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Jumia: African Amazon or African Catastrophe?

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  • Jumia: African Amazon or African Catastrophe?

Jumia has been lauded as ‘African Amazon’ by the U.S media and declared as a valid means to tap into Africa’s growing internet opportunities.

The e-commerce giant was listed on the New York Stock Exchange last month and quickly gained 76 percent within 24 hours and go on to do 204 percent in the next three days.

The possibility of investing in a startup that has potential to reach 1.216 billion African people propelled Jumia to the top of investment ladder across the world and as expected to the staple of critics, analysts and researchers needed to forever validate and solidify Jumia’s position as the greatest IPO of this generation.

Citron Research, led by Andrew Edward Left, was one of the critics that dug deeper into Jumia metrics and past records.

Citron Research, a short seller, called Jumia a fraud for hiding and inflating key metrics ahead of its IPO despite sharing those original numbers with investors in 2018.

“When a company markets to investors ahead of its IPO and then a few months later omits material facts and makes material changes to its key financial metrics to make the business seem viable, this is securities fraud,” Citron alleged.

While Andrew Left was banned in 2016 from trading in Hong Kong securities for five years by a tribunal that accused the Citron Research founder of ‘false and misleading allegations’ against a pharmaceutical company, Valeant, in 2012, there seem to be fundamental issues with Jumia.

Jumia has incurred over $1 billion in debt since it was founded in 2012, including $195.2 million on revenue of $149.6 million in 2018. Considering, the African market where infrastructures are poor and most logistics needed for deliveries had to be built from scratch, Jumia will have to burn more cash across its 14 operational countries in Africa before revenue can start picking up.

Also, consumer spending across its key markets are very low, for instance, Africa’s largest economy Nigeria is struggling with growth amid high unemployment rate, especially among the youths, the e-commerce main target audience. Nigeria’s youths unemployment/underemployment is 55.4 percent, higher than the national rate of 43.3 percent.

Perhaps, this is the main reason MTN Group, the largest Jumia investors, is looking to divest from the company and focus on data as stated in its first-quarter report released days ago.

MTN Group is the largest telecommunication in Africa, as such, have access to more information regarding Jumia and the opportunities on the continent than average investors. Therefore, it is surprising that MTN is divesting despite knowing Jumia have access to 400 million internet users across all its 14 operational countries.

While passionate African entrepreneurs, investors, and advocates have rallied behind Jumia, it would be reckless to overlook compelling facts and lack of enough information on the part of the company.

Investors and stakeholders have right to know if Jumia hid 41 percent returned orders previously stated in a Confidential Investors Presentation in 2018. Growth blueprint or is Jumia just banking on Africa’s potential story without a solid plan to reduce the numbers of fake products on its platform, improve payment service, enhance delivery time and put in place a global standard customer service?

The danger of Jumia Failure to African Startups

Jumia situation will further throw more lights on the complexity of doing business in Africa and the limitations of African startups. Companies like Konga, another Nigerian e-commerce startup looking to list on the New York Stock Exchange later this year, will struggle, in fact, Konga’s team needs to hold off until Jumia address each of the accusations and not relied on Citi Bank response put out by Andrew Howell, who had previously predicted a 52 percent surged in Jumia shares to investors and possibly struggling to save millions of investors relying on Citibank analysis from almost 50 percent plunged in Jumia value since reaching $46 a unit share.

Until Jumia addresses the current situation with a solid quarter performance and put out a proven growth plan, MTN Group will struggle to relinquish its 19 percent stake in the company as planned.

Other African startups, outside fintech, will have a hard time raising funds until they can convince global investors they can address key issues holding growth back.

Jumia Technologies should put out a statement addressing each of the point raised with proven documents.

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.

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Zoom Hit a Record High Quarterly Revenue of $882.5 Million, Almost a 370% Increase YoY

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Zoom’s revenues skyrocketed last year as global demand for online meeting solutions soared amid the COVID-19 lockdown. Although the popular video conferencing platform generated impressive revenue through its fiscal year 2021, the year’s final quarter set a new record.

