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A fresh cash injection from the World Bank’s private investment arm will help Africa’s largest ecommerce vendor absorb shocks spurred by ongoing geopolitical crises in the Middle East and meet profit targets over the next year, the company’s chief executive told Semafor.
New York-listed Jumia raised $50 million from its largest shareholder Axian and some existing investors this week, selling 7% of its shares. Half of the amount raised came from the International Finance Corporation (IFC), a World Bank unit that in recent years has been one of the biggest backers of African businesses, both as a direct investor and through other financiers.
Higher fuel prices in Africa that are linked to the Iran War, and lower smartphone supply connected to a global shortage of chips were among Jumia’s strongest challenges in this year’s second quarter, according to results published on Wednesday. These factors have made the climate for ecommerce in Africa more “volatile and risky” compared to a year ago, Francis Dufay, Jumia’s CEO, told Semafor.
The secured capital will support Jumia’s plan to diversify inventory sourcing ahead of peak shopping seasons in the coming months of this year and bear costs that cannot be passed on as higher prices to customers. “We were constrained by our cash position until recently. So the new funding gives us room to act. But of course, we’re going to be very careful and cautious with the ways we use our cash,” Dufay said.
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Founded 15 years ago, Jumia has served as the test case for the viability of online commerce in Africa, earning it the ‘Amazon of Africa’ moniker. But the company’s progress has been hampered by a tough macroeconomic environment, strategic missteps, and operational hurdles.
After years of bloat in pursuit of scale, Jumia has been on a fat-cutting operation since 2022, trimming the number of African countries in which it sells from 14 to 8, slashing several services like food and groceries deliveries, and prioritizing pick-up stations over door deliveries in the new cities it is expanding to. The company now employs fewer than 2,000 people, following an 11% fall in headcount between March and July, as it takes up AI to begin automating warehouse operations.
“Our warehouses today have no conveyor belts, for example. It’s a very different picture in an Amazon warehouse,” said Dufay.
The turn towards investors such as the IFC aims to consolidate on gains of the four-year restructuring process, signalling stability to the market with a steady gap between revenues and losses since 2022.
The IFC will not be hands-on in Jumia’s operations as a result of the equity investment, the CEO said, but the deal has a social impact dimension that both parties will explore. “For example, scaling electric vehicles for delivery operations, and installing solar panels on warehouses to remove diesel generators,” he said.
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- African e-commerce firm Jumia aims for profit as it fends off Chinese rivals, Temu, Shein.