The founder of Konga, Sim Shagaya has reignited a 7-year old war with his reaction to the Jumia scandal of $17.5 million improper orders, inflated figures and U.S class action for false statement claimed to have been used to deceive investors.
Shagaya was the Chief Executive Officer of Konga before stepping down in 2016. His position is occupied by Shola Adekoya. Konga is the closest rival of Jumia in Africa. Both e-commerce companies started operation in Nigeria before branching out to other Neighbouring countries.
In a series of tweets on his social media handle, Twitter (@SimShagaya), Shagaya condemned the false statement Jumia was accused to have given their investors. According to Shagaya, such act has a detrimental ripple effect on other players and customers.
What Jumia did: Nairametrics had reported that Jumia is battling several issues like improper orders by some of its employees, several class-action lawsuits for misinforming investors, as well as the increasing losses which grew 59.2% in one year.
We made many operational mistakes in the companies I founded but one thing we never did was mislead investors. Never. @JasonNjoku was prescient several years ago (paraphrasing): the actions of players who do this not only hurt themselves & their investors but entire ecosystems
— Sim Shagaya (@SimShagaya) August 22, 2019
While admitting that he and his partners in Konga made mistakes during his time at the helm of affairs at Konga, he said they never deceived investors like Jumia is being accused of.
In his assertion, engaging in such activity hurts the whole e-commerce chain, “We made many operational mistakes in the companies I founded but one thing we never did was mislead investors. Never. @JasonNjoku (Founder of IrokoTV) was prescient several years ago (paraphrasing): the actions of players who do this not only hurt themselves & their investors but entire ecosystems.”
Jumia management knows: While he didn’t name Jumia, Shagaya said there was no way Jumia’s employees engaged in fraud of $17 million without support from the management of the company.
“For someone who has built a large-scale e-commerce business, I can confidently tell you that there is no way that a $10m+ fraud can happen without the complicity or, at the minimum, the tacit consent of management. It’s impossible.”
Jumia hurting Konga: Shagaya in his Twitter thread, said Konga is being hurt by the activities Jumia has been accused of and the figure inflation by Jumia workers.
He said investors are constantly comparing Konga’s growth with that of Jumia whenever they had a meeting and this usually pained him. According to Shagaya, Jumia’s ‘make-believe’ figures were often rubbed on his face, with investors asking why they struggle to meet Jumia’s growth numbers.
Why Shogaya is pissed: “What annoys me is that this action of my competitor directly hurt my business. At every meeting with my investors, I was constantly peppered with questions about the ability of my competitor to grow at what seemed at a faster rate than I. We know now that this growth was a lie.” Shagaya tweeted.
Adding that, “What annoys me is that this action of my competitor directly hurt my business. At every meeting with my investors, I was constantly peppered with questions about the ability of my competitor to grow at what seemed at a faster rate than I. We know now that this growth was a lie.” Shagaya tweeted.
He added that, “This is how ecosystems are hurt and credibility of entire environments damaged. They achieved what they wanted. But ultimately they were shortsighted. The market, consumers and investors, always win.”
Meanwhile, Jason Njoku reacted to Shagaya’s comment on Twitter with an article he wrote about Jumia last year, “Is Jumia using jazz?” In the article he wrote last year (2018) April, Njoku was stunned by Jumia’s figures and how they are able to attract so many funds from investors that make them superior to Konga despite both e-commerce companies launching the same year.
Just a year ago https://t.co/ENAfZXbSnz
— JasonNjoku (@JasonNjoku) August 22, 2019
Jumia vs Konga: Aside from the extra-curricular activities attached to Jumia, which led to Shagaya’s outburst, Jumia and Konga had also been at each other’s jugular for years.
In order to secure the e-commerce marketplace beyond Nigeria, Jumia’s parent company, Rocket Internet, bought and registered Konga-related domain names in ten countries.
This move by Jumia infuriated Konga, and the latter threatened to take Rocket Internet to court, stating that registering all Konga-related domain name will handicap the company, affecting its expansion plans when the decision to embark comes.
The domain names Jumia bought;
- Konga.cd for Cote D’Ivoire
- Konga.cm for Cameroun
- Konga.ly for Libya
- Konga.mu for Mauritius
- Konga.ma for Morocco
- Konga.mw for Malawi
- Konga.sc for Seychelles
- Konga.sh for Saint Helena
- Konga.co.ke for Kenya
- Konga.co.za for South Africa.
