In a significant development for Africa’s rapidly evolving e-commerce landscape, two of the continent’s leading B2B platforms, Wasoko and MaxAB, have finalised their merger, forming a formidable entity aimed at capturing a substantial share of Africa’s $600 billion informal retail sector. The merger, characterized as the first of its kind on the continent, was officially announced following nearly eight months of negotiations and integrates 16 subsidiaries across multiple countries. According to Daniel Yu, co-CEO of the newly formed entity, this merger signifies a strategic evolution from traditional B2B e-commerce operations toward a diversified multi-vertical ecosystem.
Wasoko, based in Kenya, and Egypt’s MaxAB initially commenced discussions regarding the merger in December of the previous year, and the integration represents a response to the challenges faced by many B2B e-commerce companies across Africa, which have been compelled to scale back operations due to changing market conditions. Prior to the merger, both firms had attracted substantial investment, collectively raising over $240 million from prominent investors, including Tiger Global and Silver Lake.
The merger has resulted in the consolidation of operations in five primary markets: Egypt, Kenya, Morocco, Rwanda, and Tanzania. It is noteworthy that while both companies traditionally served small retail partnerships, they are now looking to enhance their financial service offerings, with an emphasis on providing e-payments and credit financing solutions. Yu emphasised the shift towards profitability in the merged entity, noting the focus on achieving a net profit per order, contrasting with earlier periods where growth in gross merchandise value was prioritized.
The new entity now claims to manage the largest network of B2B informal retailers across Africa, boasting over 450,000 merchants, and aims to leverage its unified brand name to amplify its offerings. The focus on fintech services, which have proven more lucrative than core e-commerce operations, is integral to their growth strategy going forward, with projections indicating a doubling of fintech revenue by December 2024.
Regarding the structural composition of the merger, Yu confirmed that it is indeed a merger of equals, with equitable terms reflected in the financial arrangements of the merged entities. With nearly 4,000 full-time employees, many roles have been streamlined to ensure operational efficiency, leading to significant cost savings and enhanced profitability potentials across various markets.
Looking to the future, the executive leadership anticipates that the new company will not only strengthen its stature within the African B2B commerce landscape but will also explore opportunities for cross-border trade, particularly in sourcing local products from various African countries. The leaders of the combined company are optimistic that continued consolidation within the sector will yield further growth, especially in a market that increasingly requires diversified operational capabilities to attract and retain investment.
In conclusion, the merger of Wasoko and MaxAB stands out as a potential blueprint for other companies within Africa’s e-commerce ecosystem, suggesting a pathway toward enhanced profitability and market reach amidst evolving industry challenges. The entities have clearly recognized the necessity for innovation and adaptation in order to thrive in a competitive environment, keenly focusing on diversifying revenues through their fintech offerings. As they embark on this new chapter, their success may provide essential insights into the future of B2B commerce across the continent.
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