Jumia to be first African start-up on NY Stock Exchange

Jumia delivers goods via scooter and offers a variety of payment options

An e-commerce company based in Nigeria is to become the first African start-up to be listed on the New York Stock Exchange.

Jumia could go public in the next month.

The company, which was given a $1bn valuation in 2016, offers a range of online goods and has branched into food delivery, hotel and flight booking and mobile tariffs.

It had four million active consumers at the end of 2018.

The online retailer was founded in Lagos in 2012 by two French entrepreneurs, Jeremy Hodara and Sacha Poignonnec, and now offers services to most of the African population, in countries such as South Africa, Tanzania, Egypt and Ivory Coast. Working alongside them were Nigerian Tunde Kehinde and Raphael Kofi Afaedor, from Ghana, who both left the company in 2015.

Its largest shareholder is MTN, Africa's biggest telecoms company.

No share price or valuation has been given but there is speculation Jumia could be valued at $1.5bn, despite the fact that it reported a loss of 170m euros ($192m) in 2018.

In documents filed in New York, Jumia warned it could not guarantee achieving or sustaining profitability in the future, citing challenges such as a robbery at its Kenyan warehouse, which saw merchandise worth $560,000 stolen.

Chinese rival

Senegalese businesswoman Marieme Jamme welcomed the fact that an African start-up had listed but said there were a lot of challenges ahead.

"There is a lot of work to do," she said.

"They need the technical infrastructure - because currently it is difficult to get a parcel from Senegal to Rwanda.

"There are also issues around distribution and the supply chain.

"Unless someone invested billions of dollars in it, then I don't know how they would beat Amazon or Alibaba."

Neither of these online retail giants have yet made inroads in the African market, partly because of the lack of postal addresses on the continent, coupled with the lack of infrastructure and the fact that most Africans do not have bank accounts.

"Alibaba has more chance of succeeding in Africa because they are more used to building things from scratch," said Ms Jamme.

BBC Africa Business Editor Larry Madowo says the inconsistent quality of the products Jumia sells and the delivery challenges it faces have often made the company a target of criticism on social media.

Its biggest selling point, however, is the acceptance of mobile money payments across the continent where few people have credit or debit cards, he adds.

Chief executive of African firm BRCK, Erik Hersman said the news was "an important event in the evolution of the African tech scene."

"Jumia is showing that an IPO [initial public offering] on a major stock exchange is possible," he added.