It's been dubbed the "Amazon of Africa".
It's Africa's largest e-commerce operator, surpassing Amazon and China's
Alibaba, and it's the first African tech startup to go public on the New
York Stock Exchange.
Investors had high hopes for Jumia when it went public on April 12th,
2019. Stocks skyrocketed at first, but then quickly tumbled on the heels
of criticism.
This is a fraud being played on the U.S.
marketplace.
People started questioning Jumia's Africans, too, due to the company's
largely European leadership and shareholders.
We are completely African company.
Now, Jumia is adjusting to its international status and figuring out what
that status means for the African continent.
There is an Africa ecosystem that has developed off the back of the
creation of this thing.
Jumia was founded in 2012 by Sacha Poignonnec and Jeremy Hodara, who were
both former employees of the American worldwide management consulting firm
McKinsey and Company.
Jumia offers customers the ability to buy products online, like phones and
shoes, as well as groceries, flights, food delivery, and offers bill
paying and cellular data recharging.
The company sought to build an online shopping experience, among other
digital products that could work well with Africa's sometimes ineffective
infrastructure.
If I said, "you know what, 42nd Street on 3rd Avenue, I'll be on the corner
waiting for," you know exactly where we'll meet.
You can't do that in Africa.
The streets aren't as signposted.
You don't know the geography, especially when you think of outside the
major cities.
In other cases, Jamia cites a lack of online shopping experience from
users.
When we ask the people who have never used online shopping yet, the reason
why, the number one reason which comes up is, "I don't know how to shop
online."
That's why it was so important to make sure Jamila addressed its specific
user base, and wasn't just a cut-and-paste copy of Amazon or Alibaba.
Alibaba serviced 4.2
million African customers through its AliExpress service since it entered
the continent.
Jumia serviced 4.3
million users and 81,000 active sellers in the 14 countries it services
since it started.
Let's take something that works in the West, throw it into Africa and see
if it works.
If it works, we'll throw money at it.
If it doesn't work, we'll kill it very quickly.
That strategy for me was fundamentally flawed anyway, because I believe,
you know, anything emanating from an ecosystem should be solving a problem
that is consistent with.
Amazon is technically available in 11 countries on the African continent.
But neither Amazon nor Alibaba have the benefit of starting and completely
focusing on African countries.
Jumia, for example, offers unique features like pay on delivery, and that
piqued the interest of U.S.
investors.
Everybody's been looking for an African unicorn.
We've all been looking, you know, I've been in this, in the angel business
for about a decade now, and all of us are looking for that, you know,
something that validates the African experience.
When Jumia went public on the New York Stock Exchange, it had a lot of
promise. Its stock prices rose 75.6
percent on its first day and held a market cap of $3.9
billion. And even though it had about $1 billion in losses at the time,
the prospective shareholders were forgiving.
The U.S.
was excited to have the opportunity to buy into the first African tech
startup on the New York Stock Exchange.
All of a sudden, here is somebody coming and say, "guess what, guys, we've
cracked Africa.
You know, we're making money gangbusters.
This is it."
You know, everybody got excited because we all want Africa to win.
Everybody wants Africa at the table.
But the attention Juma was getting in the U.S.
exposed some of its problems.
We have no doubt at Citron that this report that we've issued and the
supporting documentation will soon be used as evidence by the FTC in a
case against Jumia.
In May of 2019, Jumia came under fire from Citron Research, a stock
commentary website run by short seller Andrew left for what Citron claimed
was securities fraud and discrepancies in its reported key financial
metrics.
What we learned about Julia is best summed up in one email that was sent to
us from a former executive.
And what does he state to us?
That Jumia is clearly lying about every reported number.
The report released by Citron brought Jumia's stock down over 40 percent in
two days, and Citron isn't the only entity to raise its eyebrows at Jumia.
To be honest with you, there are quite a number, and I've met a few myself,
of disgruntled Jumia employees floating around there.
You know, you look at some of the reporting, there's some credibility, but
I think it's overhyped.
That's just a personal view.
But there's, there is no smoke without fire.
Jumia is culpable on some of those things.
That is my personal opinion.
Jumia Nigeria's CEO, Juliet Anammah responded on CNBC Africa to the
accusations.
This is taken, selected, biased and in some cases unverified facts with a
clear, you know, possibly the intent of damaging the brand and profiting
from it.
Citigroup, one of Jumia's is IPO leaders released a report debunking most
of Citron's allegations, but noting that, "Jumia could do more to provide
disclosure on some aspects of its operations as a matter of transparency
and best practice."
But it wasn't just this scathing report that hurt Jumia.
Soon after it went public.
The hashtag Jamia is not African gained popularity.
Commenting on the company's largely European involvement.
Jumia is a German company.
Okay? So it's paying its taxes in Germany, where the founders and most of
the shareholding is based except for MTN.
Its CEOs, which is irrelevant to the argument, are actually of French
origin. Its development team, it's after all a tech company, its
development team is actually in Portugal, which is in Europe.
Its headquarters is in Dubai.
But Jumia CEO Sacha Poignonnec says Jumia is a.
completely African company.
We operate exclusively in Africa.
We have more than 5,000 employees in Africa.
And as you point out...
But those are the warehouses, not the engineers.
The reality is in Africa, there's not enough development and developers,
for example, and we know that and we need to collectively, the startups
and the VCs and everyone, address that because everything should be in
Africa. This is what we want, and it shouldn't be like this one day.
We need to work on that.
It's not going to happen overnight, but this is something we have to do,
for sure.
But Jumia's African-ness this is not as critical to some. Despite
the company's offshore management, Jumia has kickstarted a wave of new
startups created by former Jumia employees.
It has grown Africans to the point where we are now creating companies
because of that experience.
And that can only be good.
We now have our Jumia mafia, just like you've got the PayPal mafia.
And that's what I look at is what has it created.
Jumia has certainly made a big splash on the New York Stock Exchange, but
the bigger impact was on the African continent.
I think the focus and the emphasis has been too much on Jumia as IPO and
all of that.
There is an Africa ecosystem that has developed off the back of the
creation of this thing.