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Jumia Plunges 19.30% on Fraud Alert

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  • Jumia Plunges 19.30% on Fraud Alert

Jumia, Africa’s largest e-commerce, plunged 19.30 percent on Thursday after Citron Research released a report calling the company a fraud.

According to the research company, they’ve not seen an obvious fraud as Jumia in 18 years of publishing. Citron attacked US media calling the e-commerce company the ‘Amazon of Africa’ despite numerous media in Nigeria discussing widespread fraud in this company.

Citron accused Jumia of altering the metrics of the Confidential Investor Presentation report presented to investors in October 2018 to seem viable when in fact it is in over $1 billion debt with poor revenue numbers to validate growth prospect.

Again, in order to lure investors to Jumia, the company was reported to have inflated its active consumers and active merchants figures by around 20-30 percent.

Citron Research also pointed out that 41 per cent of Jumia’s orders were returned, not delivered or cancelled but returned, meaning the few active consumers interested in the e-commerce were not satisfied due to huge numbers of fake products, again, Jumia removed this detail from its F-1 filing to the Securities & Exchange Commission (SEC).

Research/Publishing company said instead of Jumia to disclose 41 per cent returned orders it previously disclosed in October 2018 Confidential Investor Presentation, it disclosed that “orders accounting for 14.4% of our GMV were either failed deliveries or returned by our consumers” in 2018.

Even Nigerian newspapers in the past have called Jumia a struggling company with many internal frauds.

“Cuts a picture of a fast-growing e-commerce company” but “beneath what is painted is a company struggling to survive over internal fraudulent activities,” a Nigerian online newspaper stated.

Jumia is “sitting on gun powder which might explode any moment as the retail outfit is filled with many shady deals.”

Citron called Jumia a fraud and alerted US Securities & Exchange Commission (SEC) to the company’s filings for obvious irregularities.

“Jumia is the worst abuse of the IPO system since the Chinese RTO fraud boom almost a decade ago. Worse than being ‘the most expensive’ US listed e-commerce company, Jumia reported financials show us a stagnant business that has burned through $1 billion and has moved the sucker’s game to the US Markets.”

Jumia shares rose 76 percent within 24 hours of listing on the New York Stock Exchange and go on to do 204 percent within the very first week despite weak metrics.

The company has dropped 19.30 percent in value in the last 24 hours and presently, it’s market capitalisation stood at $2.05 billion, up from $3.29 billion.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

E-commerce

Ekeh, Zinox boss, To Headline Konga SME CONNECT Conference

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Making Money With Konga - Investorsking

Thousands of expected participants, including representatives of large corporate organizations, players in the SME segment of the Nigerian economy and other business owners are expected to learn useful tips for creating new wealth at a virtual conference to be hosted by Konga, Nigeria’s leading composite e-Commerce giant.

The event, tagged Konga SME CONNECT with the theme – Making New Money, is scheduled to hold on Thursday, May 20, 2021, at 10 am

Africa’s leading digital entrepreneur and Chairman, Zinox Group, Leo Stan Ekeh, has been confirmed as the keynote speaker at the event. Ekeh, who is expected to speak for 20 minutes, will deliver useful and incisive business success tips to participants, including existing and prospective merchants on the Konga platform. Also expected to participate in the conference are budding entrepreneurs and unemployed youths in search of opportunities to partner with Konga.

Ekeh will speak on the theme – ‘‘Making New Money’’.

To confirm participation, interested participants are expected to register for the event via the link.

Speaking on the event, VP Online Mr. Kenny Oriola, Konga Group, affirmed that the Konga SME Connect is a unique opportunity for participants to learn from Ekeh, arguably Africa’s most successful digital disruptor, while also affording them a chance to appraise themselves of the many avenues of partnering with Konga and creating sustainable wealth.

‘‘It is no secret that the raging COVID-19 pandemic has altered the equation of commercial transactions not only in Nigeria but across the world, with SMEs and even large corporate organisations battling hard to keep their heads above water.

