Jumia Technologies AG became the first African tech company to list on the New York Stock Exchange (NYSE) this spring, raising $196 million in its initial public offering.
Earlier, in 2016, the tech start-up became the first African tech unicorn, valued at $1 billion after a funding round that included Goldman Sachs, AXA and MTN, the South African telecommunications giant. Since its listing on April 12 at $25.46 a share, Jumia’s stock has been on a roller-coaster, hitting a high of $49.77 the day after the IPO but falling as low as $18.13 in early May. The shares were trading at $23.98 at midday on Monday.
From its establishment in 2012, Jumia was conceived as a pan-African e-commerce platform. It has since been dubbed an “African Amazon” and its online offerings encompass everything from electronics and gaming to fashion, health and beauty and even grocery items.
Jumia is active in 14 African countries, with more than 81,000 active sellers transacting online with millions of consumers.
Although the tech company is headquartered in Germany, “make no mistake about it, Jumia is definitely an African company as we only operate in Africa,” stressed Sascha Breuss, chief executive officer of Zando, the South African arm of Jumia. The company has invested heavily in tackling major infrastructure challenges, including investing in logistics, delivery and tech. “While we have international shareholders — like many other companies — the vast majority of our 5,000 employees are locals, including the country leads. In South Africa, for example, we directly and indirectly employ around 330 people — 327 of these are South African, which equals to 99.1 percent,” he said.
Listing on the NYSE was a logical choice, said Jumia cofounders and co-ceos Sacha Poignonnec and Jeremy Hodara. “This is the largest stock exchange in the world; many technology companies are listed on the NYSE, such as Alibaba, Twitter and Snap. By joining the NYSE and by being the first African technology company to do so, we want to showcase the digital innovation happening in Africa and the opportunities there in terms of tech and e-commerce.”
Breuss added that there were also certain realities to consider. “Most international investors have challenges when they try to push money to Sub-Saharan African countries as investment. So they’re more comfortable with investing in companies incorporated in Europe, the U.S. or markets they’re more familiar with.”
The NYSE listing, he said, “is also a strong statement that African companies are able to play in the same league as the big U.S. tech companies that are listed on the NYSE and have become household brands.”
The listing was significant, too, from a trust perspective, Juliet Amannah, ceo of Jumia Nigeria, pointed out. Jumia Nigeria is the biggest online mall and number-one e-commerce web site in Nigeria, offering over 50,000 international and local brands to over four million subscribers.
“When someone says, ‘I don’t know if I can shop online,’ or ‘I don’t know how to shop online,’ or, ‘I don’t know if I can trust the quality of the products online,’ now we can say that Jumia is a public entity, not just a small private company anymore. This is now a company that is obligated to comply with the most stringent standards of compliance that is required of a company listed on the NYSE,” she said.
Breuss echoed her sentiments. “Being listed on the NYSE will certainly help us to build even more trust with consumers, in particular those who are still not comfortable with e-commerce. They may now see us as an established company, and we hope this will help our growth and consumer adoption.”
Yet Internet penetration in Nigeria, as with South Africa, still has room to grow. Out of a population of over 200 million, according to 2019 estimates by Internet World Stats, Internet penetration was 55.5 percent as of March 2019. In South Africa, out of a population of 58 million, there are 31 million Internet users, or an Internet penetration rate of 53.7 percent. Kenya, where the population is 52 million, has Internet penetration of 83 percent, whereas in Ghana, whose population is 30 million, it is 33 percent, closer to the African continent’s average of 35.9 percent.
Smartphones, by and large, are how Africans access the Internet. A 2018 Pew Research Center report puts sub-Saharan Africa’s smartphone penetration at 33 percent, an increase from the 15 percent recorded in 2014. At 51 percent, “South Africa is the only country in the region where at least half the population is online,” said the report.
“The number of people connected to the Internet is likely to continue to rise, too; industry projections suggest that the smartphone adoption rate in sub-Saharan Africa will double by 2025,” the study said.
Both Breuss and Amannah are confident about growth in the region with regard to mobile connectivity and e-commerce consumer growth.
“We believe that a solid foundation has been laid for customers to shop online,” said Breuss. “Taking the example of South Africa, we have more than 800 brands online and offer more than 50,000 different products at the best prices in the market. On top of this we offer fast, secure and free delivery — yet only a fraction of the market has actually shopped with us, even though 87 percent of our shoppers would recommend Zando to their friends and family.”
“The online infrastructure is there. The real barriers are mental,” said Amannah. “There is just that gradual mental shift needed to shop online. You see, when people shop online at Jumia, they love it; 90 percent of our shoppers would recommend Jumia. But it’s getting those who haven’t tried it yet to try it.”
The conversion of Internet users to the Jumia e-commerce platforms throughout Africa is a priority for the company. Noted Poignonnec and Hodara: “The NYSE listing shows that innovation is happening in the African continent. It shows an innovative, dynamic and modern Africa. We really believe that funds can help us to invest more on our operations, hiring more staff to be part of our team and developing the adoption of e-commerce.”