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Jumia shuts down in Cameroon as African e-commerce struggles

November 20, 2019

 

 

Pan-African e-commerce giant Jumia has suspended its marketplace business in Cameroon.

 

Jumia did not publicly announced it imminent closure in the country and the move took many customers and local staff by surprise. “It came as a bombshell and all operations just stopped abruptly,” a Yaounde-based staff member, who asked not to be named, said.

 

The company that has positioned itself as the first African tech firm to be listed on the New York Stock Exchange, indicated the decision to quit the market is due to unfavorable conditions on their path to achieve success.

 

Jumia, said based on its review, the company came to the conclusion its transactional portal as it is run currently is not suitable to the current operating environment in Cameroon.

 

“For this reason, we made the difficult decision to suspend our e-commerce operations in Cameroon. It is more important now than ever to put our focus and resources where they can bring the best value and help us thrive.

 

While our operations in Cameroon provided many opportunities for customers and vendors, this decision will help us achieve greater success in the future,” Abdesslam Benzitouni, group head of communication told Quartz Africa by e-mail.

 

The company said it will continue to support buyers and vendors in Cameroon online through its classified portal, previously called Jumia Deals—where thousands of buyers and vendors get in touch every month.

 

But Jumia’s struggles in Cameroon may be an indicator of similar moves to come in its other African markets as the e-commerce company tries to figure out how to find its way to stem mounting losses driven by the costly investment required to build e-commerce operations in 14 different African markets which have less developed logistics and transport infrastructure.

 

It means outside of the very largest African markets like Nigeria, Egypt, Kenya and South Africa it could be difficult to build a general e-commerce site at scale today.

 

In the third quarter, Jumia posted widening losses of €54.6 million ($60 million). Since opening for business in 2012 it has racked up over $1 billion in losses. It recently lost its “unicorn” status and faced with legal tussles and fraud claims.

 

There is speculation Jumia might be trying to cut back on the number of markets to reduce operating cost. But Abdesslam said Jumia has no closure plans in the short-term in the other 13 countries where they continue operating. It is currently in: Nigeria, Egypt, Morocco, Kenya, Côte D’Ivoire, South Africa, Tunisia, Algeria, Ghana, Senegal, Tanzania, Uganda and Rwanda.

 

Jumia is the third e-commerce platform to quit Cameroon, after French-owned Afrimarket earlier this year and Cdiscount in 2016. Operators have often complained of customs clearance delays. Also, the sub-region has been suffering from macro-economic instability largely caused by a drop in global commodity prices, insecurity and humanitarian crisis.

 

The company has also had difficulties operating in parts of the country. In the restive English-speaking parts of Cameroon, it had to close pick-up outlets due to an upsurge in violence. The internet had also been cut off on at least two occasions, totaling over 230 days, making online businesses, including that of Jumia, to slow down.

 

Cameroonian-born tech entrepreneur, Rebecca Enonchong, who has monitored Jumia’s timeline in Cameroon from inception, suggested that Jumia was inflexible in adapting to the Cameroonian market. “It became clearer to me that the now rebranded Jumia wasn’t at all interested in a long-term business.

 

They were interested in just a few KPIs that would look good to investors or possible acquirers. The pressure to make those numbers is same as what caused fraud in Nigeria,” Enonchong tweeted.

 

Perhaps an indication of the difficulties of operating in Africa’s consumer markets, Jumia’s other hope to develop a payments tool that can used globally.

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