Jumia Technologies, Africa’s leading online retailer, has dealt a blow to the continent’s tech scene by shutting down its food delivery service Jumia Food in several key markets, including Nigeria. This move highlights the brutal realities of operating in a market where affordability and understanding local needs reign supreme.

Nigeria, with its 200 million people, might seem like a tech entrepreneur’s dream. But scratch the surface, and a different story emerges. The average Nigerian consumer, burdened by limited income and basic necessities like food (consuming up to 80% of their earnings), prioritizes price over tech gadgets or luxury goods. This makes scaling tech solutions a major hurdle.

Unlike India, with its sizeable “India I” segment of affluent individuals, Nigeria lacks a comparable high-spending class. Only 12,300 millionaires call the country home, offering little room for “avocado startups” catering solely to the rich.

Adding to the challenges is the high cost of data in Nigeria, severely limiting internet access and online transactions for the poorer segments. This digital divide further isolates a large portion of the population from potential tech solutions.

The Nigerian market itself is far from homogenous. The middle class, while larger than the upper class, still struggles with affordability and has different needs than their wealthier counterparts. Catering to both segments simultaneously can be a recipe for disaster.

Finally, millions of Nigerians live in extreme poverty, forming the “Nigeria III” segment. This group, largely unbanked and lacking access to technology, remains largely out of reach for tech innovators.

What can Nigerian tech startups learn from Jumia Food’s demise?

Affordability is king: Develop solutions that cater to the mass market, prioritizing affordability and accessibility.

Know your market: Go beyond demographics and understand the nuances of different segments, their needs, and spending habits.

Innovate for basics: Look for ways to leverage technology to improve efficiency and accessibility in areas like healthcare, education, and financial inclusion, addressing basic needs first.

Build a local ecosystem: Foster collaboration between startups, investors, and government agencies to develop talent and support the growth of a vibrant local tech scene.

Jumia Food’s closure serves as a wake-up call for Nigerian tech startups. The path to success lies not in mimicking models from other markets but in understanding the unique realities of the Nigerian consumer and developing solutions that address their specific needs. By focusing on affordability, accessibility, and addressing basic needs, Nigerian tech can unlock its true potential and thrive in the face of seemingly insurmountable challenges.