Two of Africa’s leading B2B e-commerce platforms, Wasoko and MaxAB, have finalized their long-anticipated merger, according to TechCrunch. This all-stock deal is set to transform the companies from traditional B2B e-commerce players into a diverse ecosystem catering to Africa’s $600 billion informal retail sector.
Discussions about merging Kenya-based Wasoko with Egypt-based MaxAB began last December. The merger, the first of its kind on the continent, involved integrating 16 subsidiaries across various countries, a complex process that took eight months, which is typical for global mergers, Daniel Yu, co-CEO of the merged company, told TechCrunch.
Major investors such as Tiger Global, Silver Lake, Avenir, and British International Investment, who collectively contributed over $240 million to Wasoko and MaxAB before the merger, played a significant role in the deal.
Both companies have historically acted as distributors for small retailers across Africa and provided some financial services. Initially, they operated in eight markets but have since consolidated their operations to five: Egypt, Kenya, Morocco, Rwanda, and Tanzania. This downsizing reflects a broader trend among African B2B e-commerce firms, many of which have scaled back or pivoted due to financial challenges and changing investment climates.
Despite these challenges, the merger offers significant growth potential. Individually, Wasoko and MaxAB were two of the largest B2B e-commerce firms on the continent. While specific GMV figures are not disclosed, the new entity claims to have the largest network of B2B informal retailers in Africa, with over 450,000 merchants. Yu indicated that around 200,000 of these merchants are active on both platforms.
Yu noted that, although they are not sharing specific GMV figures, the company is now achieving profitability per order, a significant shift from the previous focus on maximizing GMV.
The merger aims to enhance profitability by expanding fintech offerings, which have higher margins than traditional commerce. Both Wasoko and MaxAB had previously offered financial services like e-payments, credit financing, and digital services top-ups. In the newly merged entity, these services will be managed as separate business units within a unified app.
Egypt, the largest market for these financial services, saw more revenue from fintech than from e-commerce transactions, which totaled over $180 million last year. The combined company has also provided over $20 million in merchant financing over the past year, boasting a repayment rate above 99%. They anticipate that revenue from fintech services will more than double by December 2024.
