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Sustaining ICT Industry through M&As

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  • Sustaining ICT Industry through M&As

The recent acquisition of Konga, an e-commerce company, by Zinox Group, will no doubt help in growing the ICT industry in Nigeria, writes Emma Okonji

Although mergers and acquisitions have been a global development in the Information and Communications Technology (ICT) sector, industry regulators in Nigeria have always advised small and big companies on the need for merger and acquisition, which in their views, would make companies stronger, commercially viable, more visible and competitive, to become relevant in the industry they operate.

The Nigerian Communications Commission (NCC), the telecoms industry regulator for instance, has always advised telecoms companies to consider merger and acquisition, especially those companies whose activities are beginning to wobble and dwindle. NCC had always insisted that there would be no bailout option for telecoms companies whose operations are going down and that the best option is to either merge or be subsumed into a bigger organisation through acquisition. In the same vein, the Computer Professional Registration Council of Nigeria (CPN), the umbrella body and regulator of all those practicing computational technology, has always advised member companies on merger and acquisition, as the best way forward.

It is therefore not surprising why industry stakeholders are commending Zinox Group for the recent acquisition of Konga, one of the giants of e-commerce business in Nigeria. They believe that the acquisition is a major landmark industry deal that will not only sustain development in the e-commerce business, but will also revolutionise e-commerce in Nigeria, given the technology vision and focus of the Chairman of Zinox Group, Leo Stan Ekeh.

Merger and acquisition in telecoms

In the Nigerian telecoms space, merger and acquisition has been ongoing since the inception of Global System for Mobile Communication (GSM) in 2001. It all started with Econet Wireless, the first GSM company to roll out its commercial services in August 2001. Few years down the line, it had issues with its principal owner and founder, Mr. Strive Masiyiwa, a Zimbabwean businessman. The problem, later degenerated into separation of ownership and acquisition of brand identity by several core investors, until Bharti Airtel of India finally acquired it, and the brand name was eventually changed to Bharti Airtel. Today Bharti Airtel has survived its past storms and challenges and it is doing pretty well, and competing very well with other telecoms operators in the country.

In the Code Division Multiple Access (CDMA) aspect of telecoms business, where the likes of Mobitel, Independent Telephone Network (ITN), Bourdex, MTS First Wireless, Reltel, Intercellular, Cellcom, Starcomms and Visafone, featured prominently, the operators however faced stiff market competition from GSM operators and virtually all of them, except few, went under for lack the vision to embrace merger and acquisition.

Visafone for instance, saw the challenges in the competitive market early enough and quickly acquired ITN, Cellcom and Bourdex Telecoms, in order to expand its business and remain competitive. However, in 2015, Visafone entered into acquisition talk with MTN Nigeria, and in January 2016, MTN Nigeria finally acquired Visafone

Merger and acquisition in IT

Merger and acquisition in the Information Technology (IT) space has also been ongoing. Most Internet Service Providers (ISPs) went down for lack of vision to either merge or be acquired. Although some merged their operations, but could not sustain market competition for lack of right policy framework and business development plan. Some were pushed out of the market by the big GSM operators who at a point in time, started offering the same data service that the ISPs were offering, in addition to their core voice operation.

Last year, Business ConneXion, an IT solution company operating in Nigeria, was acquired by BCX of South Africa and today the Nigerian company has become a global brand through the acquisition, which retained the Nigerian company as an arm of BCX, providing the same IT services in Nigeria with increased customer base and with several awards won within one year period of acquisition.

The Zinox landmark industry deal

Last week, Zinox Group, an integrated Information and Communications Technology solutions conglomerate and Original Equipment Manufacturer (OEM), announced the acquisition of e-commerce giant, Konga in a move that is expected to raise the profile of e-commerce in the country.

Zinox Group concluded the acquisition of the e-commerce powerhouse, after successfully rounding off months of long-drawn negotiations with major investors, Naspers and AB Kinnevik in a landmark development that will expectedly reposition Konga for a greater share of the e-commerce market in Nigeria and beyond.