According to data presented by Buy Shares, Zoom hit a record high quarterly revenue of $882.5 million in Q4 FY 2021, almost a 370% increase year-over-year.

Annual Revenue Soared by 700% in Two Years

Unlike many other sectors, the video conferencing platforms witnessed explosive growth amid the COVID-19 crisis, as millions of people started working from home. However, Zoom emerged as the most preferred platform for holding virtual meetings. As countries across the globe imposed lockdowns, family members also turned to Zoom as a way of keeping in touch with each other. Museums, theatres, and schools chose the platform to maintain normal operations.

With the ban on social gatherings, Zoom also became a cultural phenomenon through hosting parties, concerts, church services, and art shows. The surge in the number of users led to a 700% revenue growth in two years.

In the fiscal year 2019, Zoom generated $330.5 million in revenue, revealed the company’s earnings report. Over the next twelve months, this figure jumped by more than 88% to $626.6 million. The two-digit increase was driven by a strong Q4 FY 2020, matching the period between January and March 2020, when the pandemic already struck. Zoom’s quarterly revenue jumped by 78% YoY in this three-month period and hit $188 million.

The strong increasing trend continued in the following months, with revenue rising to $328.1 million in the second quarter of the calendar year 2020. Statistics show this figure more than doubled in the next three-month period and hit $663.5 million.

However, the fourth quarter of the fiscal year 2021, matching the period between January and March 2021, delivered the highest quarterly revenue in Zoom`s history, causing annual revenues to rise above the expectations to $2.65bn.

Almost 70% of that value, or $1.83bn, was generated in the Americas as the largest Zoom market. Users from the EMEA region, as the second-largest market, generated $486 million in revenue. Asia followed with $332.8 million, respectively.

Market Cap Soared by 357% Year-Over-Year

While the Zoom stock price has increased steadily throughout 2020, a positive announcement regarding the efficiency of a COVID-19 vaccine in November last year resulted in the price falling by more than 30% by the end of the year.

Since then, the share price has been fluctuating and in recent months saw even more of a downturn, reaching $328.95 last week.

In December 2020, the combined value of Zoom shares stood at $115.5bn, revealed the MacroTrends data. Over the last four months, this figure dropped to $96.6bn, still a 357% increase year-over-year.

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West Africa Launches New Payments Digitization Agenda

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In Senegal, 8 out of 10 workers are paid in cash. Most are temporary workers and excluded from health insurance. A survey revealed that 77% of temporary workers would be willing to receive their wages digitally if this gave them access to health insurance. These are some of the major findings of the publication that the Senegalese government has launched today, with support from the Better Than Cash Alliance (United Nations), the World Bank and the National Agency of Statistics and Demography of Senegal. Combining digital payments with health insurance benefits offers an excellent opportunity for social inclusion, formalization, and financial innovation.

Digital payments stimulate domestic production and consumption. If 50% of temporary workers in Senegal received payments digitally, 45 billion CFA francs would be added to GDP per year (around $80 million USD). Paying workers digitally, speeds up the financial inclusion for the population, boosts business competitiveness and increases financial system liquidity. To tap into this potential, the SME Development Agency (ADEPME) plans to bolster its SME support fund with $20 million USD (around 11 billion CFA francs) from the World Bank. This will be used to strengthen SME digitization initiatives and support digital payment projects for workers.

High-level leadership speaks out in support of digital payments for workers

Senegalese President Macky Sall and H.M. Queen Máxima of the Netherlands, who serves as UN Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA), have launched an appeal to fellow leaders, the private sector and civil society, inviting them to: “use this report to ensure digital payments are at the center of a sustainable and fair economic recovery. We look forward to jointly providing leadership on this agenda to achieve an inclusive and digitally enabled recovery,” the two leaders added.

To set an example, the President of Burkina Faso, Roch Marc Christian Kaboré, also decreed, in late 2020, the digitization of payments for workers in the administration of Burkina Faso. When the COVID crisis emerged, the West African Economic and Monetary Union (WAEMU) and the Central Bank of West African States (BCEAO) took decisions aimed at reducing the circulation of cash in the 8 countries. These actions have had tangible impacts which are beginning to change the lives of workers and companies.

