Three key facilities are set to improve the commercial landscape in Kwara State
Significant opportunities exist for private operators to become involved in developing the commercial sector as diverse as aviation (International Aviation College), logistics (Truck Plaza), and retail (shopping mall).
Aviation (International Aviation College)
The International Aviation college, which has since the past year, begun operation in Ilorin, the State Capital, is poised to be a pace setter in the aviation sector in the country.
Kwara State is responsible for the initial financial outlay to establish the International Aviation College (IAC) but intends seeking private investors to take equity in the undertaking once it is up and running.
The college will train pilots of all sorts. International demand for pilots is very high and demand is expected to remain strong. The number of airlines operating in Nigeria has increased exponentially in recent years. The specialist training needed for helicopter piloting (a skill very much in demand in the oil industry in Nigeria) will also be offered.
The final state percentage of ownership is intended to rest at 50%, with various private entities holding shares. In this way, the state will recoup some of its investment while at the same time bringing in the expertise of investors and partners.
Contracts have been signed with instructors and aviation academy specialists in the United Arab Emirates with regard to the phasing in of classes and the management of the facility. Thirteen instructors have received training in South Africa in preparation for the opening of the college. In a related development, the Nigerian Air Force will establish a maintenance base in Ilorin.
Italian company Alenia Aeronautics will manage the project that will be rolled out in the course of 2010. The hangar will be available to private airlines and will contribute to the development of the aviation industry in Kwara State. The maintenance hangar will help to spark developments in associated engineering and commercial fields by creating opportunities for smaller local companies to compete for subcontracts.
Retail (shopping mall)
Location and extent
The site extends over three hectares on Fate Road, Ilorin, in the South Local Government Area.
The Kwara State Government intends to be a 30% shareholder in the project (N500-million, excluding the value of the land], with the balance of equity divided between various private investors. Attractive incentives are in place to make investing in the project worthwhile. The demand for formal retail is strong and good returns are expected. A SPV (Special Purpose Vehicle] will be created where the Kwara State Government and partners will form a company to be called Kwara Mall Develop Centre.
Banks, cinemas and supermarkets are in line to be the anchor tenants. Major retailer Shoprite (which has more than 950 stores across Africa] has expressed its intention to participate. Fast food restaurants include Mr Biggs, Chicken Capitol, Chicken Republic and others. Shops will include jewellery, fashion, furniture, household goods and pharmacy outlets. Medical doctors will have their consulting rooms in the mall and there will be medical clinics.
Construction and financing
Persianas Investment limited is the state government’s partner in delivering the N3-billion project. This company was the lead developer in the consortium that built the highly successful Palms project in Lagos. Some of alliances concluded to deliver the entire project are with FCMB, Julius Berger and Chapel & Hill.
The shopping mall will be enclosed with a substantial car park. It will be fully air-conditioned and fully powered up either through PHCN [Power Holding Company of Nigeria) or through an alternative energy source.
Increased trade within the state with shoppers no longer travelling to Lagos for monthly shopping. The mall and its tenants will create employment opportunities. The area around the malls expected to experience rapid development, with an attendant spike in property values. The multiplier effect within the city of Ilorin and the state will be high, especially as the per capita income of Kwarans has been rising steadily over the last seven years; the timing of this retail development dovetails well with this general economic trend.
A memorandum of understanding [MOU) has been signed. Construction work was expected to begin in 2010 with completion set for December 2010. The design, costing and financial information phases have all been completed. The state will hand over management of the centre to a professional management company.
Logistics (Truck Plaza)
A 90-hectare site is being developed near Ilorin International Airport as a Truck Plaza to take advantage of Kwara State strategic location. Maintenance facilities, fuel depots and accommodation units are planned.
Private investors have an excellent opportunity to earn excellent returns in the development of a Truck Plaza as part of the state’s broader aim of positioning itself as a regional and national transport hub. Kwara’s central location with respect to the rest of the country is enhanced by its strategic position close enough to the bustling metropolis of Lagos to ensure quick delivery of goods but far enough away from the congestion of that area to be able to ensure rapid deployment of those goods to other parts of the federation.
A 90-hectare site is being developed near the Ilorin International Airport to centralise and control the through-put of trucks from all parts of Kwara State and beyond. Private developers of every sort associated with the transport, tracking and logistics sectors are sought.
Facilities that will be available at the truck plaza
- Truck parking area
- Fuel and service centre
- Truckers Village
- Fire Station
- Truck and bus washing bay
- Bus and car parking area
- Emergency tow service
- Eateries and cafeteria facilities
Specific areas of the truck plaza where private-sector investment is required
- Fuel and service centre
- Motels and other accommodation facilities
- Eateries and cafeteria facilities
- Truck maintenance workshop
- Main plaza
Firm Foundation for Investment
Kwara State offers excellent supporting infrastructure aimed at creating an environment that is conducive to investment and business.
Adequate Infrastructure plays a vital role to any investor looking to start a business. Basic physical and organizational structures are needed for the profitable and efficient operation of any commercial venture.
Kwara State has put in considerable effort to improve vital areas such as transport, power generation and distribution, water supply, information and communication technology (ICT) and the provision of healthcare services, to name a few, in order to provide a conducive environment for business. Despite the achievements, the current administration realises that a lot of work still needs to be done to bring its infrastructure up to world standards.
Ganmo Power substation
Sufficient and reliable power supply is of utmost importance to anyone looking to do business in Nigeria. Kwara State has made significant progress in this regard by completing a new substation and improving distribution and transmission. The recent completion of the 330/1.32/33KV substation at Ganmo is a great success story. The state capital Ilorin currently enjoys close to 24 hours of uninterrupted power supply a day and businesses in the area hardly ever have to make use of generators, saving them a considerable amount of money. Because of the Ganmo facility, power supply in the state, which used to be between 30 and 40 megawatts per day, a typical scenario for most parts of Nigeria, improved dramatically to between 80 and 90 megawatts per day.
