Africa’s largest e-commerce company Jumia filed for an IPO on the New York Stock exchange on Tuesday, providing a big boost for the continent’s booming tech sector.
The company, which bills itself as Africa’s leading online shopping destination, said it would be the first African tech company to list on a major global exchange.
In the listing on Tuesday, the Lagos-headquartered company said it is going public to raise funds and boost its international profile.
While the timing of the listing and share price are yet to be confirmed, the IPO could see Jumia shed up to $250m in shares, with a valuation estimated at $1.6bn or more.
In December, Jumia was valued at $1.6 billion with shares at around $16.66.
The listing marks a big moment for the continent and it’s burgeoning tech industry, Paul Okaru, director of finance at consulting firm West Africa Advisory told African Business.
“It’s one of the major stock exchanges of the world and to be listed there gives it [Jumia] a much bigger profile, because for any company to get listed it needs to meet pretty stringent requirements.”
“It is good for Africa, and for the tech sector there.”
Since its founding by French entrepreneurs seven years ago, Jumia has expanded from its original location in Nigeria to 14 other African countries including Kenya, Tanzania, Morocco and Côte d’Ivoire, and has widened its online marketplace through subsidiaries offering food, travel, housing and cars.
Betting On Africa
Speaking to African Business about the prospect of the IPO in February, Jumia CEO Jeremy Hodara said that as the internet continues to boom across the continent, the company can compete with global counterparts like Amazon and China’s Alibaba.
The fact that shopping in Africa is not associated with physical high streets, means that online retailers can potentially corner more of the market, he said.
“The potential for ecommerce in Africa is way bigger than what it is in any other region in the world simply because there is no alternative.”
“If you are in the US you don’t need Amazon; you can go to the shops or the mall. You are never going to have the density of physical retail in Africa that you have in the US, because history is playing it differently.
“Africa will gradually have more stores, but these aren’t going to be the main way to access goods.”
Hodara is not the only one betting big on Africa as a hotbed for growth and technological talent.
In 2016, Zuckerberg invested millions in Andela, a Lagos-based company that trains coders in Africa.
Bumps In The Road
One of the key challenges for e-commerce companies currently operating in the region is infrastructure, as delivering goods to people can be difficult given the state of the roads.
“But as the infrastructure improves, the whole value chain will run a lot more smoothly,” Okaru said.
The move towards a cash-less payments system and boom in fintech startups, sector investment, internet access, and smartphone and mobile penetration on the continent is also helping e-commerce companies thrive.
“As all those things start to permeate through society in most African countries and people’s confidence increases in paying with credit cards, Paypal and other platforms, it’s only going to help the likes of Jumia increase business.
“The demographics are very attractive too – a very young population, emerging consumer class is increasing in a lot of African countries.”
A Unicorn Is Born
Since its creation by two ex-McKinsey consultants in 2012, Jumia, Africa’s e-commerce champion, has racked up an impressive range of achievements.
Following substantial investment from the likes of AXA, Goldman Sachs, MTN, Orange and Rocket, in 2016 it became the continent’s first startup to be valued at over $1bn.
According to Tuesday’s filing with the US Securities and Exchange Commission, their business grew substantially to 4 million active consumers in 2018, up from 2.7 million Active Consumers in 2017 .
Additional reporting by Tom Collins