Based in South Africa, Naspers is a broad-based multinational internet and media group, offering services in more than 130 countries, while AB Kinnevik, founded in 1936, is a Swedish investment company investing primarily in digital consumer brands.

The unprecedented development is coming at a time when global e-commerce spend is expected to top previously unheralded levels.

In 2017, retail e-commerce sales worldwide amounted to $2.829 trillion, while e-retail revenues are projected to grow to $4.48 trillion in 2021.

Speaking on the decision to invest in Konga, Head of Corporate Communications, Zinox Group, Mr. Gideon Ayogu said it was an easy one for the organisation.

“We have always had an interest in Konga and another big one you know very well but our priority was Konga first because of her integrated nature of four quality companies in one,” he disclosed. “Konga is a world-class, professionally-run company whose landmark strides in the sector have gone a long way in ushering millions of Nigerians into the ease and convenience of online shopping while boosting the conduct of e-commerce in the country. Konga’s integrity is their pride.

“Today, many Nigerians can attribute their first experience of e-commerce to Konga.com and we are excited to be a part of this remarkable story. Many shoppers can also attest to the speed and efficiency in delivery that characterizes KOS-Express, the company’s logistics arm, which is arguably the best in the sector at the moment,” Ayogu said.

Zinox’s motive

When asked if the motive of acquiring Konga was to expand the Yudala e-commerce business that is founded by Zinox Group, Ayogu explained that the motive was not meant to use Konga to boost Yudala e-commerce business, but to use Konga to expand its operations in e-commerce, an industry it pioneered in Nigeria with the launch of BuyRight Africa.com which was challenged by the absence of credit card and e-payment infrastructure when it was launched over 12 years ago. According to him, Yudala as an e-commerce company, is doing well and will not be merged with the newly acquired Konga.

He said the acquisition would create additional employment opportunities for over 5000 Nigerians, both at home and in the diaspora within a short period.

“Our ambition is to up the tempo by revolutionising e-commerce on the African continent, with Konga at the fore-front of this initiative. In addition to positioning the business on a path of profitability in the short term, our long term plans are focused around seeing Konga well established in other African capitals. Furthermore, we will be unveiling a lot of new initiatives soon and we advise shoppers and merchants alike to look out for these innovations, which will radically reshape the average customer experience of e-commerce in Nigeria and on the continent and put more money in their pockets,” Ayogu disclosed.

Economic value

Optimistic that the acquisition of Konga by Zinox Group will bring a lot of economic value to the Nigeria e-commerce industry, which is an emerging industry, industry stakeholders said the acquisition would further strengthen technology convergence in the Nigerian ICT space.

President, Association of Telecoms Companies of Nigeria (ATCON), Mr. Olusola Teniola, who commended the courage of Ekeh and the Zinox Group, which he founded years back, said it would boost the rollout of broadband infrastructure by NCC’s licensed Infrastructure Companies (InfraCos), since so much contents would be generated from the Konga acquisition, that will drive e-commerce in Nigeria.

“The acquisition of Konga by Zinox Group is one good thing that has happened to the ICT industry this year, because it will help the e-commerce industry to become more vibrant, competitive and it will enhance service quality. It will bring about more deployment of broadband infrastructure by InfraCos for last-mile service delivery, since e-commerce business, which used to be an emerging market, is beginning to witness rapid growth and development.

“The e-commerce business is becoming attractive, addressing several issues faced with physical market and offline market space. With the acquisition of Kongo, it simply means market expansion that will bring a lot of economic value such as affordability, accessibility and innovation,” Teniola said.

Widely expected to place Konga on a sound footing for increased market share, the landmark acquisition by the Zinox Group is seen by industry watchers as one that could see e-commerce in Nigeria finally unlock the massive revenue potential in the global multi-billion-dollar industry.

About Konga

Konga.com is a Nigerian electronic commerce company founded in July 2012 with headquarter in Lagos. It offers a third-party online marketplace, as well as first-party direct retail, spanning various categories including consumer.

