Jumia Food joins exodus from Nigeria, parent company focuses on core physical goods
By Jeph Ajobaju, Chief Copy Editor
Jumia Technologies, an e-commerce platform founded in Nigeria in 2012, says its food delivery service, Jumia Food, will exit the country at the end of this year – and will also do so in six other African countries: Kenya, Morocco, Ivory Coast, Tunisia, Uganda, and Algeria.
Some 15 multinational firms have quit Nigeria in the past three years, citing, among other factors, a harsh environment in which the authorities enforce extortionate multiple taxes without providing basic infrastructure – such as security, reliable power supply, and a stable foreign exchange (forex) rate – to enable businesses survive and thrive.
Jumia Chief Executive Officer Francis Dufay said the company will refocus on its core physical goods business and payment platform.
“The more we focus on our physical goods business, the more we realise that there is huge potential for Jumia to grow, with a path to profitability.
“We must take the right decision and fully focus our management, our teams, and our capital resources to go after this opportunity.
“In the current context, it means leaving a business line, which we believe does not offer the same upside potential – food delivery.”
A number of Jumia Food employees will transition to the core physical goods segment, the company clarified, per The PUNCH.
The exit comes after Bolt Food announced its withdrawal from Nigeria and South Africa, highlighting the harsh realities of the African food delivery landscape.
Shoprite, a popular food store based in South Africa, quit Nigeria in 2021, a year after it announced its plans to depart in 2020.
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Performance of Jumia Food
Jumia Food accounted for 11 per cent of Jumia Technologies gross merchandise value – the value of goods sold through its platform – in the nine months to September (M9 2023) and has never recorded a profit since it commenced business.
“The company determined that its food delivery business is not suitable to the current operating environment and macroeconomic conditions in its market, and will close its food delivery operations in all markets by the end of December 2023,” Jumia explained in a statement, per reporting by Premium Times.
“This decision is in line with the company’s strategy to optimise its capital and resource allocation and to continue its path to profitability.”
Jumia has had to resort to headcount cuts, scaling back delivery services outside its e-commerce business and exiting everyday grocery items in a bid to turn profitable.
Founded in 2012 in Lagos, Jumia attained unicorn status in 2016 when it became the first tech startup on the continent to hit the $1 billion valuation, which it later surpassed.
It went on to be listed on the New York Stock Exchange (NYSE) in 2019, the first African-focused tech company to reach the milestone. An initial public offering conducted by the firm on NYSE that year generated $196 million in net proceeds.
“It’s a segment that’s very difficult across the world, with very challenging economics and big losses. It’s also a segment that is extremely competitive across the world and Africa,” Dufay said in an interview with Reuters.
“The economics are tough in this market because the costs are very high and there is plenty of competition so there is downward pressure on the commissions that we make and upward pressure on marketing costs because everyone is fighting for customers.”
The company has been paring down losses, the latest in the third quarter of 2023 (Q3 2023) when it reduced losses 67 per cent compared to a year ago.
