International

Jumia Stock Debut Signals Appeal Of African eCommerce

Africa

It was a good day for Jumia Technologies on Friday (April 12) — and that’s a good signal about the future prospects of eCommerce in Africa, home to some 1.3 billion people, of whom at least 725 million have mobile devices.

On its first day of trading, shares for the company often called the Amazon of Africa jumped some 54 percent, trading at about $22. The Berlin-based company’s value stood at about $1.7 billion, according to reports.

Founded in 2012, Jumia became the first African unicorn startup in 2016 after a $326 million funding round that included Goldman Sachs, AXA and MTN. In March, the company filed for an initial public offering (IPO) on the New York Stock Exchange.

Jumia Scope

Jumia operates in 14 African countries, including Ghana, Kenya, Ivory Coast, Morocco and Egypt. Some of its brands include online takeout service Jumia Food, travel booking service Jumia Flights and classified services Jumia Deals. Its data shows the company processed more than 13 million packages last year.

The debut of Jumia on the New York Stock Exchange comes amid a growing eCommerce and mobile payment landscape in the world’s second largest continent by both area and population. More consumers there are moving in a middle class, and technology has leapfrogged into the mobile realm, given those consumers more efficient ways to not only move money but spend their disposable income.

As described in a recent PYMNTS interview with Saqib Nazir, managing director of Africa at Emergent Technology, the continent is ripe for digital and mobile conduits, with a “cash light” mentality that focuses on the needs and desires of a burgeoning and youthful population. He also pointed to the fact that three times as many people in Africa have mobile money accounts — roughly 280 million — than those who have traditional bank accounts. Part of that disparity has to do with the bifurcation between formal and informal economies, of course, but it also speaks to how the global digital economy is making inroads into Africa.

DHL Offering

Another recent sign of that progress and potential comes from DHL, which is rolling out its DHL Africa eShop app. The service reportedly will bring over 200 U.K. and U.S. retailers online in markets across Africa, according to reports. The platform is in markets such as Kenya, South Africa and Malawi, while local FinTech options like M-Pesa and Paga will be included in the service’s payment methods. The platform will also use the Link Commerce white-label offering from Mall for Africa, which will help with payments, delivery and procurement.

Meanwhile, Stripe, Visa and other firms have invested $8 million in Paystack, a Nigerian firm that enables developers to create payment tools via its APIs, and connects multiple payment processors by handling transactions for merchants and consumers. In a PYMNTS interview, CEO Shola Akinlade talked about the challenges of improving payments in his home country, including those related to infrastructure and connectivity.

Digital payments, FinTech and eCommerce are expanding slowly but surely in Africa. In Kenya, banks are pursuing regulatory approval to use distributed ledger technologies to help facilitate payments and create credit scoring models. In Nigeria, Microsoft and First Bank are linking up to bring financial services to consumers there.

No less a digital commerce and payments luminary as Alibaba Founder and Chairman Jack Ma has called Africa the next great tech frontier.

Progress vs. Regression

Of course, wishing something to be true does not make it true, to put it mildly. There are real and potential hurdles concerning logistics, infrastructure, political stability and other issues that could have impacts on the spread of eCommerce and digital payments in Africa. And progress often comes amid regression, especially in a place so big, populous and varied.

Take Nigeria, for instance. Despite being home to Africa’s biggest mobile phone market, Nigeria is seeing a decline in banked adults in the country. Financial inclusion in the African country reportedly has declined close to 4 percentage points from 2014 to 2017, now standing at 39 percent at the same time that the Sub-Saharan African average of banked people increased more than 8 percentage points to 43 percent.

But digital payments and eCommerce do keep gaining steam in Africa, and the Jumia stock debut, along with the apparent optimism that surrounds it, is further evidence of that.

——————————–

Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. Check out our April 2019 Unattended Retail Report. 

TRENDING RIGHT NOW

To Top