In the area of rural electrification, many remote areas and villages have received power, including the ‘New Nigerian Farmers’ in Shonga. To maintain the leverage that the state currently enjoys, the state government has begun to invest in a transmission and distribution programme. Contracts have already been awarded for the supply and installation of six 15MWA 33/11KV transformers. The state government is willing to provide adequate power supply to any new business investment in the state.
Industrialists Commend Stable Power Supply In Kwara State
Mr. Arowolo Johnson,
Tuyil Pharmaceutical Company Nig. Ltd, Ilorin.
We at Tuyil will forever be grateful to the Governor Bukola Saraki administration for its initiative in the area of stabilizing power supply in the state. This has paid off greatly.
Before the Ganmo Power Project came, we consumed nothing less than 10 drums of diesel monthly. But now with unprecedented stable power supply, we hardly use one drum of diesel within the same period. This is quite salutary.
We have many reasons to be grateful to the present administration: Apart from the fact that private power generation for industries is capital intensive, we have also since discovered that the use of generator often adversely affect our machines. Only a stable power supply ensured by the PHCN is good for the health of our machines.
The stable power supply has also increased our production level and has equally broadened our market base. We have developed from about five products at inception to about 82 products presently. We also have about 22 depots across the country.
We expect that very soon the cargo terminal will take off so as to reduce the challenges we face in transporting our cargos from the Lagos port by road.
Mr. Mokeke Jude,
Human Resources/Admin Manager,
Dangote Flour Mills, Ilorin.
Power supply has improved since early last year (2009). And you will agree with me that that was when the Ganmo Power Station was energized. This improvement is incontrovertible as even the most incurable cynic will admit this phenomenal improvement.
Our reliance on the PHCN power supply is quite on the high side because of our operations. Now our reliance rate on the PHCN power is about 88%. We use our generators sparingly to source for the remaining 12%.
The private sector community of the Nigerian economy has positively identified Kwara State as an emerging investors’ destination with great potentials still waiting to be tapped. This is why companies, industries are presently trooping to the state.
Stable power supply and a secured atmosphere which have become Kwara State’s middle names are great assets in industrial circle.
This new regime of stable power supply has helped our production level. Presently, we are increasing our production level from 500 tons to 1,000 tons daily. This development has its multiple advantages for us as a company – increase in output and turnover, and increase in number of factory hands needed – which are drawn from the host communities.
This present government has done very well. We only hope the next administration will be able to sustain this high level performance.
Engr. Yahaya Hussein,
KAM WILL Industry Nig. Ltd, Asa Dam, Road, Ilorin.
I must be honest with you, we are grateful to the Governor Bukola Saraki administration. He has done commendably well on the issue of power supply. Power Supply has improved significantly since the commissioning of the Ganmo Power Project. We particularly started experiencing this in January this year. Before January 2010, we used to enjoy power supply between 15 to 17 hours daily. But now, it has hopped up to between 22 to 23 hours daily. You will agree with me that in the Nigeria of today, this is quite significant.
The development has also drastically cut down on our diesel consumption often needed to power our generators in times of power outage which were incessant before January this year. But we must add that we still occasionally experience fluctuations, which we learnt is being attended to. And in domestic power supply, there is still more to be done in the area of distribution as some areas in Ilorin are still being subjected to shifts. For instance, where I live in Ilorin enjoys electricity between 8 to 10 hours daily. But admittedly, power supply has improved appreciably.
…And The Saw Millers Too.
Mallam Ibrahim Isa,
Irewolede Saw Mill, Ilorin
We are presently enjoying a steady power supply like never before. I have been in the saw milling business for about 40 years now. The regular power supply we enjoy in this place presently is unprecedented.
The volume of business is so much that we, at times, turn back customers because we work from dawn to dusk. However, this wouldn’t have been possible without a stable power supply.
Here we enjoy everything – a brand new, high powered transformer, stable power supply; all these have combined to engender a boom in business for us. We cannot thank Governor Bukola Saraki enough. We wish it were possible to prolong the tenure of this administration for another fresh term. However, we pray the coming administration will be able to sustain this laudable legacy of Governor Saraki.
Airport and cargo terminal
Ilorin International Airport Cargo Terminal
Ilorin International Airport has been upgraded with a new terminal building and other modern facilities. A recently completed cargo terminal at the airport allows investors to import and export goods via air. The facility gives Kwara State a significant competitive advantage over other areas in Nigeria. The terminal has been built especially to export agricultural produce from the state but it will also cater for the rest of Nigeria’s cargo needs.
It is indeed on record that the cargo terminal in Ilorin is the only one in the country equipped with a wet-station purposely built to ensure effective transit-storage of agro-products from our Commercial farms situated here in Kwara State
The Kwara State Government wants to establish the state as a cargo hub, competing directly with Lagos. More than half the goods arriving in Lagos are not destined for Lagos itself but for the rest of the country. Because of Kwara State’s central location, goods can now be directly brought into Ilorin, and trucked to other parts of Nigeria, saving importers time and money. Customs clearance at “Ilorin is also much quicker than Lagos with officials on standby 24 hours a day.
During a trial run using a temporary cargo shed, the New Nigeria Farmers at Shonga brought in 800 Jersey cattle from South Africa. The airport has also received a load of cargo from Dubai. One of the state’s major industrial concerns, furniture manufacturer Kwara Ethnix Designs, has recently indicated it is working towards exporting goods directly to Europe from Ilorin International Airport, utilising its cargo handling facilities.