Founded by Mr. Sim Shagaya, Konga is said to have one of the best e-commerce technology platform in Nigeria that allows for easy online shopping and online delivery of goods from the e-commerce mall to any location in Nigeria. The best in technology tools displayed by Konga, is one of the things that attracted Zinox, a technology company, to Konga, according to a source close to Zinox Group. Before the acquisition, Konga was perceived as one of the strongest e-commerce brand in Nigeria and operated in various categories as Konga.com, Nigeria’s largest online mall; KongaPay, a CBN-licensed mobile money platform with over 100,000 subscribers and rated as one of the best mobile money channels in the country as well as KOS-Express, a digitally-driven and world class logistics company with advanced delivery capabilities for Konga and other structured companies nationwide.

About Zinox Group

The Zinox Group, is arguably Africa’s most integrated technology group, with strong interest in Original Equipment Manufacturing (OEM). Under the group, it operates as Zinox technology, the first Nigerian OEM that assembles local computer, known as the Zinox computer with naira sign. It equally operates as Technology Distribution (TD), the number one IT distribution company of all kind of computers and its accessories in Africa.

Now that Zinox Group has acquired Konga, stakeholders are expecting a new wave of revolution in the Nigerian e-commerce market.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Flutterwave Teams Up with EFCC to Launch Cybercrime Research Hub in Nigeria

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Flutterwave has partnered with the Economic and Financial Crimes Commission (EFCC) to establish a cutting-edge cybercrime research center in Nigeria.

This initiative comes in response to recent significant financial losses suffered by the payment technology company due to fraud.

Flutterwave, a leading payment technology company in Africa, has faced substantial financial setbacks due to cybercrime.

Recently, the company obtained a court order to recover $24 million lost to unauthorized Point of Sale (POS) transactions.

Also, Flutterwave reportedly lost N11 billion ($7 million) to fraudulent accounts in April 2024. These incidents have underscored the urgent need for enhanced cybersecurity measures.

The partnership was formalized through a memorandum of understanding (MoU) signed on June 14 in Abuja by Flutterwave’s CEO, Olugbenga Agboola, and EFCC Secretary, Mohammadu Hammajoda.

The signing ceremony also saw the presence of EFCC Chair, Ola Olukoyede, and Christopher Gray representing the FBI, among other notable figures.

Agboola emphasized Flutterwave’s expertise in combating internet fraud, particularly the tactics employed by notorious fraudsters known as Yahoo Boys.

He highlighted that the new cybercrime research center would equip anti-corruption agents with advanced technological tools and techniques to detect and prevent cybercrimes.

“The state-of-the-art center, to be built at the EFCC academy, will focus on seven key areas: advanced fraud detection and prevention, collaborative research and policy development, youth empowerment and capacity building, technological advancement, and resource enablement,” Agboola stated.

The establishment of the cybercrime research hub is a proactive step to address the rampant internet fraud that threatens the stability and trust in Nigeria’s financial systems.

The collaboration aims to enhance the capabilities of EFCC operatives in preventing, detecting, and prosecuting financial crimes.

Ola Olukoyede, the EFCC Chair, praised the initiative as a significant leap forward in the fight against financial crimes.

“The cybercrime research center will significantly enhance our capabilities to prevent, detect, and prosecute financial crimes,” Olukoyede remarked. “The EFCC is impressed with Flutterwave’s strides across Africa, and this partnership marks a crucial step towards ensuring a secure financial landscape for Nigerians.”

The partnership between Flutterwave and the EFCC signifies a robust commitment to cybersecurity, aiming to create a safer and more secure financial environment in Nigeria.

This initiative not only addresses immediate financial threats but also aims to build a resilient framework to combat future cybercrimes effectively.

With the launch of the cybercrime research hub, Flutterwave and the EFCC are set to lead the charge against financial fraud, ensuring that the Nigerian financial sector remains secure and trustworthy for all stakeholders.

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Visa and Mastercard Face Setback as Judge Indicates Likely Rejection of $30 Billion Deal

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Visa Inc. and Mastercard Inc. are facing a potential setback as a federal judge in Brooklyn indicated she is likely to reject their $30 billion settlement with retailers.

The deal, aimed at capping credit-card swipe fees, has been a focal point of contention between the card giants and merchants for years.

