E-commerce company, Jumia Technologies on Monday, November 18 shut down its operations in Cameroon without notice just as it did in Gabon and Congo Republic; sparking fears and anxiety on the state of its health in other African countries.
Rebecca Enonchong, a Cameroonian-based tech entrepreneur, disclosed that the development is emblematic of Jumia; which she described as a badly-run business which is only in Africa to rip off Africans.
‘Beyond #JumiaIsNotAfrican, Jumia is simply a badly run business that is incapable of understanding its market, refuses to act as a good corporate citizen and thinks Africans are simply a commodity, a means to an end. No business with that attitude can succeed in the long term,’ Enonchong disclosed.
Likewise, an ex-employee of Jumia affirmed that the company is not much different from a Ponzi scheme. The former staff, who pleaded anonymity, noted that most ex-Jumia staff are not surprised at the development in Cameroon, even as he noted that it could happen even in Nigeria.
‘Jumia is run like a Ponzi scheme. Some of us were poached from rival companies with mouth-watering salary offers and laid off after six months. It is a standard Jumia practice to destabilize its competitors. What happened in Cameroon can happen anywhere, even in Nigeria. When it does, you cannot hold anyone there to account. The owners of the business are foreigners. Right from the period, it went public, I knew it was just a matter of time before the fraud that is Jumia would be uncovered.’
Meanwhile, Jumia revealed in a statement that its e-commerce platform activities in Cameroon were not suitable for the African state.
“We came to the conclusion that our transactional portal as it is run today is not suitable to the current context in Cameroon,” Jumia said in a statement to announce that its e-commerce operations in that country had been suspended.
However, the company said it would continue supporting buyers and vendors in Cameroon using its classified portal Jumia Deals.
The shut-down of its Cameroon operations makes it the third African country in which Jumia has folded up operations. It had earlier closed shop in Gabon and Congo Republic.
Meanwhile, a source at the company in Cameroon told Reuters that Jumia had chosen to prioritize growth over profitability; a move that had back-fired.
“We wanted to see how the business evolved. We can come back, but for now we’re closing to have time to study the market,” the source; who chose to remain anonymous, disclosed to Reuters.
The announcement of the suspension of its operations in Cameroon sent Jumia’s share price tumbling. Specifically, the shares hit a record low of $4.96.
Jumia had seen off a much-publicised listing on the New York Stock Exchange in April 2019. However, the company’s shares nose-dived after a report by US research firm, Citroen which declared the shares ‘worthless’. Equally, Citroen had claimed that Jumia had inflated the figures quoted in its prospectus.
‘“In 18 years of publishing, Citron has never seen such an obvious fraud as Jumia. “That is the Jumia way. To cover up and to commit fraud,” the report said.
Meanwhile, analysts and e-commerce watchers have reacted with dismay and shock to the Jumia shut-down in Cameroon. There are concerns that the same issues that had plagued Jumia in the three African countries it closed shop in were still ever-present in its other operational locations.
‘The Jumia strategy is one that has serious question marks hanging over it,’ disclosed Bode Akinpelu, an e-commerce enthusiast. ‘It has consistently prioritized growth over profitability and this has been touted as the reason for its failure in Cameroon. But the problem is the same in other countries in which Jumia operates, including Nigeria.
‘In fact, no one knows where the next shut-down will happen. It could be Nigeria, its biggest market or Ghana or Egypt. The situation is approaching critical, especially when one considers the impact on its investors, merchants, staff, creditors, suppliers and other stakeholders in the markets where Jumia folds up without warning.’
Jumia Technologies AG is a German-based e-commerce outfit. It was founded in 2012 in Berlin, Germany, and shareholders include the Berlin-based incubator and venture-capital firm Rocket Internet SE. Other early investors include French insurer Axa AXAHY, +0.04% and French telecoms company Orange ORA, +1.86%.