Copia Kenya, a prominent ecommerce and fintech platform in Kenya, has announced that it is undergoing a restructuring process in a bid to navigate the company’s financial challenges.
In a notice, the company said that it had hired Makenzi Muthusi and Julius Ngonga from KPMG to lead an administration process aimed at providing direction in sustaining its operations.
The decision comes at a time Copia Global, the parent company, has been unable to secure capital on favorable terms from stakeholders, funders and investors.
As a result, Copia Global is winding down operations, allowing Copia Kenya to seek direct funding.
The appointed administrator is expected to work closely with the management team to raise capital from new investors for the Copia Kenya business.
Challenging Market Conditions
The restructuring at Copia Kenya is taking place against the backdrop of a difficult capital markets environment in Africa.
According to Copia, the capital markets environment has been extremely difficult in the last two years, with a significant reduction in capital flowing into Africa generally and the ecommerce space specifically.
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Data from Partech shows that from 2022 to 2023, African venture capital decreased by 46%, with a 50% drop in participating investors and a 53% decline in ecommerce sector funding specifically.
Why Copia Kenya is Restructuring
However, the company noted that it is implementing a plan that is focused on raising new capital, increasing profitability, and transitioning its operations to a more digital approach to adapt to the evolving market conditions.
The company, however, notes that while preserving jobs is a key priority, it acknowledges that some staff layoffs may be necessary to align the organization with the digital opportunities and ensure future growth.
“Unfortunately, a retrenchment of staff will likely be necessary in the near future to right size and right shape Copia to the new digital opportunity and create a position for growth,” reads the statement in part.
Details of the Restructuring plan
Copia Kenya’s transition to a more digital-centric approach involves leveraging the increasing affordability of mobile internet to enhance customer experience through its innovative app.
A recent company survey revealed that 65% of Copia customers now have smartphones and can access the consumer app.
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“Customers using the Copia app place orders twice as often and include a wider variety of higher margin products each time. This demonstrates not only the value of Copia to customers but the commercial potential of the business,” states Copia.
By embracing digital transformation and enhancing customer experience through its app, Copia is striving to maintain its market relevance amid the challenging economic landscape in Africa.
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