‘‘The prevailing situation requires business owners, entrepreneurs and even job seekers to remain alive to new and emerging opportunities in this challenging business space. In times of difficulties such as these, opportunities abound to create wealth and only those with the vision to sniff out these opportunities will benefit. This is one of the many tips we will be sharing with new, existing and prospective merchants on the Konga platform, as well as business owners, the unemployed and other participants. Indeed, the Konga SME CONNECT is a must-attend event for all.

‘‘We are delighted to have Mr. Ekeh as the keynote speaker. We see him as a fitting testimony to the possibility of building the biggest business in Africa with astute vision, hard work, integrity and most importantly without taking any loans. We expect all participants to draw useful insights from the rich experiences Mr. Ekeh will share on the day,’’ he concluded.

The Konga SME CONNECT which will hold virtually is expected to become a regular feature for partners of the trusted e-commerce giant.

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Fintech

FG to Roll Out Regulations for Fintech, Other Digital Investment

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fintech - Investors King

Amid upsurge in financial technologies (fintechs) start-ups and patronage of digital assets and digital investment platforms, Nigeria is concluding arrangements to roll out its first regulatory framework for digital investment advisory services providers.

The forthcoming regulatory for digital investment advisory services providers, otherwise known as “Robo” because of the deployment of robotic interface, is the first phase of larger regulatory frameworks that include digital assets, offerings and intercontinental, borderless trading on emerging securities, according to sources.

A draft of the proposed regulatory framework for digital advisory services obtained by The Nation describes “Robo” or digital advisory services as “the provision of advice on investment products using automated, algorithm-based tools which are client-facing, with little or no human adviser interaction in the advisory process”.

Digital advisory services are categorised into two under the framework- fully automated and semi-automated. A fully-automated “Robo” advisory services provider requires no human adviser intervention in the entire advisory process while a semi-automated service allows minimal human intervention or interaction.

When it comes into effect, the new regulatory framework will become the basic regulatory document fo the Nigeria and shall be applicable to all institutional and individual capital market operators and persons offering or seeking to offer digital advisory services in Nigeria.

The framework brings digital or “Robo”advisors under the regulatory purview of Securities and Exchange Commission (SEC), Nigeria’s apex capital market regulator.

According to the proposed framework, digital investment advisers are required to put in place “adequate policies, procedures and controls to mitigate against money laundering and terrorism financing risks and comply with the Commission’s regulations on Anti-Money Laundering and Combating the Financing of Terrorism Act, 2013”.

The “Robo” advisers are also required to take steps to address specific risks associated with Non-Face-To- Face (NFTF) business relations with a client and employ additional checks to mitigate the risk of impersonation when on-boarding clients through a NFTF means.

“Robo” Advisers are also expected to provide sufficient information to their clients to enable them make informed investment decisions. with such disclosures presented in plain English and in clear simple language.

In line with the above, a digital investment adviser shall disclose to his client in writing the assumptions, limitations and risks of the algorithms, circumstances under which the Robo Advisers may override the algorithms or temporarily halt the robo advisory service; and any material adjustments to the algorithms.

To avoid conflict of interest, “Robo” advisers are required to comply with the disclosure requirements on conflicts of interest set out in the Code of Conduct for Employees of Capital Market Operators as well as disclose in writing to their clients, any actual or potential conflict of interest arising from any connection to or association with any product provider, including any material information or facts that may compromise their objectivity or independence.

“In the context of their business model, “Robo” advisers shall disclose situations where their algorithms are designed to direct clients to invest in products managed by their affiliates,” the draft stated.

With the growing investment of Nigerians in overseas-listed Investment products, the draft framework requires “Robo” advisers to provide a risk warning statement to their clients at the point of account opening and when advising them on overseas-listed investment products. Also, when advising on overseas-listed investment products, “Robo” advisers shall assess the merits of the products, as well as the client’s investment objectives, financial situation and particular needs as well as ensuring that all these are not in violation of any applicable laws and regulations.

