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Jumia: African Amazon or African Catastrophe?



Jumia ecommerce
  • 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.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq,, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Visa and Mastercard Face Setback as Judge Indicates Likely Rejection of $30 Billion Deal




Visa Inc. and Mastercard Inc. are facing a potential setback as a federal judge in Brooklyn indicated she is likely to reject their $30 billion settlement with retailers.

The deal, aimed at capping credit-card swipe fees, has been a focal point of contention between the card giants and merchants for years.

Judge Margo Brodie of the U.S. District Court for the Eastern District of New York expressed skepticism about the settlement during a hearing on Thursday.

According to court records, Judge Brodie suggested she might not approve the agreement, stating she would issue a written decision in the coming days.

Retailers have long campaigned to reduce their share of the costs associated with accepting card payments, known as interchange fees.

These fees, which are partially passed on to banks that issue the cards, including major institutions like JPMorgan Chase & Co. and Citigroup Inc., have been a burden for many merchants.

Announced in March and pending court approval, the settlement was designed to allow merchants to charge consumers extra for transactions involving Visa or Mastercard credit cards.

The agreement also aimed to introduce pricing tactics to steer consumers towards lower-cost cards.

“The court’s comments strongly suggest that she won’t accept the settlement,” noted Justin Teresi, an analyst with Bloomberg Intelligence. “While Judge Brodie doesn’t seem convinced that larger retailers should be allowed to opt out from the settlement, provisions like changes to digital wallet acceptance rules and some state bans on surcharges likely present real adequacy issues.”

Both Visa and Mastercard expressed disappointment over the developments. A Mastercard representative stated, “We believe the settlement presented a fair resolution of this long-standing dispute, most notably by giving business owners more flexibility in how they manage their card acceptance activities. We will pursue our options to ensure a proper resolution of this matter.”

Visa’s spokesperson echoed this sentiment, emphasizing that “continued engagement between industry and the merchants is the best way forward.”

Swipe fees have become a substantial financial issue for retailers, totaling more than $160 billion last year, according to the Merchants Payments Coalition. Reactions to the settlement were mixed when it was announced, with some retail coalitions pledging a thorough review and others quickly opposing it.

The Retail Industry Leaders Association, representing large merchants such as Target Corp. and Home Depot Inc., described the settlement as a “mere drop in the bucket” and urged careful review to assess if it adequately addresses the harm inflicted on retailers.

Doug Kantor, general counsel for the National Association of Convenience Stores, praised the judge’s remarks, stating, “We’re gratified to see that the court recognized how bad this settlement was.”

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Norwegian Watchdog Slams Meta for Cumbersome Opt-Out Process in AI Training Plans



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Meta Platforms Inc., the parent company of Facebook and Instagram, is facing a new legal challenge in Norway over its plans to utilize user images and posts to train artificial intelligence (AI) models.

The Norwegian Consumer Council has lodged a complaint, criticizing Meta’s cumbersome and deceptive opt-out process, which it argues breaches stringent EU data protection regulations.

The Council’s statement on Thursday highlighted that Meta’s method for allowing users to opt out of data collection for AI training is overly complicated and intentionally confusing.

“The process to opt-out breaches strict EU data protection rules and has been made deliberately cumbersome by using deceptive design patterns and vague wording,” the Council said.

This isn’t Meta’s first run-in with European regulators regarding data privacy. The tech giant has previously faced multiple complaints for allegedly failing to obtain proper consent from users before collecting their data to target advertisements.

Also, the European Union’s top court has warned Meta about safeguarding public information on users’ sexual orientation from being used for personalized advertising.

“We are urging the Data Protection Authority to assess the legality of Meta’s practices and to ensure that the company is operating in compliance with the law,” stated Inger Lise Blyverket, head of the Norwegian Consumer Council.

The complaint was prepared by the European Center for Digital Rights and will be submitted to the Norwegian Data Protection Authority, as well as other European data protection authorities.

Due to Meta’s EU base in Dublin, the Irish Data Protection Commission will serve as the lead authority in this matter.

The outcome of this complaint could have significant implications for how Meta, and other tech companies, handle user data within the EU.

Meta’s use of user data for training AI has raised significant privacy concerns. Critics argue that without clear and straightforward consent mechanisms, users are often unaware of how their data is being used.

This latest complaint underscores the ongoing tension between big tech companies and European regulators striving to enforce robust privacy standards.

The Norwegian Consumer Council’s action reflects a growing impatience with tech giants’ data practices, emphasizing the need for transparency and user control.

As AI technologies continue to advance, ensuring ethical and lawful data usage remains a critical challenge for both companies and regulators.

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Ethio Telecom Sale to Foreign Bidders Halted; Local Investors to Get Priority




Ethiopia has decided to halt the sale of its state-owned telecommunications operator, Ethio Telecom, to foreign investors.

Instead, the government will prioritize domestic retail investors before listing the company on the nation’s upcoming securities exchange.

Originally, the Ethiopian government planned to sell 45% of Ethio Telecom to foreign investors. This approach was abandoned in November after Orange SA, a major contender, withdrew from the bidding process.

Emirates Telecommunications Group Co. was also rumored to have considered a bid but did not proceed.

“There were bidders, but each one of them has left the process at one point,” said Abdurehman Eid, CEO of Ethiopian Investment Holdings, which is overseeing the sale along with the finance ministry. “At the end, we felt it’s probably better to halt the process.”

Eid explained that foreign interest did not meet Ethiopia’s expectations. “The priority now is to expedite the sale of 10% to retail investors, who are showing a huge appetite,” he noted during an interview at a sovereign wealth fund conference in Mauritius.

The focus on foreign investors will resume after Ethio Telecom is listed on the Ethiopian Securities Exchange (ESX), set to commence operations in October.

Ethio Telecom, the largest telecommunications operator in Africa’s second most-populous country, had a monopoly for decades. By January, the company boasted 74.6 million subscribers and recorded a profit of 11 billion birr ($191.6 million) for the first half of the fiscal year.

The shift in strategy underscores Ethiopia’s intention to leverage domestic investment capacity. The decision to prioritize local investors aligns with broader economic goals, aiming to stimulate local participation in major economic sectors.

This move is part of a larger plan to list five other state-owned companies on the ESX. According to Eid, proceeds from these divestitures will be utilized to reduce public debt.

Over the years, enterprises controlled by the government have accumulated substantial debt, leading to financial struggles.

The Liability Asset Management Corp., established three years ago, currently manages close to 780 billion birr in debt.

By redirecting the sale of Ethio Telecom shares to local investors, Ethiopia is fostering a more inclusive investment environment and setting a precedent for future listings.

The new strategy is expected to enhance domestic capital markets and provide more opportunities for Ethiopian citizens to invest in the country’s economic future.

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