A flyover in the center of the state capital has greatly reduced congestion
Kwara State’s road network has seen great improvements in recent years. Most of the major roads in the state have been upgraded, although this is a work in progress. In Ilorin, the major arterial roads have also been improved and a new flyover in the centre of the state capital has greatly reduced congestion. The Kwara Traffic Management Authority ensures the smooth flow of traffic in Ilorin, especially along certain roads that have been identified as highly prone to congestion.
Kwara State has numerous banks and financial institutions that are ready to assist investors and businesspeople. Most major banks have branches in Kwara State and investors have access to most bank services. The Kwara Microfinance Bank complements the activities of existing microfinance banks to provide credit to small businesses and cooperative groups.
The recent opening of the Ilorin branch of the Nigerian Stock Exchange is evidence of Kwara State’s growing importance in the country’s financial-services sector. Since the opening of the branch, a number of stock-broking firms have also set up shop in the state.
Most of Nigeria’s main mobile operators have base stations in Kwara State’s major cities and many have started to connect the more rural areas of the state. When the New Nigerian Farmers settled in the state, the current administration collaborated with Globacom to provide mobile services to the farms. Although the arrival of mobile telephony has boosted the state’s economy and created employment, the administration has called on operators to further improve their services. Businesses can subscribe to Internet access through various service providers and Internet cafes are found across the state.
Kwara State is proud of the fact that it is one of the most peaceful states in Nigeria. Although the state hosts a wide variety of people with different religions and cultural heritage, there is a sense of mutual respect among the population.
To further improve security in the state, the administration has recently installed close-circuit television (CCTV) cameras in the capital Ilorin. New solar-powered street lights have also been introduced to boost security at night.
Water supply is one of the major challenges facing all of Nigeria’s rural areas and Kwara State is no exception. While the region has sufficient water resources to meet the needs of the people, many are still not enjoying the benefits of potable water. Historically, water infrastructure such as waterworks, storage reservoirs, pumps stations and distribution networks has been poorly maintained. The current administration has shown its commitment to turning the situation around by rehabilitating waterworks, drilling new hand-pumped boreholes, installing solar-powered mini-motorised boreholes, improving the pipeline distribution network and purchasing water treatment chemicals.
The state government believes water is a major factor in achieving key development objectives especially in the areas of health, education and poverty reduction. It is therefore willing to partner with all stakeholders at national and international levels in meeting this all-important challenge.
Modern sprinkler systems installed in Shonga Farm
Another important part of water supply is providing irrigation for agriculture. A project to provide the New Nigerian Farmers in Shonga with adequate irrigation is nearing completion. CGC Nigeria limited has been awarded the contract to build a pipeline system stretching from the River Niger to the individual farms. Modern sprinkler systems have already been acquired and will make a significant difference to the crop yields at the Shonga farms. Small-scale irrigation projects have also been established in various local Government Areas to assist small-scale farmers.
Investors in Kwara State will find adequate healthcare services. Being a qualified medical doctor himself, the Kwara State Governor, His Excellency Or Bukola Saraki, is placing a great emphasis on healthcare. Hospitals have been upgraded, drugs have been distributed and modern hospital equipment has been procured.
The state is partnering with Medequip Medical Services to construct one of its flagship healthcare facilities – the Central Diagnostic Centre. The facility will provide sophisticated laboratory investigations, pathology and imaging services such as CAT scan and mammography. The centre will not only serve both public and private hospitals in Kwara State but institutions across the entire country. The revenue potential of this initiative, apart from the health benefits, is indeed enormous.
One of the other steps that has been taken to improve healthcare is the establishment of an oxygen plant at the Sobi Specialist Hospital. The oxygen produced is important for surgical and emergency procedures. Through the Malaria-Free Kwara programme, insecticide-treated nets and free malaria drugs are being distributed.
Ilorin International Airport Cargo Terminal
The Cargo Terminal at Ilorin International Airport will provide a huge boost for importers and exporters
The Ilorin International Airport Cargo Terminal is a major innovation and a significant factor in the outward-looking policies of the administration of Kwara State. The year 2010 will see this facility in full use. The implications of this modern facility being at full capacity for the state of Kwara and the Federal Republic of Nigeria are expected to be great, as indeed they may be for the whole of West Africa.
The cargo terminal is designed to support the broader economic policies of Kwara State, and in particular the agricultural plans. These take a holistic view of the agricultural cycle, and support primary producers, transporters and companies that add value later in the cycle through processing. The modern
Cargo Terminal supports this comprehensive approach as it allows for the export of fresh produce (because of the cold-storage and wet facilities at the terminal], the export of processed agricultural products (because of the large storage areas] and the import of materials and equipment needed for the support of the agricultural sector. Designed to take the strain off the massively busy airport at Lagos, the Cargo Terminal in Kwara State aims to take advantage of the state’s already advantageous, central, position. Good road links south to Lagos connect the state with the most populous region in Nigeria, but crucially link to the central and northern parts of the federation without the congestion associated with the south-western sector. The Cargo Terminal is expected to serve the five other states in the North-Central zone (Niger, Kogi, Nasarawa, Plateau and Benu~) together with all of the states in the North-West zone (Kebbi, Sokoto, Zamfara, Katsina, Kaduna, Kano and Jigawa]. In addition, Kwara is well located in relation to the nation’s capital, Abuja.
The primary product to be handled out of the new terminal in the first phase will be the agricultural produce of the Shonga farms. This includes dairy products, poultry and cassava. Many other crops have great potential, as does the horticultural sector.
