Jiji (Genesis) has acquired OLX businesses in Ghana, Kenya, Tanzania, and Uganda, pending certain regulatory approvals, to fulfill Naspers plan in 2014 that it wanted to exit loss making sub- Saharan Africa.
OLX users in Nigeria and in the four countries will be redirected to Jiji. OLX had closed its African operations and centralised them in South Africa at the Naspers headquarters. Jiji is therefore acquiring users only and probably a very small operation in South Africa.
The deal is backed by one of Jiji’s cornerstone investors, Digital Spring Ventures.
According to Anton Volyansky, CEO and co-founder of Jiji: “Users will always come first for us. We warmly welcome OLX’s customers to the Jiji family and we look forward to our new customers joining Jiji on its journey to empower the lives of its customers by providing a safer, more secure and enjoyable online shopping experience”.
Jiji believes that this transaction is pivotal for it’s business as it’s a long-term investor in Africa and believe in the continent as soon-to-be global leader in business and technology.
“With this transaction we plan to build the largest Africa-based classifieds business, creating a new experience for Africa’s fastest-developing countries and their combined population of 300 million. We firmly believe that in the next 2-3 years ours will be one of the top 10 classifieds businesses in the world by traffic,” said Vladimir Mnogoletniy, Board Director and co-founder of Jiji.
The firm, then MIH Africa, reportedly wanted to close down its African classifieds operations in 2014 to allow the giant media group to focus on e-tail sites and grow its portfolio in other developed markets. But contracts with suppliers and employees and leases are more complicated to deal with in real life than in the boardroom, therefore the firm had to strategize and exit minus hurting itself legally and financially.
During that time, our sources argued that the new Naspers CEO Bob van Dijk was not a strong believer in early stage sub Saharan African markets and Naspers was set to focus on its global classifieds businesses in more mature markets where monetisation and profits are a more attractive opportunity.
Our sources alleged that OLX had been given one more year to prove itself in Africa, but in the total absence of any business model other than pay per click the firm will hardly succeed given Africa’s immature pay per click market with even Google turning away its focus from continent but only pushing last mile connectivity.
OLX’s challenge is mostly an African problem as OLX Argentina makes $25m revenue from CPC and display advertising.
In Africa, however, there is low internet penetration and low CPC rates, maybe even ten times lower, making the African market too early for CPC. Africa also has few spenders on CPC making the digital advertising marketplace so infant and the curse making OLX Africa’s business model highly unsustainable. Then forget fraud and competition from private curated Facebook marketplaces such as Nairobi Expat Marketplace, Kilimani Mums, ArushaRusha and hundreds of others where people buy from people they know.
Sjoerd Nikkelen, General Manager of OLX in Africa, Middle East and Asia agrees it was time for them to move out of Africa to focus on other markets such as Asia, India and recently Europe after Naspers launched a startup fund.
“We continually evaluate our portfolio of classifieds businesses to ensure a disciplined approach to how and where we allocate capital and management time. With our focus on accelerating the growth of other markets, now is an opportune time to sell our interests in these markets. We are pleased that Jiji will continue to provide the exceptional quality of products and services that the customers in these countries have come to know and enjoy from OLX.”
Following closing of the transaction (which is expected to occur once certain regulatory approvals have been obtained), all users of the sell-and-buy classifieds websites of OLX Nigeria, OLX Ghana, OLX Kenya, OLX Tanzania, and OLX Uganda will be redirected to Jiji. The Jiji team will strive to make the transfer seamless, and to provide a high-quality user experience across all geographies.
Zhanibek Sydykov, Partner at Digital Spring Ventures, commented: “We are pleased to be able to assist our partners at Jiji on this transaction, and we strongly believe that the combined Jiji and OLX businesses will become a formidable force in the African e-commerce market. This transaction further advances the consumer reach of one of the star portfolio companies in our current fund, which is focused on partnering with ambitious entrepreneurs to deploy capital in the internet and technology sectors in some of the world’s most exciting emerging markets.”