Judge Margo Brodie of the U.S. District Court for the Eastern District of New York expressed skepticism about the settlement during a hearing on Thursday.

According to court records, Judge Brodie suggested she might not approve the agreement, stating she would issue a written decision in the coming days.

Retailers have long campaigned to reduce their share of the costs associated with accepting card payments, known as interchange fees.

These fees, which are partially passed on to banks that issue the cards, including major institutions like JPMorgan Chase & Co. and Citigroup Inc., have been a burden for many merchants.

Announced in March and pending court approval, the settlement was designed to allow merchants to charge consumers extra for transactions involving Visa or Mastercard credit cards.

The agreement also aimed to introduce pricing tactics to steer consumers towards lower-cost cards.

“The court’s comments strongly suggest that she won’t accept the settlement,” noted Justin Teresi, an analyst with Bloomberg Intelligence. “While Judge Brodie doesn’t seem convinced that larger retailers should be allowed to opt out from the settlement, provisions like changes to digital wallet acceptance rules and some state bans on surcharges likely present real adequacy issues.”

Both Visa and Mastercard expressed disappointment over the developments. A Mastercard representative stated, “We believe the settlement presented a fair resolution of this long-standing dispute, most notably by giving business owners more flexibility in how they manage their card acceptance activities. We will pursue our options to ensure a proper resolution of this matter.”

Visa’s spokesperson echoed this sentiment, emphasizing that “continued engagement between industry and the merchants is the best way forward.”

Swipe fees have become a substantial financial issue for retailers, totaling more than $160 billion last year, according to the Merchants Payments Coalition. Reactions to the settlement were mixed when it was announced, with some retail coalitions pledging a thorough review and others quickly opposing it.

The Retail Industry Leaders Association, representing large merchants such as Target Corp. and Home Depot Inc., described the settlement as a “mere drop in the bucket” and urged careful review to assess if it adequately addresses the harm inflicted on retailers.

Doug Kantor, general counsel for the National Association of Convenience Stores, praised the judge’s remarks, stating, “We’re gratified to see that the court recognized how bad this settlement was.”

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Norwegian Watchdog Slams Meta for Cumbersome Opt-Out Process in AI Training Plans

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Meta Platforms Inc., the parent company of Facebook and Instagram, is facing a new legal challenge in Norway over its plans to utilize user images and posts to train artificial intelligence (AI) models.

The Norwegian Consumer Council has lodged a complaint, criticizing Meta’s cumbersome and deceptive opt-out process, which it argues breaches stringent EU data protection regulations.

The Council’s statement on Thursday highlighted that Meta’s method for allowing users to opt out of data collection for AI training is overly complicated and intentionally confusing.

“The process to opt-out breaches strict EU data protection rules and has been made deliberately cumbersome by using deceptive design patterns and vague wording,” the Council said.

This isn’t Meta’s first run-in with European regulators regarding data privacy. The tech giant has previously faced multiple complaints for allegedly failing to obtain proper consent from users before collecting their data to target advertisements.

Also, the European Union’s top court has warned Meta about safeguarding public information on users’ sexual orientation from being used for personalized advertising.

“We are urging the Data Protection Authority to assess the legality of Meta’s practices and to ensure that the company is operating in compliance with the law,” stated Inger Lise Blyverket, head of the Norwegian Consumer Council.

The complaint was prepared by the European Center for Digital Rights and will be submitted to the Norwegian Data Protection Authority, as well as other European data protection authorities.

Due to Meta’s EU base in Dublin, the Irish Data Protection Commission will serve as the lead authority in this matter.

The outcome of this complaint could have significant implications for how Meta, and other tech companies, handle user data within the EU.

Meta’s use of user data for training AI has raised significant privacy concerns. Critics argue that without clear and straightforward consent mechanisms, users are often unaware of how their data is being used.

This latest complaint underscores the ongoing tension between big tech companies and European regulators striving to enforce robust privacy standards.

The Norwegian Consumer Council’s action reflects a growing impatience with tech giants’ data practices, emphasizing the need for transparency and user control.

As AI technologies continue to advance, ensuring ethical and lawful data usage remains a critical challenge for both companies and regulators.

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