The listing of Jumia on the New York Stock Exchange with its characterization as being African has elicited controversy as to whether it is really African.
“My standard for saying a startup is African is simple: the idea originates from Africa and it is founded by an African,” says Victor Asemota, a respected Nigerian tech investor once said. It aptly captures the ongoing conversations.
But Jumia as much African as it is not.
As it submitted its documentation for listing, the company revealed that it is yet to record a profit, from its overall global operations. The situation is however different in respective countries it operates.
Speaking on Citizen TV following the listing, Sam Chappatte the Jumia Kenya Managing Director said the way to growth is continuing to build infrastructure as well as skills set in order to get more people to use the e-commerce site.
Among the key infrastructure developments necessary for the growth of e-commerce is logistics and internet connectivity. Internet connectivity is more a function of government and telecommunications companies while for logistics Jumia must partner will relevant industry players to deliver goods on time and in good condition. Some of the companies Jumia has partnered with to ease this is Postal Corporation which has footprints across the country.
On the software side, attitude towards e-commerce, especially earning trust is most important.
Jumia is not an African company in the sense that it was not founded by an African, in Africa and operating in the continent. It was founded in Lagos, Nigeria, by two French entrepreneurs in 2012. It is incorporated in Germany, has its headquarters in Dubai with its central tech team based in Portugal.
In listing, 17.6 per cent of the company at $14.50 a share, the company earned “unicorn” status – a technology start-up worth $1 billion-plus.
The company is active in 14 African countries with more than 81,000 active sellers transacting online with millions of consumers. The e-commerce platform directly employs more than 5,000 team members in Africa.
Last year, Jumia made a pre-tax loss of sh14 billion, rising from the previous year’s sh12.5 billion.
Its losses were attributed to increased investment in its businesses, with the e-commerce firm saying sales were up despite the deficiency.
The above two reasons of debt and significant operations on the continent are the core reasons why the listing and uptake by investors is a good thing to celebrate in Africa.
Much has been written and touted about Africa being the next frontier for growth, higher growth rate and higher investment returns.
The Brookings Institute affirmed that the digital economy will bridge the gap between uneven progress in the realms of governance, commercial, and social development. “When implemented holistically, digital technologies bring women, youth, and marginalized communities into formal economies. Greater connectivity also facilitates their social contributions through education initiatives, skills training, and financial inclusion,” it added.
According to experts, the listing on NYSE will create more awareness to foreign investors on Africa’s technology ecosystem and wake up other players to see the benefits of listing internationally or locally to raise substantial capital for business growth.
As a boon on Africa’s confidence by investors, the continent should celebrate this interest and look to ways of solidifying it to lift millions from poverty and improve development outcomes.