Cut flowers are an extremely lucrative market. Now that the Cargo Terminal has up-to-date refrigeration facilities, Kwara State entrepreneurs will be in a position to exploit the fact that the main centres of Europe are within a six-hour flight from lIorin International Airport. The airport is currently accepting and forwarding cargo to South Africa and the United Arab Emirates and will be extending this profile over time.
The lIorin International Airport Cargo Terminal will give exporters and importers a competitive advantage, especially as customs officials are destined to be on duty all day and all night. This will significantly reduce time spent on paper-work and allow for the expeditious handling of goods. In the case of the companies exporting time.
- Cargo Terminal facts
- Import Cargo Shed: 1260 cubic metres
- Export Cargo Shed: 1260 cubic metres
- Equipment on site
- Fire-fighting vehicles
- Security patrol vehicles
- Water Tanker
- Airfield recovery equipment
- Screening machine (Cargo)
- Airfield ground control equipment
- Trolley (stainless steel)
- Ramp handling services equipment
- Cargo aircraft night handling equipment (15 KVA inverter)
- Wet cargo facilities
- Weighing scales
- Stainless-steel system
- UV dryer
- Ice machine
- High-pressure cleaner
How did a 30-year old Nigerian and a Ghanaian – Tunde Kehinde and Raphael Afaedor – grow their local e-commerce startup into a multimillion dollar company in less than year?
VENTURES AFRICA – I was chatting with a colleague, as we drove to Jumia’s Lagos corporate office, when he asked rhetorically: “Why would JP Morgan be so interested in a 5 month old Nigerian startup as to invest millions in it?” Well, I was eager to know too.
Africa, home to six of the world’s fastest growing economies, has caught the entrepreneurial bug but an ubiquitous lack of funds has kept its entrepreneurs from marching. Minutes into meeting Jumia co-founder Tunde Kehinde, he would have me know having an amazing powerpoint business plan isn’t the key to investor funds.
“With the little crowd funding you can get, test your business concept and prove it makes money,” he tells me. “That way you become irresistible for investors.”
His partner, Raphael Afaedor chips in: “We had to quit our jobs and put all our effort in what we believed. Often, working 16 hours a day, sometimes more.”
Raphael was laid back, but spoke with rare speed. Spitting an average of 3 words per second, he would give Eminem a run for his money. His business-like countenance, tucked-in white office shirt and black trousers, made him look like the boss at the Jumia office.
Tunde on the other hand, with the rest of the Jumia team appeared youthful and casual.
At the online retailer’s office, dozens of under-30 year olds carrying Jumia tags could be seen in jeans and sneakers or fashionable clothing. Self expression is uninhibited, ideas are encouraged. It’s the kind of place a millennial would love to work. It isn’t the conventional Nigerian work setting – for a second, I thought I was in some sort of Google workspace.
Hanging on the walls at the lobby are two aluminium frames. One reads: “Best People for the Best Team.” The other, a sort of guideline for interaction between the staff, reads: “Challenge ideas but Respect everyone.”
When Raphael and Tunde first conceived the idea of building an enduring online ‘shopping mall’ for the Nigerian market, they had never met. Raphael was Head of Marketing and Sales (West, Central & North Africa) with Notore Chemical Industries while Tunde Kehinde was in the UK assisting alcoholic beverage multinational Diageo, to acquire valuable African brands. Both had also studied at Harvard Business School (and Tunde had tried his hands on Bandeka.com, a dating site for young African professionals) so they had received some training for their impending entrepreneurial pursuit.
Word got around about two guys talking about e-commerce opportunities in Nigeria and by a stroke of fate they met through a mutual contact. 10 days later, the pair started building their first general merchandise store; only this time, the store was to be online. The name was Kasuwa. The strategy was simple – boycott difficulties associated with shopping at the mall – traffic, long queues, stress, time constraint – by providing a user friendly online store with competitive prices, thereby making shopping convenient.
“Why wait till weekend before going to the mall when you can shop at the press of a button and have your purchase delivered to your doorstep?” Tunde wore a wide grin as he made the statement.
The business of delivering electronics, computers, fashionable items, et al across Nigeria’s 36 states is not an easy task. The boys had to quit their jobs and take a risk. Little did they know Rocket Internet, a german internet Venture Capital was seeking opportunities in Nigeria. Like the American billionaire Paul Getty who struck oil at an early age, the young men had struck gold. Rocket Internet, also owners of South Africa’s leading fashion online retailer Zando, met the duo and decided to invest in Kasuwa. June 2012, Kasuwa.com was officially launched.
“It’s not just getting money that matters,” Tunde explains. “Get smart money.”
“Investors that can add value to you, open doors and help you network, will help you run faster against competition.”
Not only does Rocket Internet funds Kasuwa, the group also shares with Raphael and Tunde its network, expertise and vast experience operating e-commerce, including a billion dollar business, in several continents.
An introduction of the German group on its website reads: “Rocket is much more than a venture capital firm or an incubator. We bring together all key elements required to create great companies: team, concept, technology, and capital.”
It’s one thing to have all that support though, it’s another to understand the market and rightly execute market entry strategy in a peculiar one like Nigeria. The first four months were really rough for Kasuwa. Just two months after launch, reports of a brand name change from Kasuwa to Jumia “due to legal issues” filled the online media. Subsequently in September, Jumia and Sabunta – a Nigerian online fashion store, also supported by Rocket Internet – downsized and merged, shedding off around 50 employees, some earning as much as 6.5 million naira ($41,000) per annum.
Raphael says, “the name Kasuwa wasn’t catchy. We wanted a name that could sell, even in other African countries.”
