Despite Increased Trade Over the last 3 Years, Jumia Still has a Liquidity Problem

Jumia is the most-funded ecommerce company in Africa, and since it launched in 2012, it has been the poster child for African digital commerce. But, as of the third quarter of 2022, the company had accumulated losses of about $2bn, owing to several factors. Jumia has changed its business model and its leadership several times and even pivoted to other terrains like fintech, but its losses are still piling up. In its early days, the company inspired hope that Africa was fertile ground for ecommerce to blossom, and that sparked a wave of ecommerce startups across the continent. But today, the cold reality is that the business is tougher than it looks. Over the last decade, Africa’s ecommerce market has grown exponentially. Statista estimates that ecommerce revenue in Africa has risen from approximately $13bn in 2017 to $37bn in 2022. However, profit is still elusive. In Nigeria, Jumia’s premier marketplace, 2 of the biggest ecommerce names—MallforAfrica and Payporte—have shut down due to operational issues. Konga, another ecommerce company, which trails Jumia in Nigeria with a total of $79.5m in VC funding, was eventually sold off at an undisclosed price—widely rumoured as a loss.