Jumia contemplates being the Alibaba of Africa as the continent’s largest ecommerce platform seeks listing with the Securities and Exchange Commission for an Initial Public Offering (IPO) on the New York Stock Exchange.
This means the ecommerce giant will be the first African ecommerce firm to list outside the shores of the continent. The IPO is valued at $1.20 billion, while its total funding round is about $770 million.
The listing is coming at a time that some ecommerce firms are closing shop on the back of a deteriorating macroeconomic environment.
For instance, two major players in the industry-Efritin and OLX- exited in 2017, as hundreds of young vibrant young workers lost their jobs, raising concerns about the ease of doing business in the country.
For ecommerce industry to thrive, federal government will have to invest in roads, railways, and electricity.
Ecommerce firms can leverage on Nigerians young population that crave for consumption and proliferation of internets to increase revenue and magnify shareholders’ earnings.
According to the World Bank, the country’s population will hit 400 million by 2050.
The Nigerian Communications Commission (NCC) has reported that the number of internet users in the country increased marginally to 108.5 million in November, compared to 107,106,975 users recorded in the previous month.
The current Ecommerce spending in Nigeria is estimated at $12 billion, and is projected to reach $75 billion in revenues per annum by 2025 (McKinsey).
Experts are of the view that a lot young people prefer to shop online compared to brick and mortal because it is quicker and more convenient, and moreover, the smart phone makes it very easy to place orders online.
A young banker says he cannot remember the last time he went to the market to buy office wears that he orders them from the office and a dispatch rider delivers the goods at his door step.
“I cannot imagine myself going to the market under the scotching sun to shop, it makes a lot of sense to buy online,” said the If the listing is consummated, Jumia will spread the risk of ownership and its cost of capital will reduce. Additionally, the company will have more capital to expand its operation across the globe, and competing at the global competitive arena means it will rub shoulders with the largest ecommerce firm in the world, Alibaba.
Jumia CEO Sacha Poigonnec told Techcrunch: “You’ll see in the prospectus that last year Jumia had 4 million consumers in countries that cover the vast majority of Africa. We’re really focused on growing our existing business, leadership position, number of sellers and consumer adoption in those markets”.
BALA AUGIE