To safeguard the client-facing tools which are primarily algorithm-driven, a “Robo” or digital investment adviser shall put in place adequate governance and supervisory arrangements to effectively mitigate against fault or bias in the algorithms.

The board and senior management of the “Robo” adviser shall be responsible for maintaining effective oversight and governance of the client- facing tool and, ensure that there are sufficient resources to monitor and supervise the performance of algorithms.

The “Robo” adviser should be adequately staffed with persons who have the competency and expertise to develop and review the methodology of the algorithms. Adequate training should also be provided to all staff members who use the client-facing tool.

“The board and senior management of the “Robo” adviser shall also put in place systems and processes to ensure a sound risk management culture and environment in its firm, as well as compliance with the relevant rules and regulations,” the draft stated.

The responsibilities of the directors of the digital investment advisory firms or platforms include approving the design and methodology development of the client-facing tool and ensuring its proper maintenance, approving the policies and procedures that apply to the systems and processes of the client-facing tool, maintaining oversight over the management of the client-facing tool, such as designating appropriate personnel to approve changes to the algorithms, having security arrangements to identify and prevent unauthorised access to the algorithms, ensuring that the requirements set out in the SEC’s guidelines on technology risk management are adhered to and maintaining proper documentation on the design and development of the algorithms.

In ensuring accountability and utmost responsibility, the proposed rules state that while the board and senior management may delegate the daily oversight and governance of the client-facing tools to other personnel, the board and senior management remain ultimately responsible and accountable for the proper development, monitoring and testing of the client-facing tools.

Also, in developing the client-facing tools, “Robo” advisers shall ensure that the methodology of the algorithms behind the client-facing tool is sufficiently robust, that the tool collects all necessary information and sufficiently analyses same to make a suitable recommendation, including have proper mechanisms to identify and resolve contradictory or inconsistent responses from clients and have controls in place to identify and eliminate clients who are unsuitable for investing.

Additionally, “Robo” advisers shall perform sufficient testing, prior to the launch of the tool and when changes are made to the tool, to detect any error or bias in the algorithms and to consistently and reliably ensure that the algorithms correctly classify clients according to their risk profiles based on inputs provided by them.

In particular, the “Robo” adviser shall conduct back-testing using hypothetical inputs to ensure that the risk profiles generated by the algorithms are in line with its risk profiling methodology. The testing shall ensure that the algorithm scores and assigns risk profiles to clients correctly and consistently; and that the algorithms produce the intended asset allocation and investment recommendation according to the “Robo” adviser’s risk profiling methodology.

Besides, the “Robo” advisers shall have policies, procedures and controls in place to monitor and test the algorithms on a regular basis to ensure that they are performing as intended. At the minimum, such processes should include access controls to manage changes to the algorithms whenever necessary, controls to detect any error or bias in the algorithms, controls to suspend the provision of advice if an error or bias within the algorithms is detected and compliance checks on the quality of advice provided by the client-facing tool. Such checks shall be conducted regularly and when there are changes to the algorithms, including post-transaction sample testing, and shall be reviewed by an independent and qualified human adviser to ensure compliance with the requirements of extant laws and regulations.

According to the proposed framework, the digital investment advisers shall implement internal policies and procedures to address technology risks while also meeting the requirements set out in SEC’s guidelines on technology risk management (TRM) and also refer to the TRM guidelines for industry best practice which they are expected to adopt.

Digital advisers shall perform a gap analysis against the requirements set out in the TRM guidelines to ensure that all gaps are adequately mitigated prior to the launch of the client-facing tools and also when changes are made to these tools.

The digital investment advisers are also required to have a reasonable basis for recommending any investment product to a person who may reasonably be expected to rely on the recommendation while also ensuring that a recommendation takes into account a client’s investment objectives, financial situation and particular needs.

