Picture: REUTERS
Picture: REUTERS

Lagos — Jumia Technologies is facing fresh competition from start-ups in the African e-commerce and logistics market after the Covid-19 pandemic increased demand for online deliveries.

The US-listed firm is seen as one of the pioneers of internet trading in sub-Saharan Africa, which trails the rest of the world due to challenges including weak internet connections and unreliable addresses. But lockdowns to contain the coronavirus have attracted more entrepreneurs to the sector, according to Jumia co-CEO Sacha Poignonnec.

Greater competition is to be welcomed, given there are still so few people in the region that transact online, the Frenchman said in an interview. “I would rather grow the market than just try to take everything,” he added.

Jumia investors have experienced a roller-coaster ride since the stock debuted in New York in 2019. Persistent losses, allegations of corruption in the Nigerian sales force and a damning short-seller report contributed to an initial share-price slump, but the arrival of the coronavirus has helped double market value in 2020. That was even higher before a 30% stock decline this week after second-quarter results.

The shares fell 2% to $13.47 on Friday, valuing Jumia at more than $1bn. The initial public offering price was $14.50.

MTN Group, Africa’s largest wireless carrier and an early investor in the company, is evaluating its stake in the company, sometimes dubbed the Amazon of Africa. Jumia may offer MTN’s shares in the group as part of a potential new equity offer within the next three years if the Johannesburg-based firm decides to sell, Poignonnec said.

Expanding into food has helped to increase sales and Jumia’s footprint in existing markets, which are led by Nigeria, according to the co-CEO. That’s involved adding grocery and pharmacy orders as well as restaurant takeaways, he said. Jumia’s logistics unit is also now open to third parties wishing to use the company’s network of drivers to deliver packages, adding another revenue stream.

The rapid growth of food delivery across emerging markets may make Jumia an acquisition target, Nirgunan Tiruchelvam, an analyst at Tellimer Markets, said in a July note to clients.

Bloomberg

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