And Jumia sold. With a workforce of less than a hundred, a 12,000 sqft warehouse, omnipresent Google ads, effective marketing campaigns, and countless overtimes, the new brand quickly gained wide acceptance, recording about 40,000 site visits daily – more than Amazon’s site visits from Nigeria – and receiving orders from every state in the country. “The early acceptance surpassed our expectations. We emerged 7th most trafficked site in Nigeria, the number one player in the country’s ecommerce space, and the business was profitable,” Raphael says with a hint of excitement.
It was only natural for J.P. Morgan Asset Management to grab some equity in the company. As hard as I pressed, Tunde wouldn’t disclose the amount of the JP Morgan investment but he was kind enough to tell the cash was “significant enough” for him to feel “very confident about growing the business to a really really large scalable platform for a long time.”
Analytics of top internet searches and inquiries (for products) from Nigeria informs the decision of which category and product is sold on Jumia. Now, the online store gets 70,000 visitors daily. A March statistics report by global web information company Alexa, says roughly 34 percent of visitors to the site are one page views. The remaining 66 percent of visitors spend an average of over 9 minutes per visit. If a-tenth of this group purchases an item (comprising mostly of electronics, mobile phones, fashion items) and Jumia makes a meagre $7 on each sale (the retailer receives products on wholesale), it is safe to assume the company generates $32,340 daily, approximately a million dollars per month.
“Our staff has grown to over 300 and we are expanding into a 66,000 sqft warehouse, only 4 months after we moved into our current 12,000 sqft warehouse,” Raphael discloses.
With Nigeria’s middle class growing tremendously, and consumer buying on the rise, Jumia’s investors seems to have struck another goldmine of the Nigerian economy.
Tunde says: “We don’t want to just make profit. We don’t want to be here just a few years. We want to establish something enduring, help develop e-commerce in Nigeria and provide that talented fashion designer with no shop, a platform to sell across Nigeria.”
Launched in 2013 as Jumia.com, the site kicked off with only five workers as an e-commerce startup, dreaming of organizing and cashing in on the huge potentials in Nigeria’s retail market.
The rapid growth of Jumia.com has seen it emerge as arguably the country’s number one online shopping portal, with over 500 members of staff after just one year in operation.
With over $70 million investment funding available to its founders, Tunde Kehinde and Raphael Afaedor, Jumia is poised to maintain leadership in Nigeria’s online retail market.
The site controls 70 percent of the online retail market in the country and has serviced about half a million customers in its over one year of existence, in addition to being independently ranked as second only to Google for preferred online shopping in Nigeria.
Co-founder of Jumia, Kehinde, who spoke to Sunday Trust at their offices and warehouse facility in Ikeja Lagos, seemed confident that the business will maintain its leadership of the online retail market.
According to him, they strategize to maintain the lead by exploring better innovative technologies and market trends, to deliver the best online shopping experience and options for customers across the country.
In Tunde’s words: “All our instinct tells us we have at least five times the volume of the next closest competitor. We expect that to increase as the years keep going, because all the time we are adding more categories.”
He adds: “We are expanding our footprint across the country, we have also raised a significant amount of funding to support that growth, and we disclosed about $75 million worth of funding, from people like JP Morgan, etcetera.”
The story of Jumia is as novel as it is inspiring, given that Nigeria is known to have a relatively difficult business environment, especially as business startups considered small or medium scale in nature are often dead on arrival or suffer from lack of electric energy, a good business plan or technological pull backs.
Tunde explained how the business was conceived, saying: “The Jumia story started with Raphael pretty much. He was already in Nigeria running an e-commerce venture, so he already sampled the market and knew that there was a big market here and he was thinking about doing something bigger. So he actually got in contact with some investors who were interested in investing in Nigeria. At the same time I had heard he was working on something with these guys. I reached out to him and about ten days later I was in Lagos, working with Raphael on Jumia.
“Now, the idea behind Jumia is very simple. We are in the largest country in Africa population wise; and we have the largest growing middle class. The amazing thing is that there is no real organized retail. If I wanted to buy a shirt or a phone or some shoes about a year ago, where do I go? There is no store that gives you a fantastic price whenever you want it.
“You either go to a local market or your friend travels, or there are one or two malls here and there. But there is nothing that can provide the services you want wherever you were across the entire country. So we said to ourselves, ‘the market is huge, people will always need items, they are always going to need a phone or a shoe or a shirt no matter how rich or poor you are around the world. So why don’t we try and attract this market and provide a solution for Nigerians’”, he said.
While the idea of online retail shops can be considered relatively new in Africa, Western Europe and the United States of America have since the early 1990s enjoyed better internet facilities, with flourishing companies like Amazon.com and Ebay.com owning a huge online marketing industry.
However, Kehinde explained that the deficit in internet penetration and online savvy folks in Nigeria has not deterred the efforts of their company. “Our targets are people who are looking for what to buy. Whether you are on the internet or not, the idea here is that it doesn’t matter if you are young or old, but you are always going to need something at some point. Whether it is a gift for a loved one or a home appliance for your house, the question is how do you buy it now and the challenge for us is how do we make sure you are aware of Jumia and we educate you so that you can buy on Jumia today.”
Kehinde added: “Of course, for the internet savvy folks we have online marketing, but for folks who are into traditional offline retailing, we have a sales force of about a hundred staff that physically go to local malls, banks, schools, and say: ‘How are you? You shopped somewhere obviously? What do you buy typically? And on their tablet they will walk you through the entire Jumia portfolio. They will show you the shirt you want to buy, the shoe you want to buy, and they can place your order for you on the spot and they have activated you as an online customer.
“So now you know if I want to buy something I can go on Jumia, press a button and typically in Lagos, you get your item the next day. But across the country, it’s within five working days. So for us, the idea is not just to focus on the online customer, but to also focus on all customers that are looking for what to buy,” he said.
