Naspers Still Searching for Tencent in Africa: Mocality, Konga, Kalahari

Africa’s largest company by market capitalization which is so big that the whole of the Nigerian Stock Exchange is not up to 40% of its value is still searching for another winner. It saw alpha when it hit glory with investments in China’s Tencent. Naspers has seen many disappointments in its broad internet (ecommerce) investments in Africa. It shuttered Mocality, a digital business directory, and also killed Kalahari, one of Africa’s foremost ecommerce companies. In all these entities it closed, it complained of one thing: lack of profitability.

Naspers chief executive officer Bob Van Dijk said Africa’s largest company will consider “structural options” if the value gap with its stake in Tencent Holdings persists.

Naspers has a 33% stake in Shenzhen, China-based internet giant Tencent, valued at about $158 billion, while Naspers itself has a market value of about $112 billion. The discount is “too high,” and has been accelerating in the past 20 months, Van Dijk said on Tuesday in New York. Leaving aside Tencent, analysts place Naspers’ asset value at more than $180 billion, said chief financial officer Basil Sgourdos.

The deal with Tencent was extremely good for the South African company. It has continued to look for another moment like that. Despite exiting many ecommerce companies, it got back few years ago with investment in Konga for 50% equity.

Naspers, South African media giant has acquired a 50 percent holding in Konga.com, the leading Nigerian online general merchandise store, for an undisclosed amount.

Meloy Horn, Naspers’ group information relations officer confirmed the acquisition adding that the media giant was “anticipating favourable collaborations involving both parties in the near future.”

“Nigeria will possibly soon be the largest economy on the African continent, therefore as an investor we are keen to participate in the growth of a promising African market,” Horn said.

Naspers loves Nigeria with MultiChoice, DStv, GoTv , etc all doing just fine in the country. Yet, its ecommerce investments have not turned out well. It tried Kalahari and Mocality in Nigeria before it gave up. It has at least one major ecommerce business in Nigeria through OLX, a digital classified business. OLX early this year started running adverts in its platform to help boost revenue, and it is now within the crosshairs of Facebook Marketplace which is now the second ecommerce platform in Africa, behind Jumia..

Yes, Facebook has a marketplace; the very business companies like OLX and Jiji depend upon. With nearly everyone on Facebook, these companies would have real challenges ahead to get people to get out of Facebook. After all, the same users OLX and Jiji target are the same people selling and buying on Facebook.

Facebook would scale Marketplace across Africa in coming months. That would be bad for OLX which just introduced advertising in its ecosystems to make extra revenue. The future with Facebook, WhatsApp and Instagram evolving into SME and business ecosystems could be devastating to African startups working in the ecommerce space.

Konga was sold to Zinox Group this weekend.  That is certainly not the exit Naspers was expecting. The story of Naspers’ foray into ecommerce tells us clearly that ecommerce in Nigeria would be hard to figure out. This company has essentially burnt tens of millions of dollars as it continues to look for a working model. Sure, one day, someone would figure it out. It could be that the solution is not just the money, but the right business model. That “right business model” remains elusive.

You can always read my Harvard Business Review piece that captures some of the challenges which most ecommerce platforms cannot control, unfortunately.

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