Newsdeck

Newsdeck

Jumia Doubles Down on Nigeria in Struggle to Turn Profitable

Jumia Doubles Down on Nigeria in Struggle to Turn Profitable
A worker scans inventory inside a Jumia Technologies AG distribution warehouse in Lagos, Nigeria, on Friday, April 12, 2019. Jumia shares soared by 75 percent on their first day of trading in New York, as investors rushed to buy into the companys plans to extend online shopping services across Africa. Photographer: George Osodi/Bloomberg

E-retailer Jumia Technologies AG plans to focus on Nigeria, Africa’s most-populous nation, as part of a bid to turn profitable. 

The New York-listed e-commerce firm will consolidate its three warehouses in Nigeria to one 30,000 square-meter depot in Lagos in an effort to cut costs, Chief Executive Officer Francis Dufay said in an interview. The company will also add more cities it services in the West African nation, he said.

Jumia, which has yet to report an annual profit, expects Nigeria — home to 200 million people — to give it scale and help break even. It’s a gamble because lack of dollars and rising cost of living have forced multinational companies including Procter & Gamble Co., GSK Plc and Bayer AG to exit.

“We want to be sized and organized for significant growth,” Dufay said. “Jumia sees the macro situation in Nigeria as temporary, and expects it to turn positive in the medium term.”

Read more about Nigeria:

Jumia reported an operating loss of $8.33 million in the first quarter of the year, while revenue rose 5.7% to $48.9 million. The company’s shares have plunged about 90% from a record reached in the middle of the pandemic, when people were relying on e-commerce services.

“We need to build scale,” Dufay said in a separate interview at the Qatar Economic Forum in Doha with Joumanna Bercetche. “We know that customers are heavily price-conscious, so we need a very lean structure on our end, so we can deliver very low prices on everything, including delivery and all services.”

In Nigeria, Jumia’s biggest market, the central bank has devalued the naira twice in a year. Most Nigerians struggle with electricity supply and congestion at Nigeria’s ports have compounded its economic woes.

Still, Dufay said the company is seeing demand match population growth on the continent.

Jumia is betting on economic revival in the West African nation as President Bola Tinubu and the central bank try to introduce policies to slow inflation and lure investors.

For now, Jumia is preserving its cash reserves. It has also introduced buy-now-pay-later financing option to woo customers struggling with rising prices.

“We are also very reactive in pricing as Nigeria remains a huge market for consumer demand, and our business is not stopping,” Dufay said.

The government of the State of Qatar is the underwriter of the Qatar Economic Forum, powered by Bloomberg.

Gallery

Comments - Please in order to comment.

Please peer review 3 community comments before your comment can be posted

A South African Hero: You

There’s a 99.7% chance that this isn’t for you. Only 0.3% of our readers have responded to this call for action.

Those 0.3% of our readers are our hidden heroes, who are fuelling our work and impacting the lives of every South African in doing so. They’re the people who contribute to keep Daily Maverick free for all, including you.

The equation is quite simple: the more members we have, the more reporting and investigations we can do, and the greater the impact on the country.

Be part of that 0.3%. Be a Maverick. Be a Maverick Insider.

Support Daily Maverick→
Payment options

MavericKids vol 3

How can a child learn to read if they don't have a book?

81% of South African children aged 10 can't read for meaning. You can help by pre-ordering a copy of MavericKids.

For every copy sold we will donate a copy to Gift of The Givers for children in need of reading support.