The latest filing from May 5, 2025 by British long-term institutional investor, Baillie Gifford, in which it announced the final sales of its remaining shares at e-commerce giant, Jumia, at a huge loss, portends bad news for Africa. If anything, it sends a negative vibe to global investors and only suggests one thing: Jumia needs to rejig its business sustainability strategy.
Baillie Gifford’s initial investment in Jumia, the first pan-Africa e-commerce outfit to be listed on the New York Stock Exchange, was a loud statement in global investors’ confidence in African equities. But that confidence has continued to wane. First, Baille Gifford reduced its ownership to 9.2 percent and down to a further 7.4 percent before selling off all its stake in Jumia by May, this year at a humungous loss. This is both worrisome and distressing. Why would a globally acclaimed long-term investor suddenly offload its shares and exit a company that was thought to be the light bearer of e-commerce on the continent?
Jumia, which marked its 13th anniversary recently, has seen a gradual erosion in reputational equity with the exit of Rocket Internet, MTN Group, among others. With the May filing, Baillie Gifford, one of Jumia’s largest institutional investors, sold the last of its 18 million shares in Jumia to end a six-year bet on the firm.
Baillie Gifford’s new status at Jumia now reads a stake at 0.0 percent, down from 7.4 percent last November, 9.2 percent in January 2024, and 11 percent at the IPO in 2019. The filing confirms that all 18.1 million American Depository Receipts (ADRs) (≈9 percent of the float) have been sold. ADR is a negotiable certificate issued by a US bank that represents ownership of shares in a foreign company and it allows US investors to access foreign companies without the complexities of directly buying shares on foreign markets.
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A Finance in Africa report says other big investors like Goldman Sachs, JPMorgan, Morgan Stanley, and Citi have trimmed their stakes below the 5 percent disclosure line since 2021.
Baillie Gifford has a reputation for long-term bets on companies it considers on good standing, have sustainability capacity and are boldly futuristic. It has had long-standing stakes in Tesla, Shopify and MercadoLibre and other high networth brands. This makes its exiting Jumia troubling for African firms wishing to go global via stock enlistments in established equity bourses in America and Europe.
Unfortunately, Jumia has had a history of commercial misfortunes. If it was not the co-founders, Jeremy Hodara and Sacha Poignonnec, stepping down, it was a revolt from shareholders grousing about some unethical practices linked to the Africa e-commerce platform.
In April 2020, British media giant, BBC, described Jumia as the ‘E-commerce startup that fell from grace.’ This time, the company that became the first Africa-focused ecommerce startup to be quoted on the New York Stock Exchange (NYSE) seems to have fallen into a deeper hellhole. Over time, its imprints have shrunk from 14 African countries down to nine. The manner it stopped operations in quick succession in three African countries (Gabon, Congo DR and Cameroon) got pundits pointing at a skewed business model built on make-believe.
Jumia suffered an operating loss of $51.6 million in Q2 2021, up 24.7 percent from the same period in 2020. In real terms, the company’s adjusted EBITDA loss increased by 15 percent from $36.2 million in Q2 2020 to $41.6 million in Q2 2021. The streak of losses kept piling amid allegations of unethical practices. This got many Africans looking to continental competitors like Takealot (South Africa), Konga (Nigeria), Bidorbuy and Zando (both of South Africa) to play leading role in the drive for the continent’s share in the growing global ecommerce market which market revenue is projected to reach $4.32trillion this 2025.
In second quarter of 2024, the losses continued. Jumia said its revenue fell 17 percent year over year to $36.5 million in US dollars as gross merchandise volume (GMV) dropped 5 percent to $170 million across its African operations.
Jumia, once touted to be the pride of Africa, has since listing at NYSE in 2019 been through one crisis or another.
But some analysts versed in African markets insist that the streak of losses and unhealthy business behaviours of Jumia should not define Africa.
They insist that Jumia is a German company, registered in Germany but trades in Africa, hence cannot be said to be flying the Africa flag. They see more hope and future in truly African online retailers like Takealot, Konga, and others to fly the continent’s flag.
At the 2021 Intra-African Trade Fair (IATF) in Durban, South Africa, the consensus among journalists analysing the African ecommerce market was that Nigeria’s Konga appears to have a head-start over others in the quest to position Africa as a truly profitable ecommerce market in the global arena. They point to the huge size of the Nigerian market, the nimble-footed management model of Konga, its youth-dominated staff strength, efficient payment system, self-owned logistics capacity and peerless understanding of the Nigerian market as factors that give Konga the edge. Any e-commerce firm that dominates the Nigeria market will see other countries in Africa as mere plug-and-play. Konga is leading the charge in Nigeria-wide dominance hence more likely to fly the flag for Africa on the global market.
Takealot, founded by Kim Reid ((with US-based hedge fund, Tiger Global) with further investments from Naspers in a deal that gives majority share to Naspers, is considered to be in the running but it is weighed down by external borrowings which stymies its growth path to profitability. This hands the baton of market leadership to Konga which at the moment is building its base with its own money, hence not encumbered with overbearing debt.
And whereas Jumia has been operating on a loss curve, it expects to cut its pre-tax loss to $25 million to $30 million in 2026 and break even by Q4 of the same year with prospects of posting profit by 2027. This. however, remains to be seen.
Jumia’s troubles are mostly internal. Its poor run on NYSE, which has seen it experience a significant drop in shares, has not also helped matters. Jumia was accused of many infractions including that:
(i) Jumia had materially overstated its active customers and active merchants;
(ii) Jumia’s representations about its orders, order cancellations, undelivered orders and returned orders lacked a sufficient factual basis and materially overstated the company’s sales;
(iii) Jumia failed to sufficiently disclose related party transactions; and
(iv) Jumia’s financial statements were presented in violation of applicable accounting standards.
Recall that on or about April 12, 2019, Jumia sold 13.5 million shares of stock in its initial public offering (the “IPO”), at $14.50 per share raising $196 million in new capital.
Trouble started when on May 9, 2019, Citron Research, a respected firm with a history of in depth research in stock markets and investments, published a report accusing Jumia of overstating certain financial metrics in its April 2019 IPO prospectus and omitting adverse information about the number of returned, undelivered, or canceled orders from the prospectus.
On the strength of this information, Jumia’s share price fell by $6.22 per share, approximately 18.8 percent, to close at $26.89 on May 9, 2019. At the time of this report, the share value is below $3.43.
Flowing from this, Kirby McInerney LLP put out a notice to concerned shareholders to fill out a contact form which it intends to aggregate to discuss the rights or interests of the shareholders with respect to the matter at no cost to the investors. Jumia opted for out-of-court settlement in the ensuing class action but not without paying out a princely $5 million.
· Oduntan, Africa ICT Market Analyst, writes from Lagos.
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