South Africa-based online business directory firm Mocality will shut down its Kenya and Nigeria operations as it reviews investment priorities, it said on Friday.
Mocality through a post on its website said it will be closing down February 28.
The action will affect more than 100,000 business owners who were listing for free their business services on the site. It will also affect buyers who relied on the site to buy discounted products and services in what was commonly referred as the “daily deals”.
Mocality allows businesses to list their contacts on its website and send 400 short messages on their business and products for free and subsequently charges Sh3 for every extra message measuring 140 words.
It becomes the second online firm to close its business it Kenya after Dealfish, raising the questions of sustainability of such ventures in a country whose population still prefers the traditional mode of transactions.
Company CEO Neil Schwartzman is expected to issue a comprehensive statement on the closure Monday.
“We launched online directory services in Kenya and Nigeria under the Mocality brand in 2009 and 2011, respectively. This was pioneering work, which carried considerable risk,” said Mr Schwartzman in a brief statement on Friday.
“As reaching profitability was not a reasonable near-term prospect, a decision was made to refocus efforts on other group businesses.”
By January last year the firm said it had paid out a total of Sh11 million to agents who brought it business and had 170,000 verified business listings for little return. The firm source of revenue was through placing of adverts.
Mocality said it will refund money for all paid up services such as advertising space to the clients. The shutdown would not affect any coupons bought through the site.
“Coupons remain valid until they either expire or are redeemed in full by you at the relevant merchant,” read the web statement.
Early last year, Mocality’s founder and ex-CEO, Stefan Magdalinski exposed Google’s unsavoury business against the start-up in Kenya in a widely publicised saga.
Google later apologised to Mocality saying they were “mortified” by the anti-competition allegations and pledged to investigate and take necessary action leading to the resignation of its country manager.
Kenya has 13.5 million online users, 8.5 million who access Internet through the mobile phones and a good Internet infrastructure but online businesses is hobbled by traditional transactions.