MTN aims to steal a march on Amazon, Alibaba in African corporate procurement

By David Whitehouse
Posted on Tuesday, 13 September 2022 06:00

REUTERS/Siphiwe Sibeko

Africa’s largest mobile network MTN is aiming to secure first-mover advantage in the continent’s corporate procurement market through its partnership with the Dooka business-to-business (B2B) commerce platform, MTN executives tell The Africa Report.

The partnership, agreed this month, is intended to speed up corporate procurement processes, give buyers access to a larger pool of suppliers, reduce purchasing fraud and cut costs. MTN’s aim is to be ahead of global corporate entrants into the African market such as Amazon and Alibaba, says global procurement lead Andrew Savage. “I have no doubt they will be our competitors in future.”

The world B2B e-commerce market is estimated as being worth up to five times more than business-to-consumer (B2C) e-commerce. According to Vantage Market Research, the global B2B market will grow at a compound annual rate of 18.3% to $19tn in 2028. Yet Africa has lagged behind the developed world in the development of B2B marketplaces. “There’s a hole in Africa,” Savage says.

Most companies devote about 80% of their spending to a core group of suppliers making up 20% of the total number, says MTN chief procurement officer Dirk Karl. The remaining 20% of the spending is widely distributed among a large number of suppliers, he says. Procurement teams don’t really focus on this “long tail” of suppliers as most of them involve low volume and low spending. That, Karl argues, creates the potential for savings estimated at between 10% and 20% by grouping them on an electronic marketplace.

  • Dooka, led by CEO Toby Sparrow, is supported by the Tradeshift cloud-based business commerce platform. MTN is Dooka’s first and anchor client, and plans to roll out the product across African markets.
  • Sellers on the Dooka platform will be able to access a pool of corporate buyers through a single, low-cost channel, while gaining market insights and access to finance, Karl says.

Purchasing transparency

Dooka has financial backing from South Africa’s Oppenheimer family. Its Tradeshift-supported tech platform began in 2005 as an e-invoice network for the Danish government called EasyTrade, which is still widely used by Danish businesses. Tradeshift was set up in 2010 and has now processed over $1trn in transactions for corporations including Unilever, DHL and Volvo.

The platform can also help companies to meet environmental, social and governance (ESG) and inclusivity goals, Karl says. Buyers have the option to screen for suppliers who are black-owned or have mostly women executives. The platform also makes it easier for small and medium-sized companies (SMEs) to compete by reducing their need for expensive advertising campaigns, he says.

  • Companies in rural locations have a more level playing field with a digital marketplace, Karl says. “Our agenda is driven by connecting the unconnected.”
  • MTN wants to become “an IT house in procurement,” Karl says. “We wanted a partnership originated in Africa.”
  • About two to three months of integration with Dooka will be needed before live operations, Savage says. “We are aiming to move as fast as possible. We want to get vendors on board.”
  • No firm decision has yet been taken as to where the venture will start operations. South Africa and Nigeria are priority countries.

Bottom line

International corporate market places are a missing part of African e-commerce landscape.

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