Responding to issues of online security and the fear of fraud as it pertains to money payments on the internet in Nigeria, he said, “We work with a variety of payment options. One of which is we do pay on delivery, (where) you can literally press a button, wait for the item to get to you, touch it feel it, and then pay for it. We also do credit cards or debit cards. So if you have your ATM card, you can pay online on Jumia.com and we are introducing some innovative payment options to come down the line.
“We have pay on delivery in about six states across the country now and soon this will be in about fifteen states across the country. We just opened up Ibadan. We are going to open up some other states across the country. So pay on delivery is live, if there is ever any issue with pay on delivery I encourage the customer to call the hotline, ask the question and we will take care of your order.
“We do a lot of customer friendly surveys all the time and we rank highly in terms of our user friendliness. Now of course, we can always improve the site. One thing we have done is that we expanded very quickly, so we went from four categories, we did mobile phones, books, we did computing and electronics in the beginning.”
On maintaining competitive prices within a reasonable profit margin, Tunde said: “So we just try and source very smartly, we source directly from all the brands. We work directly with Nokia, with Blackberry with LG, with Samsung, and just make sure that we are negotiating aggressively, so that we can provide enough value back to our customers. What we want to be sure is that when you look to buy in Jumia, you don’t say ‘look it is so much more expensive than it is in a mall.’ The idea is that the same price you find offline, you can find online, in some cases even better on Jumia.
“In terms of online, I estimate that we are probably around 60 to 70 percent of the organized online retail market. It is my estimate in Nigeria, we have done a couple of surveys and we know that we may be five times bigger than our next competitor. In terms of offline, that is really where the big pie is, the estimates I have seen is that retails represents around 50 billion in US dollars, in terms of GDP for Nigeria as a whole,” he added.
Utilizing a gamut of social media options has also increased Jumia’s visibility on the web, Tunde said: “We have close to a million fans now on social media. I think they are around 750,000 on social media and we engage them on the hour every single hour on Facebook, Twitter, Google+, and Jumia blog.”
Remarkably, Jumia staff work in an open space environment, without any demarcations or barriers separating the staff, but with only work tables arranged in rows and grouped around. Tunde said this is deliberate and for a special purpose. “The idea is to promote collaboration, so in the office you have just seen now, we have our buying teams, our marketing teams, our production teams and it is an open space, because we don’t want people to be typing emails asking questions. (We want them to) get up go talk to your teammate and solve the issue. But also we try to make it a fun environment,” he said.
He argues that the online shop makes available easy information on the viability of their business. “We look at our customer data in terms of what they are ordering, what amount they spend, how often they are coming back and any issues they have. It’s critical because we are only going to go as far as our customers take us. So we have to make sure that we are getting them what they want. We are getting to them at the prices they want and our customers are responding greatly to us.
“We just celebrated our first anniversary and we announced that we provided services to about half a million customers and that we are ranked as the second after Google in terms of preferred shopping sites by Nigerians. We have seen more businesses than Amazon.com in Nigeria. PC Africa which is a popular tech blog does these rankings.
“On Google you can see that we are getting more searches than Amazon.com today and what that says is that the proof of the pudding is in the eating. Nigerians want to shop and they are coming to shop on Jumia.
“Corporate Social Responsibility (CSR) is very important to us, it is something that is very important to me and Raphael and the whole Jumia team. We are building something to make profit, but we want to also have an impact on the society and I think of CSR in several ways.
“One is internally, by employing, training and developing young Nigerians, as you have seen here. We are bringing skills to this market that did not necessarily exist before. So now, there are young people who know how to do online marketing in a world class way. They can run a warehouse in a world class way, they can do buying and talk to Samsung, talk to Nokia representatives in a world class way. These are kids that are younger than 27; our age here is 27.
“Externally, we are working with some very important organizations that are impacting society all the time. We are working with One Child One Book. What happens is that for every book that we sell, we donate a book to One Child One Book. We are working with AIDS foundation and their main focus is on economic empowerment and health initiatives and education. So the idea is, of course to sell, train to make money, but at the same time to also have a positive impact on society.
On the technical aspects of the website development and engineering, Kehinde said: “Everything is in-house, we have a team of developers that we work with across the world, everything is propertied to Jumia. We build from the scratch, because we are thinking long term with this business, we want something that can scale. We started with five employees a year ago, now up to 500 employees are in the company. We started our services in Lagos, now we are servicing the entire country; delivering to every single state. In order to accomplish that you need the kind of software, in addition to a team that will be able to forge ahead with you. That is why from the very beginning we went with a permanent solution.
He spoke about other competing operators in the Nigerian online Market. “I think the competition is good for sure, because what it means is that it brings more innovation. Of course, it creates jobs for Nigerians and for the customers too to get the best price and most quality items.
“So competition is there and it is good, but one thing we know is that we are the clear leaders. The upper most thing is for us not to focus on online competitors, our main focus is on retail in this country in general.
He spoke about going to Harvard University in the United States of America, meeting his partner and what that brings to the enterprise. “I think one thing it does is that it gives you a very strong network. So obviously, through Harvard is how I met my cofounder, we have also recruited some people from Ivy league schools, like Harvard. But at the same time, one thing I will tell your readers and our team all the time is that you can achieve anything you want, it doesn’t matter what school you go to. If you are hard working, if you learn quickly and have no ego, you can get anything you want. Some schools and some jobs give you an upper hand, but I think anyone can catch up.
All big achievers are big dreamers. More often than not, their dreams are bigger than who they are and what they have while dreaming. And one classical example of big dreamers are Bose Ayeni and Folu, her husband, who cofounded Tantalizers, one of the biggest and the fastest growing fast foods restaurants in Nigeria today, 15 years ago.
