The pioneer CEO of Konga, Sim Shagaya, took to twiiter to share his experience – how the then budding e-commerce platform had to spend a whopping N60 million in 2014 to rescue one of its distribution centres that was used as collateral by the landlord to collect loan from a Nigerian bank, Justice Godfrey Okamgba reports.
Konga, before its acquisition by Yudala, was undoubtedly the leading e-commerce platform in Nigeria.
Flip to two months prior to its acquisition, Konga had cut nearly 60% of its staff. The struggle of the company became severe that the best option was for Konga to be acquired at a paltry fee reported to be around $10 million.
Owing to the entrepreneurial skills of the Founder, the news of the acquisition came as a huge shock to the business community in Nigeria.
But with recent revelation by Shagaya, it is now becoming clearer that harsh business climate did a big blow on Konga.
He disclosed how they paid a debt that should never have been recorded in the books and how he even faked a heart attack when it seems not to have any solution.
Here are excerpts from Sim Shagaya’s tweets:
”In 2014, we were going gangbusters. We were growing 20+% month on month. Lots of operational challenges but this one would be special. Then at 6.30 AM one day, I got a call from our head of fulfillment. The Nigeria Police has shut down the distribution centre. Details were murky.”
According to Sim Shagaya, it all began when one Nigerian bank convinced itself that Shagaya’s company, Konga, was owned by a landlord who had failed to repay a loan from them.
The bank had thought the landlord owned the online marketplace before it decided to send the Nigerian Police to shut down one of Konga’s distribution centres.
Although, Shagaya admitted that Konga had some small short-term trading liabilities to suppliers but clearly didn’t owe any bank.
The landlord owned the property where Konga distribution centre was situated but not the online retail business. But the bank was not convinced that Konga was not owned by the landlord.
One day, the bank decided to take over the property, causing over 100 warehouse workers to be chased out of the facility. The police had staged every corner around the distribution centre. Shagaya explained that he was clueless about what was going on and had to speak with a top officer to find out.
Obviously at that point, Konga needed time to prove no corporate affiliation with the landlord. This scenario in many ways disrupted the flow of business for Konga as customers were becoming livid after placing orders without getting their orders delivered.
”As orders kept pouring in but demands were not met due to the shutdown of the distribution centre.”
Shagaya, his lawyer and the then-COO of Konga, Shola Adekoya, had to present incorporation documents to prove Konga had no corporate affiliation with the landlord.
Nevertheless, despite the submission of incorporation documents, the bank said it wasn’t still convinced that the landlord wasn’t the owner of Konga.
The issue lingered than anticipated, Shagaya had to communicate his board about the circumstance after initially deciding against that.
While the issue lasted for four days, all efforts to reach the landlord proved abortive. The Konga boss claimed that the landlord had switched off his phone, and was never reached out during the period either.
It was becoming frustrating and Shagaya began to consider shutting the Konga website down in order to stop the overwhelming orders they couldn’t fulfill.
Shagaya had an emergency meeting with his board, and the resolution was to take down the Konga website if the debt issue wasn’t resolved in 48 hours.
He also began to make calls to persons that could be of help as regards the bank and the recovery firm.
According to Shagaya, the then Minister for ICT, Omobola Johnson, as well as leaders of the banking community and senior lawyers were among those contacted to help resolve the issue and get the attention of Bank’s CEO.
The CEO of the bank confessed that he had never received “so many calls around any one issue” and promised that he would “look into it”.
Irrespective of the ray of hope from the bank, the issue still lagged while orders from customers piled up. Konga began to meet demands from the headquarters rather than waiting for the distribution centre which was still under lock.
After another round of calls, an agreement was finally reached with the bank and the recovery firm. Shagaya had to write a cheque for two years of additional rent in favour of the bank.
The payment was in the value of N60million. However, after handing over the bank draft for payment to the recovery firm, Shagaya and Shola were informed that only the bank could order the police to vacate and open its distribution centre.
Shagaya and his team had to go to the bank to meet with the CEO. After waiting for 4 hours without seeing the CEO and having only 1 hour left to shut down the Konga website, Shagaya came up with a plan to fake a heart attack.
”So I call my lawyer to a corner of the lobby. I’m going to throw a Hail Mary and damn pride and decorum. I tell Babajimi I’m going to fake a heart attack and he would have to back me up.”
The management of the bank were in the lobby in minutes. Shagaya was offered a seat and some water which I drink with shaky hands partly due to his acting and partly low blood sugar and lots of nicotine.
At the end of the tunnel, Konga trading the next day like nothing happened and our customers had no idea.