In Africa, a young continent wide open to innovation but where no one dared venture until a short time ago, not even the global tech giants, an Internet start-up called Jumia has grown from 10 to 3,000 employees in just a few years’ time, becoming an e-commerce leader in 14 countries. Massimiliano Spalazzi, the manager who steered the platform’s international development and is today its executive vice-president, describes the recipe for that success as follows: the ability to provide simple responses to consumer needs, starting with Mobile Money, an electronic wallet linked to mobile phone credit from which to pay for everything, even vegetables at a market stall.
A start-up becomes an e-commerce leader in Africa: so where were the big corporations?
They were afraid of the African market, of the risk of a low return on a big investment. This perception kept the continent off the radar of major sector players for a long time. Our investors, on the other hand, believed in this young market and chose to challenge the stereotype that it’s hard to create value in Africa. Jumia immediately generated incredible value because it dealt with people’s real problems: Nigeria is a country where shopping on the weekend can mean sitting in traffic for three or four hours. A platform like ours, which groups together a range of supply sources in a market with a lot of supply gaps and where competition was practically non-existent, made annual growth of from 50 to 70 per cent possible.
How has it been possible to grow so quickly?
The African market is very young and in constant demographic expansion. When we started out in 2012, Nigeria had a population of 165 million, which is now up to 190 million. Of course, less than 50 per cent of the population is connected to the Internet, but the numbers are still enormous and capable of sustaining a high rate of growth.
One of our initial aims was to train staff. Supervisors had to first train and then manage employees and, in this way, we generated many of the skills that then became crucial to expanding to other African markets. We started out with 10 employees and are up to 3,000 now across the continent –100,000 if you factor in downstream activity – and we have offices in all 14 nations in which we operate.
Can Jumia become a global player?
For the moment, we are concentrating on Africa. We’re in 14 nations on a continent of 50, so there’s still a lot to be done. There are approximately 500 million people connected to the Internet in Africa, with an average age of 19 years. A young population, highly digitalized and eager to do business. Entrepreneurial aspirations are high in every one of our markets, and platforms like Jumia are successful because they respond to this demand by making everything easier with mobile phones. Lagos, where our headquarters are located, is a hub for start-ups that is becoming a technological crossroads for the whole of western Africa. E-commerce is a world in ferment; we got in first and trained a lot of people, who later went on to open new tech firms.
Have innovations been made in Africa that haven’t been made in Europe?
Certainly. Take payments, for example, and particularly the use of mobile phone credit as currency. When I first came to Nigeria, I had never heard of “mobile money”: every user has an e-wallet from which to draw when making payments for everything from bus tickets to vegetables. This kind of solution also makes it possible for telephone companies to extend credit to customers, whose reliability can be verified through their transaction histories, thus becoming full-fledged banks.
Does the African e-commerce market offer opportunities for made in Italy?
The major Italian brands are already well known and much sought after. The Italian idea of quality is perceived positively, especially in terms of food, but I think there is room for growth in the luxury goods sector where there aren’t many points of sale and the market is still relatively virgin terrain. In any case, whenever I speak with Italian businesspersons, I explain that Africa is the kind of market where you have to invest in one nation at a time, and you must have a local presence. It is hard to succeed here if you stay back in Italy, even if you have the support of a local distributor. That’s because you have to deal directly with the peculiarities of national markets that are still not all that transparent or regulated.
How can Italy encourage the creation of innovative companies?
After completing my studies, I opened a start-up with a friend. Our goal was to help people find places to watch international sports matches in the main Italian cities. We realized very early on, however, that we didn’t have the skills we needed to make a company grow and turn a profit, so we joined an incubator. Incubators and investors are essential to start-ups, yet the problem with Europe is the fragmentation, both legal and linguistic, of its national markets. If we could overcome this problem, we would have a market large enough for even Italy to have its say: if you think about it, part of Silicon Valley’s success has to do with its lovely landscape and Californian climate; I believe that, given the charm of its cities and enviable quality of life, Italy can hope to become a major European magnet for talent from around the world.
