The crises that the African tech company Jumia faces now isn’t very unlikely having established a model that left many in doubt about their adeptness. Reports of breaches of contracts with employees to boost aggregates have surfaced, and to make matters worse Jumia was also accused of fraud by Citron Research one month after listing shares. To many, Jumia is starting to appear as one of those business villains.
Jumia has earlier established its image as the ‘Amazon of Africa’. It became its manifesto at NYSE in April when they listed at the IPO at $14.50 per share. The shares saw an immediate surge, reaching close to $50 after a few days of trading before it suddenly went downhill.
The shares now trade close to $5. The dramatic drop is arguably a result of their breaches with good governance and failed growth attempts. They, however, blame it on the difficulty of running an e-commerce business across a continent with weak infrastructure.
Jumia is currently laying off workers in Nigeria and shutting down operations in smaller markets such as Rwanda, Cameroon, Gabon, and Tanzania. The Jumia travel website is also shutting down. This is a Hail Mary and should probably have been done before the IPO. With the reduced presence across the continent, Jumia does not have the capacity it presented to investors at the New York Stock Exchange in April 2019.
They do however maintain their e-commerce presence in 11 countries throughout Africa, even after these scale-backs, and the company now tackles a chance in online payments in Africa with JumiaPay.
Only time will tell if the management is able to turn things around and get Jumia back on track. So far, there are concerns for subsequent African IPO’s after the allegations that saw Jumia’s share price spiral downwards.
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