the touch of a screen, bypassing the potholed roads and exhaust-filled traffic jams that characterise many fast-growing African cities.
Interest in Jumia’s initial public offering had been intense. Not long after the ceremonial bell ringing, the company’s stock began to surge from its initial price of $14.50. By the end of the day, it was up 75 per cent, valuing the company within a whisker of $2bn and making small fortunes for its founders. In the following few days, the share price continued surging to break through $40.
Though that was still tiny by the standards of Silicon Valley, to the Afro-optimists, particularly ones with a technological bent, Jumia’s listing was a hugely significant event. It showed the world that African tech had come of age and that investors could make money out of a company with big African expansion plans. Surely now more investment would follow, argued Jumia’s advocates, helping African businesses and African economies to chart a new future.
The row over the origins of Jumia is part of a larger debate about race and appropriation
Jumia’s listing had shone a light on what close watchers of Africa had long known: that the continent was buzzing with tech ideas. After the leap to mobile, the story began in earnest a little over a decade ago in Kenya, with the invention of M-Pesa, a system for transferring small amounts of money by mobile phone. As easily as sending a text message, people could transfer money home to relatives in their village or pay for goods or utilities. M-Pesa and dozens of variants like it are now used by hundreds of millions of Africans, many of them otherwise excluded from the formal banking system. Even the poorest can build up a credit history and take out microloans.
In the Kenyan capital Nairobi, the ecosystem has given rise to a vibrant tech hub known, almost inevitably, as “Silicon Savannah”. Hundreds of companies have built on the spine of the money transfer network to offer services such as the renting of solar panels, where customers make micropayments by phone. Online pharmacies have been launched, enabling customers to screen for fakes and cut out gouging middlemen.
Not to be outdone, Lagos, Nigeria’s commercial capital, has its own tech hub in the district of Yaba, known to some as “Yabacon Valley”. Even neighbouring Cameroon, with its far smaller economy, has not one but two tech hubs: “Silicon River” and “Silicon Mountain”. Across the continent, an explosion in the use of mobile phones — and the increasing penetration of smartphones — has opened the possibility of app-based services that can, at least theoretically, address problems from poor education standards and low farming yields to dire infrastructure and even corrupt tendering processes.
Health apps in Rwanda offer the poorest citizens the prospect of cheap medical consultations driven by AI. One online company in Nigeria, known as Cars45, seeks to address the problems of theft and fraud that plague Africa’s huge second-hand car market by offering a real-time online auction. Other companies, including Bridge, backed by Bill Gates and Mark Zuckerberg, hold out the possibility — still controversial to many — of tech-based solutions to poor-quality education in which a standardised curriculum is relayed to tablet-wielding teachers.
Much of this remains at the prototype phase. In spite of all the activity, Africa’s technology sector is still relatively small. Last year, African start-ups raised a record $726m, according to WeeTracker, just over a 10th of the $7bn mustered by Indian tech start-ups in the same period. But interest and activity are rising fast. Last year’s figure represented a 300 per cent rise over the previous year.
Anammah, the Nigerian country manager who rang the bell at Jumia’s IPO, is among those who believe in the power of technology to transform the continent. Jumia, she says, is already employing 5,000 people in Africa and using technology to solve the logistical problems with which African states have long been saddled. “We are an African company,” she says. “We are solving problems for Africans on the continent.”
But critics wonder how “African” the company really is.
Jumia was incorporated in 2012 in Berlin, though it has been known to tell inquirers that it was headquartered in Nigeria. It was originally called Kasuwa, which means “market” in Hausa, a language used in northern Nigeria. Later, it was renamed the Jumia Group. At the most senior level, the company is managed not by Africans, but by French executives, who operated out of Paris until they moved to the current headquarters in Dubai. Most of the technicians who design and maintain Jumia’s online systems work out of Portugal and many, though not all, are Portuguese nationals. Much of Jumia’s capital was raised in Europe and America. So how does it differ, precisely, from companies such as Shell or Coca-Cola, which both employ thousands of Africans, but which can hardly claim to be African?
Jumia co-chief Sacha Poignonnec, left, and Jumia Nigeria chief Juliet Anammah at the New York Stock Exchange on April 12
Jumia has made much of its supposedly African roots. On listing day, co-chief executive Sacha Poignonnec, a French citizen, emphatically told CNBC: “We are completely an African company.” To his detractors, it was an odd thing to say about a business that was about to make millions for the company’s mainly white directors.
If Jumia isn’t really African, say its critics, is it not merely the latest iteration in a long history of exploitation stretching back to the likes of Goldie’s Royal Niger Company? Though that is far-fetched to some, Jumia has become a lightning rod for a sometimes heated debate about the nature of technology and foreign capital in Africa. While some see much hope in Africa’s participation in this brave new world, others see the old patterns of extraction reasserting themselves in a new guise. Instead of oil, they say, companies such as Jumia are plundering data and profits. You might call it “techsploitation”.