Speaking with Weekend SuccessDigest, Bose, who is now Managing Director, Tantalizers Nigeria, with her husband as CEO, shares her experience in starting her business in Nigeria. The first hurdle the couple had to scale to realize their dreams was the recurring decimal in the stories of all entrepreneurs: the start-up capital. Her words:
“Our greatest challenge then was raising the capital. We didn’t have the money required for the kind of venture that we had in mind,” she revealed. But rather than give up their Tantalizers vision, the couple took off the hand breaks and threw in their savings, adding for good measure, soft loans from family and friends.
She revealed: “We started the business in 1997. If I recall now, I know the initial loan that we got was N2.5million. However, that was after we had expended all the money we personally had. I remember we got loans and advances from family and friends and so on.”
Yet the dream was still under threat from a lack of sufficient funds. With their backs against the wall, the couple turned to the banks for a loan. If the Ayenis had expectations that their ‘friendly, neighbourhood’ banks were there to help on days when loans are needed, they had to wake up and smell the coffee! Bose tells the story:
“I recall that there was a bank where we (my husband and I) had maintained an account for so many years and through that you would think you had a good relationship. And the truth of the matter is that when you approach them for a loan for a business venture, you are disappointed (because they won’t grant you a loan).”
“Even when we brought collateral we were not given any loan. The bank was afraid because we were a new venture. But we felt that a bank we have been with for a while should be able to give us such loan.
“And I remember that my husband closed his account with one of those banks out of annoyance. He was just not happy with the way we were treated,” she recounts with a note of sadness.
But the couple did not stop knocking on doors and asking for the bank loans. Their dream was for them, much too precious to give up just because they couldn’t get a loan. And as they say, persistence pays, and according to the former Unilever staff, eventually, one bank took the risk to loan them the money.
“I think the total amount of money was around N7.5 million to N10million then,” she points out. “Also, there was a bank that was ready to give us money. They looked at our proposal and they were convinced that we would succeed. And they gave us N2.5 million.”
She finally heaved a sigh of relief when the bank officials, after several meetings and demanding for countless documents and assessments, decided to grant her the loan she and her husband needed to start the fast food business.
That was 15 years ago. Today, Bose and Folu Ayeni have not only made Tantalizers one of the leading chains of fast food restaurants in the country, they have also listed it on the Nigerian Stock Market as a public limited liability company.
From just one shop eatery in Lagos, Tantalizers has spread across major Nigerian cities, rivalry the other known brands like Mr. Biggs, Tasty Fried Chicken, Sweet Sensation and a host of other not-so-popular ones.
In February 2010, Tantalizers forged a strategic partnership with The International Finance Corporation (IFC), an arm of the World Bank which granted it $7million in loan and took $1.5million equity in company to help take the fast food company to the next level and outwit competition posed by foreign eateries like Shoprite, KFC and Barceló’s in Nigeria.
Though Tantalizers has grown into a multimillion dollar company today, getting a loan from the bank was by no means the only mountain they had to climb to reach the Promised Land they now occupy. First, they had to deal with Shylock landlords.
Bose recollects that, “When we started we actually didn’t start with lack of location. Anyway, we were renting the premises that we were using. But along the way when we also saw that when you rent a property, our experience has shown that, for our kind of our business, you will have to completely redesign the premises to the level of the standard you want to set.
“And the landlord is watching you improve the state of his house and once your lease expires you can be sure that you will come back to pay double. One, he is looking at the renewing the lease on the building; he is looking at how your business is doing well so that he could be a partaker of whatever profit that comes.
“Overtime we have had such experiences. The option they give you is that you can move out if you can’t pay and you would not want to move because you have already established your business in that location. After such experiences we also decided that maybe we should look at acquisition of buildings or land and build on our own rather than having problems of landlords.”
A strong will is certainly important for every entrepreneur, especially if you start business in Nigeria. No sooner had they decided to acquire their own properties and build than they had to contend with another challenge: land speculators!
“We faced problems with land speculators. You buy a piece of land and at the point you are about to build on it somebody would come to claim the land. And as we speak now, we have a similar case at a site.
“After paying, we sent for the soil engineer to start the soil test because of the kind of structure we want to build on it. It was an initial property but suddenly somebody came to say that they own the place. Unfortunate, it was the police. As we speak, we have not been able to resolve the issue and we are waiting for the authorities before any work could commence,” the Tantalizers boss recounts.
This prevalent problem of land speculators has not stopped the company from growing though. Even amidst growing competition from local and international fast food brands, Bose and her husband have been able to steer Tantalizers in the right direction of grow and expansion. Tantalizers currently has over 30 outlets in Lagos alone and a total of about 50 across the country. For some time now, the fast foods restaurant has been planning on taking its operations outside Nigeria to the US, UK and Europe.
However, Tantalizers’ growth has not been without fierce competition coming from other fast foods companies, indigenous and international. Competition and the challenge they pose to Tantalizers’ dominance is not an issue Bose loses sleep about; Tantalizers, according to her, is not resting on its oars in spite of its achievements and wants to continue to expand. Her words: “We have been in business for 15 years and we have seen different phases of competition.
“We started from where competition was largely local. We had a dominant or major player who was Mr. Biggs and all others. All others then were made of people like us, Tasty Fried Chicken, Sweet Sensation and we have lots of neighbourhood competitions.
“But overtime, we found out that a lot of neighbourhood operators were dwindling and some of them have shut down. Then all others are surviving. And in the last five years, we discovered that the competition moved from being local to international. We have had a couple of entries of international brands.
“We now have KFC, South African brands among others. The face of competition has changed, and demands made on local operators from consumers have also changed. It has changed expectations of average consumers.”