Digitizing payments and advancing universal health care coverage

While receiving a salary is often linked to health care contributions, globally at least 61% of workers operate in the informal sector without adequate coverage, according to the International Labour Organization (ILO). Indeed, in some countries, there is not always a legal obligation for employers to contribute to any kind of coverage for their informal/self-employed workers, which affects women more than men.

To meet this challenge of inclusion, the National Agency for Universal Health Coverage in Senegal has launched an ambitious digital payments platform. It has partnered with fintechs and private companies to link access to universal health coverage and digital payments – specifically targeting women. Flagship national enterprises such as the agricultural giant SODAGRI or SMEs such as QUALIOCEAN and Kossam SDE are setting an example by providing temporary workers with universal health coverage. More than 200,000 workers will now have access to quality, government-subsidized health care.

While 81% of national companies have fewer than 20 employees, on average hundreds or even thousands of temporary workers are employed in their supply chains. Employees are generally banked, but 93% of employees on temporary contracts are paid in cash. The latter are systematically excluded from the formal health system.

The successful transition towards digital payments

Three obstacles have limited the growth of payment digitization in Africa: the size of the informal sector, sometimes up to 90% of the economy; the historically low financial inclusion rate; and most importantly, 21% of African workers receive a wage keeping them below the poverty line.

This has all changed dramatically. Financial inclusion has surged since 2010 with the arrival of electronic money issuers and fintech.

The country’s largest employer, Compagnie Sucrière Sénégalaise, has successfully digitized payment for around 8,000 workers via a partnership with local fintech. “We wanted to digitize payments without using the banking system, which isn’t suited to some populations,” noted Claude Fizaine, the company’s Secretary General, in an interview with an African media outlet. “For employers, the benefits of digitizing payments include avoiding the constraints of managing large amounts of cash, and all the risks that distribution can involve. It also makes it possible to offer employees tools tailored to their financial and family situations, which can only have a positive impact on their personal and professional lives,” he added.

WAEMU’s innovations should continue to inspire the rest of Africa. Since 2012, it has been the continent’s engine for economic growth and stability. The examples of Senegal and its neighbours reinforce the ILO’s global agenda that could well make digital payments for workers a new global standard for promoting decent work.

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Kwik Delivery Releases Prestashop Plugin; Becomes Most Integrated Delivery Platform With e-commerce Frameworks In Africa

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The ‘oars’ are definitely not resting at Kwik Delivery at this time! Just weeks after the release of its plugins for Shopify and Magento, Kwik Delivery announces the release of its plugin for Prestashop. This new plugin is a milestone as Kwik Delivery is now fully integrated with the “Big Four” of e-commerce frameworks: Magento, WooCommerce, Shopify and now Prestashop.

Delivery plugins are a critical technology brick in the growth of African e-commerce by allowing thousands of merchants to offer reliable, secure and efficient last-mile delivery services to their customers. By installing the plugin, businesses no longer need to worry about on-time deliveries after-sales as Kwik handles it for them. Kwik delivers within 2 hours in Lagos and 1 hour in Abuja after pickup and will soon expand its service to new cities.

“These are key milestones for us in enabling the growth of e-commerce in Nigeria,” commented Romain POIROT-LELLIG, Founder & CEO of Kwik Delivery. “We are working to ease the logistics hassles faced by both businesses and their customers after-sales. Just providing the network to make this possible is not enough. The added value brought by Kwik Delivery starts from the fulfillment systems of merchants, all the way to the doorsteps of buyers.”

The Prestashop plugin is free and easy to install and use. The plugin allows buyers to get real-time shipping rates between merchants’ addresses and the buyers’ delivery addresses. Buyers can directly place orders to be delivered by Kwik Delivery at the checkout of Prestashop stores.

Since its launch in 2019, Kwik Delivery has introduced the concept of “just-in-time” last-mile deliveries in Nigeria and has pioneered an approach of deep integration with e-commerce frameworks that proves to be indispensable to the growth of Africa’s e-commerce, fostering trade across Africa. Kwik Delivery is the trading name of Africa Delivery Technologies SAS and the mobile app is available on iOS and Android.

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