Naspers is preparing to invest heavily in African startups

Tech giant Naspers is actively searching for investment opportunities in startups across Africa, aiming to use its vast reach to transform these small businesses into significant entities within the continent. As Naspers South Africa CEO Phuthi Mahanyele-Dabengwa explained to CNBC Africa at the World Economic Forum in Davos, the company has a wealth of opportunities across Africa.

She highlighted that the digital sector holds numerous prospects, and Naspers is consistently evaluating these. Mahanyele-Dabengwa mentioned a few recent investments made by the company, including those in Egyptian startups, and added that there are several enticing small businesses that they are considering for acquisition.

Mahanyele-Dabengwa explained that mergers and acquisitions play a significant role in Naspers’ operations, and the company is always on the lookout for new opportunities not only in South Africa but beyond as well. The company follows a specific investment strategy, seeking specific types of businesses that align with the successful investment principles of its past.

“We usually invest in businesses at an early stage, partnering with them as they scale up. If we take a look at most of our companies, they started as small businesses or startups, eventually growing into substantial corporations,” she stated.

A crucial aspect of this strategy is pinpointing founders with whom Naspers can collaborate to progressively grow the business.

Having the right people to assist founders in starting and expanding their businesses is a crucial part of Naspers’ investment strategy, according to Mahanyele-Dabengwa. The tech giant is employing this strategy in South Africa, investing early and aiding startups in navigating the country’s challenging operating landscape.

She highlighted that this type of investment has the potential to significantly impact the continent, creating job opportunities and fostering entrepreneurship. For instance, she mentioned Takealot, a once-small business that’s only 12 years old but now offers over 9,000 small, medium, and micro enterprises a platform to sell their goods.

This impact wouldn’t have been possible without Naspers’ initial investment and subsequent support in growing Takealot.

Nonetheless, Takealot is facing an uncertain future as it’s yet to turn profitable and is preparing for stiff competition from Amazon in its home market. In response, Naspers is ramping up its investment in Takealot to help it withstand the impending competition from Amazon.

Mahanyele-Dabengwa told Bloomberg TV that Naspers is increasing its investments considerably, and the company is well-equipped to handle any challenges that Amazon’s presence might pose. In anticipation of Amazon’s arrival, Takealot has expanded its services to offer one-hour delivery for a range of products.

According to World Wide Worx, online retail sales in South Africa surged 30% to R55 billion in 2022. Online retail comprises roughly 4% of the country’s total retail sector, presenting an opportunity for the market to grow at three to five times the rate of its peers.

Mahanyele-Dabengwa sees Amazon’s interest in the South African market as a positive sign, emphasizing that Takealot is well-positioned, as it understands its market exceptionally well.