Barely a week after its latest earnings call showed yet more losses despite the increased prominence of its payment platform, Jumia appears to have called off its operations in Cameroon after launching in the country in 2014.
This development may be linked to an attempt by the Rocket Internet-backed company to arrest the cash deluge that has seen the company’s losses rise to nearly a USD 1 Bn since kicking of operations in 2012.
Needless to say that the company is yet to turn a profit and the forecasted profitability date of 2022 now seems far-fetched.
Jumia has been bleeding cash in its attempt to simultaneously grow several verticals in up to 14 African markets. Even though the company is backed by hundreds of millions of dollars in VC, an ill-fated IPO on the New York Stock Exchange from earlier this year hasn’t helped matters.
The Africa-focused e-commerce company has since lost its unicorn status and its share price is in their single digits.
Last week’s earnings call suggested that Jumia is indeed weighing up the idea of giving up its “Amazon-of-Africa dream” in favour of a “PayPal-of-Africa play”.
Its Jumia Pay platform may have been the only bright spot in an otherwise bleak financial outlook and it appears Jumia wants to go easy on the e-commerce while exploring a fintech play in Africa.
Jumia’s mounting losses mean that it’s become imperative to cut costs lest the company runs out of cash and the closure of its Cameroonian subsidiary suggests the company is now scaling back on its e-commerce business.
Indeed, there may yet be similar moves in the next few weeks. However, the timing of the development — just a week after (not before) the release of Jumia’s Q3 2019 financial report — seems curious.
Before 2018, Jumia Cameroon experienced strong growth. With the socio-economic and even the political situation, growth has declined sharply. And this may have motivated the decision of the shareholders to close Jumia’s Cameroon subsidiary.
The website of Jumia Cameroon, whilst still functional, currently doesn’t reflect that the platform is still open for business.
The closure of its Jumia Cameroon follows the closure of its businesses in both Congo and Gabon, signalling a tough e-commerce terrain in Central Africa. In 2018, Jumia quit its core e-commerce business in Rwanda, continuing only its food delivery service, Jumia Food, in the East African country.
At present, Jumia can still lay claim to having a presence in 13 African markets including Nigeria, Kenya, South Africa, Egypt, Ghana, Morocco, Uganda, Tanzania, Senegal, Rwanda, Ivory Coast, Tunisia, and Algeria.