African Amazon Jumia Has Five Quarters to Win Over Investors

LAGOS (Capital Markets in Africa) – Jumia Technologies AG has given itself five quarters to convince investors that the Africa-focused e-commerce firm is on a path toward profitability.

The company is looking to claw its way back after watching its shares drop about 58% since a high-profile U.S. initial public offering in April. The company will spend the next four or five quarters investing in technology, marketing, and operations teams, Co-Chief Executive Officer Sacha Poignonnec said in an interview.

Poignonnec insists Jumia is on track to financial stability and said the Berlin-based company won’t need to raise any more cash during this period.

“Everywhere in the world e-commerce is very relevant — it’s a powerful business model,” Poignonnec said. “The need for Africa is bigger than everywhere else, as in places like Germany and the U.S. there will always be a lot of shops.”

The company has been plagued by a report from a short-seller that alleged financial wrongdoing, including that Jumia, had inflated customer and order numbers. The company denied the report at the time. In August, the company found evidence that “improper” sales had been recorded and canceled at its Nigerian operations.

The biggest priorities now include increasing the amount of spending per user while controlling costs, he said. The growth of Jumia Pay, now used for about a third of the company’s transactions, is also of paramount importance, Poignonnec said.

Jumia was founded in 2012 by Poignonnec and co-CEO Jeremy Hodara, two Frenchmen who met as colleagues at consultancy group McKinsey & Co. Their aim is to set up platforms for online buying and selling of everything from plane tickets to wireless airtime. The company operates in 11 countries, having exited Tanzania, Rwanda, and Cameroon in recent months to control costs.

Jumia ultimately plans to separate its logistics business off into a new company, said Poignonnec, declining to elaborate on the structure.

“We have a large number of logistics partners and a big footprint on the continent even stretching into rural parts,” he said. “The plan is to open-up our logistics capabilities to other companies and individuals in need of these services in Africa.”