Jumia looks beyond profit target with plan to spin off logistics
Jumia, the leading e-commerce platform in Africa Technologies AG, is looking beyond an immediate target of generating a profit from its pioneering African e-commerce business, laying out longer-term plans to spin off divisions and enter new countries.
The question of when the Berlin-based company will become profitable has hung over the group since a high-profile New York listing in 2019. And while Jumia has been careful in recent months not to set itself a deadline, co-Chief Executive Officer Sacha Poignonnec said it’s time to lay the groundwork for the next phase of growth.
That will partly focus on Jumia’s division that helps transport goods between buyers and sellers in 11 African countries, including Nigeria, Egypt and Uganda, and the payments business that allows them to settle transactions. The company may eventually look to spin them both off into separate entities, according to Poignonnec.
“We created something that does not really exist in Africa, which is an end-to-end logistics partner on the continent. We have built it from the get-go, so that one day we are in the position to carve it out if we want to.”
Jumia was started in Lagos by Frenchmen Poignonnec and Jeremy Hodara in 2012, and began to attract attention due to the entrepreneurs’ ambitious plan to bring e-commerce to a continent with relatively weak internet connections and banking systems, chaotic transport and unreliable addresses.
The New York initial public offering at first attracted a surge of interest, but a damning report by short sellers Citron, who alleged fraud, sent the stock into a downward spiral.
That started to change earlier this year, when stay-at-home warnings during the Covid-19 pandemic began to paint a more positive picture for e-commerce companies even in Africa. Citron said in October its analysts had “learned a lesson” and wouldn’t bet against Jumia’s rally, even as challenges such as slow delivery times remain.
The stock has surged since, and has increased by more than 550% in the past 12 months. That values the company at about $3.2 billion.
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