- 25th November 2019
- Posted by: damian.shore
- Category: Africa, SagaRetail News, Retail & Shopping Malls, Cameroon
On November 17th, pan-African internet retailer Jumia ceased operations in Cameroon. In a statement, the company said that “We came to the conclusion that our transactional portal as it is run today is not suitable to the current context in Cameroon.” Before the end of the month, it had also exited Tanzania.
According to company sources, Cameroon lacked both the infrastructure and the nucleus of middle-class consumers required to support Jumia’s business model. An unnamed source told news agency Reuters: “We wanted to see how business evolved. We can come back, but for now we’re closing [to have] time to study the market.” The source added that Jumia had prioritised growth over profitability in Cameroon, according to Reuters.
Cameroonian technology entrepreneur Rebecca Enonchong, who the World Bank recently described as “a heavyweight in African tech,” was scathing of the internet retailer in a series of Twitter posts. Noting that she had “watched this company from inception,” Enonchong wrote that “Jumia wasn’t at all interested in a long-term business. They were interested in just a few KPIs [key performance indicators] that would look good to investors or possible acquirers. The pressure to make those numbers is the same as what caused fraud in Nigeria.” She concluded that it was “simply a badly run business that is incapable of understanding its market.”
Ten days after it announced its abrupt departure from Cameroon, Jumia released the following statement to local media in Tanzania: “Based on our review of the path to success, we have made a difficult decision to cease operations in Tanzania as of 27th November. While Tanzania has strong potential, we have to focus our resources on our other markets. This decision will help put our focus and resources where they can bring the best value and help Jumia thrive.”
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The Sagaci Research View: Jumia may exit other peripheral markets, such as Uganda, as it seeks to slow its rate of cash burn.