Wasoko & MaxAB merge to empower businesses, connect consumers across Africa
While the terms of the deal are yet to be finalised, the merger is seen as a strategic response to the challenges faced by B2B e-commerce companies in Africa, many of which are scaling back operations due to funding scarcity.
Wasoko and MaxAB seek to enhance the informal retail sector across the continent, aiming to drive digital retail transformation and establish the most successful e-commerce platform on the continent.
With a combined customer base exceeding 450,000 merchants spread across eight African countries, including Egypt, Morocco, Kenya, Tanzania, Rwanda, Uganda, Zambia, and DR Congo, the impact is expected to be substantial. This strategic move reflects a shared vision to accelerate the growth and development of the informal retail sector, estimated to be worth $850 billion.
Wasoko, amid its push for profitability, recently conducted a significant round of layoffs affecting its Kenyan workforce and exited markets in Senegal and Ivory Coast. MaxAB, a major player in Egypt and North Africa, faced financial challenges and actively sought a survival strategy as its cash reserves depleted.
Notably, the decision to merge aligns with the shared investors of MaxAB and Wasoko, making it a logical partnership in the current funding space. Other B2B e-commerce companies, like Copia Global and Twiga, have also scaled back operations due to cash constraints, highlighting the prevailing challenges in the industry.
Sources suggest that Wasoko closed a $125 million round last year, with funding tied to meeting set milestones. However, conflicting reports indicate that only $30 million had been received by the time merger talks began. Wasoko refutes this claim, stating they received $113 million and emphasising the absence of a milestone system for fund release.
Both MaxAB and Wasoko have a robust financial history, with MaxAB having raised over $100 million, including a $55 million Series A and a $40 million pre-Series B. MaxAB’s strategic acquisitions, including YC-backed WaystoCap, position it as a significant player in Egypt’s B2B retail and e-commerce market.
While a merger between MaxAB and Wasoko seemed unlikely last year, the evolving landscape has prompted this move. MaxAB aimed for full distribution in Morocco and expansion into Saudi Arabia, while Wasoko targeted West Africa expansion and diversified product offerings.
The merged entity aims to leverage its combined expertise to address challenges in the informal retail sector, fostering greater intra-Africa trade, and driving technological innovation on a Pan-African scale. Monthly revenue growth exceeding 30% since the start of 2023 highlights the optimistic outlook for the merged entity, as it continues to explore opportunities for expanding services across the African continent. The CEOs of MaxAB and Wasoko, Belal El-Megharbel and Daniel Yu, express their commitment to steering the long-term future of the merged entity, providing stability and a shared vision for the company’s trajectory.
Strengthening Infrastructure for Market Challenges
Both companies identify major challenges inhibiting the informal retail sector’s development and are committed to addressing them through strengthened infrastructure.
The merger emphasises the importance of overcoming logistical hurdles, enhancing payment solutions, and providing better financing options for merchants. This concerted effort is positioned to bring about positive changes in the day-to-day operations of the informal retail sector.
Promoting Intra-Africa Trade and Technological Innovation
One of the key outcomes expected from this merger is a deep collaboration to enable greater intra-Africa trade between markets served by Wasoko and MaxAB. The emphasis on implementing new technologies on a Pan-African scale indicates a commitment to innovation. This move could potentially revolutionise e-commerce technology and services, fostering a more connected and efficient trade environment across borders.
Financial Growth and Profitability
Both Wasoko and MaxAB have experienced commendable growth in recent times, with monthly revenues and active merchant networks showing substantial increases. The merger is anticipated to accelerate this growth trajectory through the combined expertise and capabilities of the two entities. The focus on profitability signals a positive outlook for the financial health of the informal retail sector in the regions they serve.
Consumer Impact: A Diverse Range of Essential Products
Consumers are expected to benefit from the merger through access to a diverse and affordable range of essential products. The commitment to empowering businesses and connecting consumers across the African continent highlights the companies’ dedication to providing valuable services to local communities.