Alibaba Will Soon Open In Nigeria And Africa To Compete With Jumia And Konga

Alibaba.com will soon open operations in Africa with specific focus on Nigeria. We do think that the firm’s global ambition cannot be completed without having Africa in the midst. There is evidence that expansion, not necessarily via e-commerce, is imminent. In short, they are already in the continent through a partner firm. The e-commerce is just going to be added very soon.

For the past decade, fintech startups in the Africa with U.S. partners have successfully unbundled financial services. By focusing on one vertical such as consumer lending, remittance, receivables or life insurance, these startups leverage modern tech stacks to reimagine a single offering, and do it better than the incumbents.

However consumers may still desire the simplicity of a “one-stop-shop.” With this in mind,  it is very possible for financial services to be re-bundled on a modern tech platform.

Ant Financial, the $60b financial services behemoth spun out of Alibaba, may have created the playbook. Formerly known as Alipay, Ant Financial was launched in 2004 as an escrow-based method for Alibaba’s customers to pay online. Today, Ant Financial’s users can also build and obtain credit, manage investments, save in a digital bank, and acquire insurance.

In the process, Ant Financial has established a dominant market position in China. Over 70% of China’s online commerce goes through Alipay, and the company sees accelerating adoption of its other services.  The company also has international ambitions, partnering with First Data in the U.S. to enable its users shop with 4 million American merchants. The company is now paying $1.2b to acquire Moneygram and dip its toe in the international money transfer market.

That acquisition of Moneygram is the path into Africa. Moneygram has been operating in the continent for many years. Ant Financial will simply use that vehicle to redesign the financial system in selected countries it may decide to operate. Nigeria will be one of those countries.

Ant’s ubiquity will be a huge change for local e-commerce companies as the escrow account strategy is something many Africans will agree with. They will bundle many services in the midst with remittance, transfer etc all together to deliver one-stop service at scale few can compete. Jumia and Konga will have more challenges to deal with since Ant Financial will likely be a precursor for Alibaba.com to open shop in Africa. Once they have built up the payment system, the next is the marketplace.

They truly want global domination and without Africa, they cannot claim that title.