E-commerce specialist Jumia aims to grow lending service
Jumia, the pan-African e-commerce group partially owned by MTN, wants to take its lending platform to new markets in the region to help its merchant partners get access to funding, says co-CEO Sacha Poignonnec.
Many of the 50,000 businesses that sold goods on the Jumia platform were unable to get loans as financial institutions did not have enough data about them, Poignonnec said.
"But we have data on those sellers. We know how much business they do, we have a distribution relationship with them and to some extent we also have some collateral because their money is processed on Jumia."
In 2017, the business often referred to as Africa’s own Amazon.com started partnering with banks to offer loans to its vendors.
"We offer that now in four of our 14 markets," Poignonnec said. We are still learning … and we plan to have it in more markets," he said.
E-commerce rival Naspers also plans to offer lending services in SA and Nigeria. Unlike Jumia, Naspers has said it would consider using its own balance sheet in certain instances when providing loans.
Poignonnec said that Jumia did "not yet" offer lending services in SA, where it focuses on online fashion through its Zando platform. The group was considering adding new services in SA, which is one of its largest markets alongside home-base Nigeria, Egypt, Kenya, Ivory Coast and Morocco.
"It’s clear that SA is very exciting for us as a market, and we’re looking at options to bring some of the Jumia offerings to SA," he said.
In addition to online shopping, Jumia offers food delivery, hotel and flight booking, and classifieds services. After discontinuing its own ride-hailing app, the group has integrated Uber into its Jumia One app.
Poignonnec said it would consider integrating other third-party services on to its app.
Meanwhile, the group remained "in the investment phase" and would need more capital to fund its growth. That would have to come from either an initial public offering or more equity or debt.
"We’re looking at all those options," he said.
Poignonnec said Africa’s e-commerce market was poised for significant growth, albeit off a low base.
"In the countries we’re in, there are about 400-million internet users — there are only about 460-million internet users on the whole continent. Last year, we had 2.2-million active customers, so there’s a huge number of consumers who are yet to try the service, so it’s just the very beginning."
Many consumers in Africa were "victims of the inefficiency of distribution" in the offline retail segment, which was characterised by high distribution costs.
"Those consumers are switching from offline to online whenever they feel that online is saving them time and money."
Online shopping was likely to "accelerate quite dramatically" as e-commerce players developed infrastructure and built consumer trust.