Shagaya in a letter in 2014, described the German’s decision as a “Destructive foreign competition in the internet industry.” According to Shagaya in the letter, Rocket Internet has been trying to take down other local startups that operate in the same market where its (Rocket Internet) subsidiaries are operating.
Rocket Internet owns Camido, Jovago (now JumiaTravels), Kaymu, Vamido, EasyTaxi and HelloFood.
Shagaya claimed Rocket Internet was gunning for the likes of Cheki, Private Property, BuyAm, Tranzit, and CityChops. He said in the letter, that this ‘destructive’ business model is intended to drown indigenous innovation.
COVID-19 reveals that many Nigerians have no emergency savings
The playout of events following the lockdowns resulting from the ongoing COVID 19 pandemic shows that Nigerians do not have emergency savings
Though we are still grappling with the effects of COVID-19, it may not be too early to begin to take stock and find out what we did well during the pandemic and what we should have done better.
Almost everyone’s radar has been on the ill-preparedness or lack of appropriate response by the government, with little or no time for an inward look at ourselves. The type of government we have in Nigeria should not have left anyone surprised at their response to the pandemic, especially when it came to the welfare of the populace. What do you expect from a government that is dysfunctional, at best?
With such government, it is time for Nigerians to begin to watch out for themselves and prepare for the unforeseen, like the times we are in currently. The playout of events following the lockdowns caused by the ongoing COVID-19 pandemic shows that Nigerians do not have emergency savings.
According to a recent publication from the Punch Newspaper, “Barely one month of a lockdown of Abuja, Lagos and Ogun state, millions of Nigerians had become stricken with hunger. Many could not bear an extension of the movement restrictions.” The ensuing protests were indicative of the fact that many Nigerians were living off their daily incomes with no savings to fall back on.
High Poverty Level
Many may have asked how they could save without having funds, to begin with. Agreed, the level of poverty is high in Nigeria; however, people should know that having savings is not a luxury, but a necessity. It does not have to be large, but putting aside something, no matter how small on a regular basis goes a long way in times of emergency.
I have seen images of Nigerians who surprised themselves and others with how much they saved over time in their piggy banks. There is no hard and fast rule of how much one should have in emergency funds, but there seems to be an agreement among financial analysts and planners that having the equivalent of 6 months’ expenses in your emergency savings account is the ideal.
The author of the book “Richest Man in Babylon” stated it clearly that if you do not save, it means that you have paid everyone else but yourself.
How to Start Saving
Pay yourself first: In line with the instructions in “The Richest Man in Babylon,” when you receive your monthly salary or collect that sales proceed from your business, “pay yourself first” by saving at least 10% of your collections or salary. For the salary earner, set up a direct deposit account where the money would be taken out of your pay directly into a bank savings account. By so doing, you are forced to save.
Cultivate the savings habit: Just as spontaneous buying is a habit, form the habit of saving. Do not see saving as putting aside the remnants (if any) after all your expenses. If that is your attitude to savings, then you fall into the group that pays everyone else but themselves.
One thing is certain; as long as you have the money, there will always be something that is going to demand that money from you.
Remind yourself to save: If you are a salary earner who does not want to set up a direct deposit from your paycheck or you are a businessman or woman of any means, you can set up a savings reminder around the time you receive your salary or around your peak business time.
One website that can help you with this is https://www.futureme.org/ With this website, you can send an email to yourself to be delivered around the time you expect to receive your pay or business income, reminding yourself to save. Just like you set an alarm on your mobile phone, you can do so with a reminder to save.
Start Small ASAP: The Bible says that if you are not faithful with small things, how can you be faithful with larger things. You do not need millions to start saving, all you need is the will, the determination, and consistency. So, start small and start now, but be consistent.
Reduce your Expenses: As already noted, one of the reasons that people do not save is because their expenses keep increasing, even when income sources are shrinking. If you find yourself in that situation (and you surely will, at one point or the other), cut down on your expenses and make them fall in line with trends in your income. Avoid spontaneous, emotional and flamboyant buying. Buy out of need, not out of want.
Why It Seems Difficult to Save: To a whole lot of people, it is difficult to save because they live in the now. This is what financial psychologists call scarcity of attention. This scarcity of attention stops people from seeing what is really important and makes them see the urgent current expenses they need to cover.
One reason why it is difficult to save is that while the expenses keep rising (out of increased need and inflation), sources of income keep shrinking or stagnating. The good thing however, is that we have the option to shrink our expenses in line with shrinkages in our income, but often times, we do not choose to do that. That is where the inability to save starts from.