In assessing the suitability of investment advice, a digital adviser shall take reasonable steps to collect and document information on the financial objectives of the client, the risk tolerance of the client, the employment status of the client, the financial situation of the client, including assets, liabilities, cash flow and income, the source and amount of the client’s regular income, the financial commitments of the client, the current investment portfolio of the client, including any life insurance policy, whether the amount to be invested is a substantial portion of the client’s assets; and for any recommendation made in respect of life policies, the number of dependants of the client and the extent and duration of the financial support required for each of the dependants.

However, a fully automated “Robo” adviser may exempt the collection of full information on a client’s financial circumstances if the advice is fully-automated, with no human adviser intervention in the advisory process or where human interactions are limited to providing technical assistance such as, assisting clients on IT-related issues or clarifying with clients on their responses when inconsistencies are noted as well as where there are in-built “knock-out” or threshold questions to effectively identify and eliminate unsuitable clients and there are controls in place to identify and follow up on inconsistent responses provided by clients. Such exemption also requires provision of a risk disclosure statement to clients to alert them that the recommendation does not take into consideration their financial circumstances, at the point when the recommendations are provided to them; and when the advice is limited to instruments within the regulation of SEC.

Notwithstanding, all “Robo” advisers shall still take reasonable steps to collect information on the client’s financial objectives and risk tolerance to satisfy themselves that the investment recommendation is suitable and to assess if a client possesses the relevant knowledge and experience to invest in complex instruments through the Customer Knowledge Assessment (CKA) or Customer Account Review (CAR). This applies, regardless of whether the client is self-directed or not.

According to SEC, the proposed new regulatory framework is expected to provide “guidance on the regulatory requirements and expectations in relation to the provision of automated advisory services”.

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FarmFix to Use Technology to Achieve Food Security

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FarmFix - Investorsking

The Chief Operating Officer (COO) of FarmFix Investments, Damilola Oladehin, has said his company would use technology in achieving food security in the country.

FarmFix is an integrated farm and agro-allied business that is innovatively and technologically driven to, according to the management of the company, ensure food security and sustainable returns on investment for the stakeholders or investors.

During a virtual press briefing held from their head office in Ibadan, Oladehin said that their company, FarmFix focuses on the entire agricultural value-chain, investment, production, processing, trading and exporting.

He said, “FarmFix is a leading agribusiness offering diversified farm products, services and profitable projects. Our vision is to be a leading player in the agricultural industry space and investment destination for individuals and organisations that want to be involved in farming. Our mission is to increase the nation’s food security while creating wealth for her people.”

Speaking on the unique selling point of the company, he stressed that though it was true that many other agro-investment companies may have reneged on financial returns accrued to investors, especially those who were not directly involved in farming, FarmFix was poised to regain the trust deficit of agro-investors.

“Many companies have rushed into the business without any pedigree. They say they are in the business of rice farming but all they do is buy in small quantities and rebag for sale. At FarmFix, we are here to fix the problems mitigating against all stakeholders, especially investors.

“We have acquired various expanses of land around Nigeria for rice planting and have started harvesting in some of our farms, we are in partnership with a rice mill currently nearing completion and the business is fully insured by a leading insurance company in Africa.

“For us, our business starts from planting the seedling till it gets to the consumers’ tables. Our team is led by astute professionals whose industry leadership would be achieved through the integrity of our skilled and knowledgeable workforce.

“We foster a culture of personal and professional integrity characterised by trust, respect, and a spirit of partnership among employees and investors. Innovative and diversified services drive our continuing profitable growth while providing the scope and flexibility to accommodate the customised needs of our clients nationwide”, he said.

Also speaking at the event, the Business Development Manager, Bisi Adeyemi, highlighted the potentials of the agricultural market in Nigeria, Africa’s fastest growing and second largest economy.

He said that all activities necessary to bring about the transformation of Nigerian agriculture hinges on agribusiness spanning services from production, manufacturing of agro-inputs, packaging and distribution besides extension of credit facilities for agricultural investments.

He assured potential future investors that the company would guarantee its mandate by ensuring that quality of service and market expectation is fulfilled.

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