British taxpayers invest in Africa Internet Group
01 Aug 2016
British citizens will be pleased to hear their tax money has been invested in Africa Internet Group (AIG) by CDC, the development finance institution fully owned by the U.K. government (about CDC and its sole shareholder).
CDC announced a €50-million equity investment in AIG, the parent company of Jumia, Africa’s leading e-commerce brand, and nine other online brands operating in 23 countries across Africa. It wasn’t clear how many shares CDC got for its money.
The mission of CDC is “to invest capital and re-invest all our profits in businesses throughout Africa and South Asia, to create jobs and make a lasting difference to people’s lives in some of the world’s poorest places.”
AIG is operated by Berlin-based Rocket Internet, which also holds a minority share in the company. Other shareholders are Orange, AXA Insurance, Millicom, MTN, and Goldman Sachs. The owner structure is unknown.
AIG currently connects more than 50,000 local and international companies with millions of African consumers. CDC’s capital will help AIG improve its existing operations, and help it expand into new countries.
Mark Pay, CDC’s managing director for equity investments, said: “CDC’s investment in AIG means that we’re backing a business that is playing a leading role in Africa’s growing e-commerce market.
“The investment will help create thousands of jobs and allow many small businesses to access new markets previously closed to them. Smartphone-driven e-commerce will be one of the most important technological and economic trends in Africa in the next decade. More and more Africans can now access the internet, with half the population expected to be online by 2025.”
Online marketplaces can also play an important role in providing access to new customers for local vendors. Kaymu, an online marketplace focused on smaller sellers, enables these vendors to develop their businesses by providing them with access to a nationwide market for the first time.
Most sellers on the Kaymu platform are micro and small businesses – often people who had previously been market traders. Several thousand of these small firms actively trade on the platform every month and as they grow so do the number of jobs they provide.
Other services offered by AIG include a general classifieds brand Vendito, real estate brand Lamudi, jobs platform EverJobs, auto site brand Carmudi, as well as the food-delivery site Hellofood and hotel-booking platform Jovago.
CDC recently stopped investing in China, Southeast Asia and Latin America, to focus only on Africa and South Asia.
“…the number of businesses we support (in China, Southeast Asia and Latin America) is falling, as our fund managers start to exit companies and reduce their portfolios. This trend will continue gradually over the next few years, until our portfolio will be focused only on Africa and South Asia”, CDC says on its website (here).
Of the 1,403 investments CDC has made to date, only few have been in classifieds. Apart from the investment in AIG, CDC invested in Rocket Internet’s Jabong in 2013 (sold to Flipkart last week), JD Group in China in 2006, and in marketplace Daraz (operates in Pakistan, Bangladesh and Myanmar) in September last year.