Conclusion: If there is any lesson, we learned from the sudden outbreak of COVID-19, it is and should be that emergencies happen, and efforts should be made to cushion the financial impact of such emergencies by preparing for them in advance through emergency savings.
Written by Uchenna Ndimele firstname.lastname@example.org
IMF advises banks to suspend dividend payment
However, halting dividend payments may not go down well for many retail and institutional investors, who rely on bank dividends for regular income.
In an article published on its website, International Monetary Fund (IMF) Managing Director, Kristalina Georgieva, advised banks to halt dividend payment for now. According to her, with the expectation of a deep recession in 2020 and partial recovery in 2021, banks’ resilience will be tested. Therefore, having in place strong capital and liquidity positions to support fresh credit will be essential.
According to the article, one of the steps needed to reinforce bank buffers is retaining earnings from ongoing operations which are not insignificant.
IMF staff calculate that the 30 global systemically important banks distributed about US$250bn in dividends and share buybacks last year.
In a circular dated January 31, 2018, the Central Bank of Nigeria (CBN) stipulated new conditions for eligibility of Nigerian banks to pay dividend and the quantum of dividend to be paid out by banks who are eligible. Prior to the release of the circular, dividend payout policy for Nigerian banks had been spelt out in Section 16(1) of BOFIA 2004 (as amended) and Prudential Guidelines for DMBs of 2010. The circular provided guidelines and restrictions around divdidend payout for banks based on NPL ratio, CRR levels, and Capital Adequacy Ratio (CAR).
However, there were no regulatory restriction on dividend payout for banks that meet the minimum capital adequacy ratio, have a CRR of “low” or “moderate” and an NPL ratio of not more than 5%. However, it is expected that the Board of such institutions will recommend payouts based on effective risk assessment and economic realities. Indeed, current economic realities demand caution.
Current economic realities mean that banks face asset quality threats, further devaluation threat which may impact capital in some cases, and lower profits which in turn affects the quantum of capital retained. Ideally, these should reflect in NPL ratio and CAR ratio and should immediately restrict banks’ ability to pay dividend. However, there is usually a time lag before these ratios begin to reflect the new economic realities. Therefore, IMF’s advise may come in handy for many banks.
That said, halting dividend payments may not go down well for many retail and institutional investors, who rely on bank dividends for regular income. Banks like Zenith and Guaranty Trust have a good history of consistent dividend payment with attractive yields which is a major attraction for many shareholders.
CSL STOCKBROKERS LIMITED CSL Stockbrokers,
Member of the Nigerian Stock Exchange,
First City Plaza, 44 Marina,
PO Box 9117,
CBN reduces MPR to 12.50%, holds other metrics
Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) from 13.50% to 12.50% and retains CRR at 27.5%, Liquidity ratio at 30%.
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) from 13.50% to 12.50%.
Governor, CBN, Godwin Emefiele, disclosed this while reading the communique at the end of the MPC meeting on Thursday in Abuja. Meanwhile, other parameters such as the Cash Reserve Ratio (CRR) remained at 27.5%, Liquidity ratio at 30%.
Highlights of the Committee’s decision
- MPC cuts MPR by 100 basis points to 12.50%
- CRR stood at 27.5%
- The Liquidity Ratio was also kept at 30%
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CBN MPC cuts policy rate by 100 basis points to 12.5 %, maintains other parameters constant.
— Central Bank of Nigeria (@cenbank) May 28, 2020
According to Emefiele, the decision of the MPC to reduce the Monetary Policy Rate was informed by the impact of the Covid-19 pandemic on the economy, increased inflationary pressure, restrictions in international trade and more.
He highlighted the decline in the nation’s GDP as well as the decline in the manufacturing and non-manufacturing purchasing index which were attributable to slower growth in production, rate of unemployment, amongst others.
On reopening of the economy, Emefiele emphasised the need for Government to work towards a gradual reopening in line with recommendations of the Presidential Task Force (PTF) and advice from medical experts, insisting that efforts must be directed at saving not only lives but also livelihoods. He said,
“This is to enable the resumption of economic activities necessary to stimulate growth, accelerate the pace of recovery and restore livelihoods, particularly the vulnerable in our society.
“With respect to output, the Committee urged the Federal Government to continue exploring options of partnership with the private sector to fund investment in infrastructure. This would aid employment generation, support production and boost output growth.”