- Jumia Suspends Operation in Cameroon
Jumia, the leading e-commerce company in Africa, on Monday, announced the suspension of its e-commerce operations in Cameroon.
In a statement issued by the company, the e-commerce firm said: “Based on our review, we came to the conclusion that our transactional portal as it is run today is not suitable to the current context in Cameroon,” therefore, the company suspended its e-commerce operations in Cameroon.
Since listing on the New York Stock Exchange (NYSE) in April this year, Jumia has lost more than 60 percent of its value from $14.50 per share to $5.10 on Monday.
A source in Cameroon said the e-commerce company has chosen growth over profitability.
The anonymous source that works with the company in Cameroon said: “We wanted to see how business evolved. We can come back, but for now, we’re closing (to have) time to study the market.”
While weak consumer spending and higher poverty rate continue to hurt e-commerce penetration in Africa, currently at 0.5 percent when compared with a nation like China with 20 percent, sluggish wage growth and other factors are also weighing on e-commerce in Africa.
According to Aaron Kessler, an analyst at Raymond James, “We believe a number of factors should drive strong eCommerce growth in Africa going forward, including a growing middle class, a fast-growing young population more digitally inclined, increasing urbanization, and increasing smartphone adoption.”
The International Monetary Fund lowered Cameroon growth projection for 2019 from 4.1 percent to 3.9 percent, suggesting that weak growth amid economic uncertainty dictates consumption in the African nation and highlighted some of the reasons Jumia decided to pullout.