MaxAB And Wasoko Ride Turbulence To Join Forces In Landmark Merger

Wasoko and MaxAB, among Africa’s prominent retailer-facing e-commerce players from Kenya and Egypt, respectively, have signed a preliminary merger agreement to create a combined company which they say aims to propel the transformation of Africa’s informal retail sector.

This comes as a boost for the sector in the midst of what has been a torrid year dotted with fundraising difficulties and upheavals at various startups looking to digitise the supply of everyday goods to retailers across Africa. Indeed, one-half of the merger, MaxAB, had its fair share of challenges and was teetering on the brink, insiders told WT a few months ago, with ex-employees citing mass layoffs and downscaling amid rapidly shrinking sales. MaxAB founder/CEO Belal El-Megharbel did not respond to repeated requests for comment on this matter.

Wasoko has not been spared. In a bid for profitability, the company embarked on its largest layoffs recently affecting Kenyan staff and high-level executives, as well as exiting Senegal and Ivory Coast earlier and closing hubs.

Also, despite announcing a USD 125 M funding round, there are claims that only a small fraction of the amount was received at the time of starting merger talks, reports TechCrunch citing well-placed sources. However, the company brands those claims “factually incorrect,” reiterating to WT that it “received USD 113 M out of the USD 125 M and there was no milestone system for the funds release.” Tiger Global and Avenir were among the institutional investors in Wasoko’s Series B round, valuing the company at USD 625 M.

Collectively, Wasoko and MaxAB have announced over USD 250 M in funding from local and global investors though it’s not clear how much of the investor commitments materialised as the reported issues with Wasoko’s Series B, however minimal, come to mind. Meanwhile, another rival e-commerce startup, Kenya-based MarketForce, revealed a similar funding setback earlier this year.

Nevertheless, the merger, positioned as the largest in African tech history, will fuse the strengths of Wasoko and MaxAB, boasting a customer base exceeding 450,000 merchants. This unified entity is poised to cater to over 65 million consumers, distributing essential goods within local communities spanning eight African countries: Egypt, Morocco, Kenya, Tanzania, Rwanda, Uganda, Zambia, and DR Congo.

Both companies have showcased impressive growth trajectories since the onset of 2023, per the announcement. Wasoko witnessed a 30 percent surge in monthly revenue while expanding its Sub-Saharan African merchant network by over 20 percent. Similarly, despite the struggles, MaxAB experienced a 25 percent increase in its monthly active merchant network, bumping fintech transaction volumes by 50 percent, a press release seen by WT suggests.

This convergence not only promises accelerated profitability but also heralds a combination of expertise and capabilities across diverse markets.

The merger of Wasoko and MaxAB also looks to extend beyond conventional boundaries by fostering intra-Africa trade and implementing cutting-edge technologies on a Pan-African scale. Beyond their B2B e-commerce interests, both entities are keen on integrated payment solutions, merchant financing, and proprietary logistics operations, forming the bedrock of their success.

CEO Belal El-Megharbel of MaxAB, articulating the significance of this merger, emphasized, “Our journey, marked by dedicated teams and innovation-driven solutions, culminates in this union with Wasoko. Together, we are uniquely positioned to unlock the informal retail sector’s potential through a spectrum of tech-driven services in e-commerce, fintech, and logistics. This collaboration heralds a promising future for our customers and partners across Africa.”

Daniel Yu, CEO of Wasoko, echoed this sentiment, underscoring the merger as a pivotal stride toward realizing their Pan-African aspirations. He remarked, “Our consolidation with MaxAB signifies our commitment to empowering businesses and bridging African consumers with a diverse array of essential products. With shared visions and complementary strengths, our partnership is set to chart an extraordinary path forward.”

Both Belal and Daniel are set to spearhead the unified entity post-merger, fostering a collaborative leadership approach. The merger, subject to internal approvals and customary closing conditions, has garnered additional investments, providing ample runway for profitability pursuit and new ventures.

Editor’s Note: This article has been updated to include information about Wasoko’s restructuring efforts and the Series B funding received, as well as reflect that MaxAB was born in Egypt, not Morocco as earlier written.