Is she learning anything from her competition? Bose answers in the affirmative, adding that, “For us at Tantalizers, it has only made us wiser because in a situation where we were dealing with one of us is different from when we are dealing with an international brand that we know we can learn from.
“So what we have now is that the local fast-food operators are working to bring themselves up to the level of the international brands.”
With international brands now involved in the same market, how has Tantalizers faired in the market? An astute businesswoman that she is, Bose reveals that the competition has been there from day one, but Tantalizers’ concern is to “think every day of how to improve what we do to satisfy our customers because they are key to our goals.”
Speaking further on taking the business to the next level, Bose admits that the loan granted by IFC is a major boost for the business. She believes that, “our association with International Finance Corporation (IFC) should push us to a higher level because when you have an association with the World Bank, there are acceptable standards expected of you.
“So, the association would not only help in the area of finance but it would also help us and push us to the next level to ensure that we benefit in terms of IT and information flow and integration upgrade.”
This is not all. The former Rank Xerox employee reveals that Nigerians are welcome to join the Tantalizers family, explaining that by being a part of the Tantalizers franchise is being part of a great dream. She explains:
“When you come to Tantalizers and you accept that you can do a franchise with us, we ask you some questions. We ask you if you have a location or we give you a location we have been looking at, we supervise the building of the structure. Do you have the resources?
“If the location is okay, we give you an agreement; we take you through the training programme. Thereafter, we recruit for you and manage the business with you for a period of time until we are sure you are able to run it on your own,” she pointed out.
From a dream that was in danger of fizzling out due to lack of funds, Tantalizers has grown to become a fast food restaurant of choice for Nigerians. We sought to know what the success secrets of the boss were and she lists them carefully.
“I think for me the number one thing is that you need is to acquire knowledge”, she begins. “You must have an idea of what your business is. You should understand basic financial principles. You must know that there is difference between revenue and profit.”
Then she emphasizes prudence, revealing that “You must not be disciplined and delay gratification when money comes in. A lot of businessmen throw parties when money comes. You must invest on your workers. You must have a vision that is bigger than yourself.
“My vision for Tantalizers was not as big as my husband’s vision for Tantalizers. It is my husband’s vision for Tantalizers that has taken us to where we are now. You must have a roadmap on how you want to get there. You should work with people and deal with them as people and not as tools. Always think of the human side of people.
“You may not be the best payer in the economy but people working for you should be happy when they leave their homes for work not because of how much you pay them but because you have built a relationship with them that transcends the job. As a woman, another principle of success comes from support from your family, support from your husband. My husband really supported me.”
WHAT IS YOUWIN!?
YouWiN! stands for Youth Enterprise with Innovation in Nigeria. It is an innovative business plan competition aimed at job creation by encouraging and supporting aspiring entrepreneurial youth in Nigeria to develop and execute business ideas. The accomplishments of the 1,200 YouWiN! awardees were celebrated at the Presidential Villa on April 12, 2012. YouWiN! Women was the second edition of the entrepreneurial scheme, which was designed for only female entrepreneurs aged 45 years or less. YouWiN! 3 is the third edition and will feature men and women entrepreneurs in Nigeria between the ages of 18 to 45.
The Youth Enterprise with Innovation in Nigeria (You WiN!) Programme is a collaboration of the Ministry of Finance, the Ministry of Communication Technology (CT), the Ministry of Youth Development and the Ministry of Women Affairs and Social Development that will launch an annual Business Plan Competition (BPC) for aspiring young entrepreneurs in Nigeria, in line with the Federal Government’s drive to create more jobs for Nigerians. The programme will be implemented in partnership with Nigeria’s private sector, who will be requested to provide funding support.
GOAL OF THE PROGRAMME
The main objective of the Youth Enterprise with Innovation in Nigeria (YouWiN!) Programme is to generate jobs by encouraging and supporting aspiring entrepreneurial youth in Nigeria to develop and execute business ideas that will lead to job creation. The programme will provide aspiring youth with a platform to show case their business acumen, skills and aspirations to business leaders, investors and mentors in Nigeria.
SPECIFIC OBJECTIVES OF THE PROGRAMME:
- Attract ideas and innovations from young entrepreneurial aspirants from Universities, Polytechnics, Technical colleges, and other post-Secondary institutions in Nigeria;
- Provide a one time Equity grant for 1,200 selected aspiring entrepreneurs to start or expand their business concepts and mitigate start up risks;
- Generate 80,000 to 110,000 new jobs for currently unemployed Nigerian youth over the three years during which the three cycles will be implemented;
- Provide business training for up to 6,000 aspiring youth entrepreneurs spread across all geo-political zones in Nigeria;
- Encourage expansion, specialization and spin-offs of existing businesses in Nigeria; and,
- Enable young entrepreneurs to access a wide business professional network and improve their visibility.
- YouWiN! is an equity contribution to your business. It is therefore NOT A LOAN but a grant.
- Award recipients will be paid according to the needs of the business and specific mile-stones stated in the business plan.
- Award recipients must be registered with CAC before disbursment of funds even though they do not need to be registered to apply. YouWin! will support the registration process.
- Award recipients will opperate accounts using their registered companies with any of the participating commercial banks prior to disbursment.
- Award recipients must sign a grant agreement with the managers of YouWiN!before disbursment of funds.
FOR GENERAL ENQUIRY:
Woka: (234) 809 594 1711
Oyinda: (234) 812 891 8177
YOUWIN! FIRST EDITION:
Nanko: (234) 815 751 2826
Oyinda: (234) 812 891 8177
Olawale: (234) 818 032 4052
Michele: (234) 818 723 7689
Ken: (234) 810 219 9690
Wale: (234) 806 394 1372
For more information, visit : https://www.youwin.org.ng/about-youwin/