Rebecca Enonchong, a Cameroon-born tech entrepreneur, is among those who insist that Jumia is a foreign company dressed in African robes. Jumia, she says, is the brainchild of Rocket Internet, a German company that she says “copy pastes” ideas developed in Silicon Valley and applies them to the rest of the world. “This is a Rocket Internet company. It is not an African start-up,” she says. “We have a painful history with European companies, this colonial legacy that is very recent. It seems like it’s being repeated in the start-up world.”
Enonchong does not question Rocket Internet’s right to do business in Africa, though she does doubt the strength of a business model run by a senior management team based outside the continent. Not long after Jumia’s launch, a note from a short-seller at Citron Research knocked hundreds of millions of dollars off the company’s valuation by questioning the validity of some of its claims and even calling the stock “worthless”. Jumia vigorously denies misleading investors and its share price has since recovered somewhat to around $25, although that is still only half its peak.
Far from helping Africa, says Enonchong, Jumia and companies like it are throttling Africa’s homegrown tech industry at birth. That is because of what its critics say is the great unspoken advantage of such companies: their access to capital. “I don’t see any African start-up that would be permitted to lose that kind of money,” says Enonchong, referring to the near $1bn that Jumia burnt through in seven years on its way to listing. “That robs Africans of an opportunity to be the first,” she says, arguing that many African start-ups have been steamrollered out of existence because of their inability to match Jumia’s deep pockets.
A 2018 study of start-ups in east Africa confirmed that 90 per cent of funding had gone to foreign founders. Many African entrepreneurs complain that foreign companies use a false African identity as a marketing tool, raising capital on the basis that they are “doing good” through “impact investing”, but in the end cashing out like any savvy capitalist.
TMS Ruge, a Ugandan entrepreneur, detects what he calls a “digital recolonisation” of the continent. African start-ups are being deprived of capital by age-old prejudices and power relations, he says. “What you’re going to have is this outmuscling of really good talent, this outmuscling of really good innovation by well-funded, fast-moving western-linked organisations that are willing to lose money for a number of years.”
In a tweet about Jumia, Ruge writes: “Dear Africa do NOT allow [yourselves] to be blinded again.”
Ruge sees the problem as much in psychological as in financial terms. “Our minds are still colonised,” he says. Many Africans have “the idea that we don’t have the capacity to do anything, that nothing we do has value until someone from the west blesses it.”
To Jumia’s supporters, including many from the continent itself, this rehashing of a colonialist past is unhelpful at best and positively damaging at worst. Iyinoluwa “E” Aboyeji, one of Nigeria’s most successful technology entrepreneurs and co-founder of Andela, a company that trains African coders, puts the case for the defence most sharply. “Rather than take the opportunity to celebrate black excellence by sharing and amplifying inspiring stories . . . we got into a meaningless and primordial debate about what an African company is in a world without borders,” he wrote in an article in April this year.
Aboyeji, who spends much of his time in Silicon Valley, argues that Jumia’s detractors misunderstand the nature of global capitalism. Given Africa’s grasping officials and unpredictable rule of law, he says, no company could be incorporated on the continent — outside perhaps South Africa or the tiny island of Mauritius — and hope to raise capital. Even south-east Asian or Chinese companies list or incorporate in Singapore or Hong Kong in a search for more reliable jurisdictions, he says. Nor does the fact that Jumia has French executives make it un-African any more than Microsoft’s Indian chief executive renders the inventor of Windows an Indian company. Besides, he adds, Jumia’s biggest shareholder is South African telecoms operator MTN.
While some see hope in Africa’s participation, others see the old patterns of extraction reasserting themselves in a new guise
While what Aboyeji calls Africa’s “petty and visionless” elite is mired in a pointless debate about techno-colonialism, he fumes, it is losing sight of what is really important: that technology can be harnessed to overcome Africa’s colonial legacy and tackle some of its deep-seated problems. “What is tragic”, he writes, “is that while we engage in these meaningless arguments, we miss the company’s mission and the opportunity it represents for Africa’s ability to leapfrog traditional retail infrastructure and build infrastructure for a digital economy . . . What they have built in Africa against all odds remains symbolic. We should be celebrating them and taking credit for our role in making that feat happen.”
Kabirou Mbodje, founder of Senegalese mobile payments company Wari, makes a similar point. “Jumia is everything but an African company,” he says. “But we have to congratulate them. This should just show that there are opportunities and . . . if somebody else is taking them, good for them. If we are sleeping, then too bad for us.”
The squabble over Jumia’s origins remains, for some, a distraction. But to others it is born of deep, unhealed wounds and is part of a larger conversation about appropriation, race and ownership. It is no accident that African entrepreneurs don’t have access to the skills and capital essential to build modern companies, says Enonchong. Colonial powers spent centuries extracting wealth from the continent, destroying homegrown systems of government and depriving it of the human resources and capital formation on which other states have built success.
Part of the solution is for those Africans who have amassed capital in traditional industries to invest in early-stage companies, she says. “We cannot expect Silicon Valley to invest in African start-ups. It is our responsibility to take more ownership.”