Jumia reviewing Africa operations as mounting losses, trust concerns bite

A Jumia outlet in Kenya’s capital Nairobi. The firm now operates in 11 countries in Africa, from 14 last month. PHOTO | FILE | NATION MEDIA GROUP Jumia Technologies AG, Africa’s largest online retailer, is facing a difficult time on the continent as it battles to shed off integrity issues related to allegations of cheating investors during its initial public offering in April.

The Pan-African e-commerce operator, which has been operating on the continent for close to seven years, is now scaling down its operations in key markets amid mounting losses and concerns over its alleged breach of investor and customer “trust.”

The Berlin-based firm says its African operations, which are now hanging by a thread, have largely been driven by “trust” and it is now reviewing its operations on a case by case basis based on the financial performance of the business, commercial environment as well as the ease and cost of doing business in each market.

“Trust is critical in Africa where people traditionally rely on face-to-face interaction,” said Jumia in its IPO prospectus. “We believe that our targeted marketing efforts and consistent focus on delivering a high-quality seller and consumer experience have helped us to build a strong reputation and create a leading brand that consumers recognise and trust.”

Since May this year, several law suits have been filed against the retailer in the US District Court for the Southern District of New York, the Kings County Supreme Court and the New York County Supreme Court in New York.

“The claims in these cases relate to alleged misstatements and omissions in our initial public offering prospectus and statements made by our company in connection with our initial public offering,” said Sacha Poignonnec and Jeremy Hodara, the firm’s co-chief executives. “These actions remain in their preliminary stages.”

The firm’s troubles began in November when within a space of less than seven days the retailer, which is listed on the New York stock Exchange (NYSE) shut down its operations in Tanzania and Cameroon.

And last week, the firm made an abrupt exit from Rwanda and announced shedding off six percent of its employees in Kenya, its largest market in East Africa.

“After careful consideration, we have made the difficult decision to undergo some headcount reductions across our business verticals and geographies,” Jumia Kenya said in a statement Tuesday. “While decisions like these are always difficult, we need to put our focus and resources where they can […]

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