Naira devaluation weakens Jumia’s sales value by $182m

The weakening of local currencies in eight countries, particularly Nigeria, weakened Jumia’s total sales value by $182.7 million year-on-year in 2023.

In its earnings statement for the full year 2023, the e-commerce firm reported that its Gross Merchandise Value (GMV), which refers to the value of all goods bought on its platform, declined to $749.8 million as of year-end 2023 from $942.9 million as of the year-end 2022.

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It blamed this, particularly on the naira’s decline. Jumia said, “Foreign exchange was a significant headwind to GMV performance, with 8 out of 10 local currencies in our countries of operation depreciating against the US Dollar in 2023, compared to 2022.

“Notably, the Naira experienced a 100 percent depreciation against the US Dollar, falling from a rate of USD/NGN 448 as of December 31, 2022, to a rate of USD/NGN 897 as of December 31, 2023. This foreign exchange development was the main contributor to our reported GMV decline year-over-year (y-o-y).”

Jumia, however, noted that five countries experienced positive y-o-y GMV growth. If local currencies had not declined, the firm stated that the value of items bought on its platform would have amounted to $942.9 million.

Total revenue for the year was $186 million, with the firm announcing an operating loss of $73 million, a 64 percent decline from the $202 million recorded in 2022. Jumia laid off about 900 staff members and discontinued its food delivery business, among other things, to achieve this reduction.

The firm noted that its staff costs, excluding share-based compensation expense, decreased by 17 percent y-o-y. Commenting on the report, Francis Dufay, Chief Executive Officer of Jumia, said, “We believe that Jumia is now a much leaner, more agile, and more focused company.

“We have reevaluated our portfolio and made tough decisions regarding business activities that did not bring the right value. Recently, we discontinued our food delivery operations as we concluded that the growth prospects did not justify the complexity it created.

“We believe our focus and resources will be better invested in our physical goods business, where we see more opportunity for revenue growth and higher margins.”

Nigeria’s currency has fallen steeply against the dollar since a June 2023 policy directive from the Central Bank of Nigeria allowed the free market to determine its value. This has partly led to record-high inflation in the country.

This is not deterring Jumia, with the firm’s CEO, in his projection for 2024, noting, “With the macro situation in several of our African markets starting to recover, we are confident that Jumia has never been in a better position to capture the unique opportunity of e-commerce in Africa.”