The words “fraud”, “Nigerian” and “tech” have been used in the same sentence or story on three separate occasions in one week. In the space of a week the tech ecosystem has seen a fraudster “Forbes CEO” arrested, Jumia’ fraud incident blamed on Nigerian staff and 80 Nigerians indicted for fraud in Los Angeles.
Read More : Invictus Obi: Would tech or regulation save Nigeria’s ecosystem from fraud smudge?
It is arguably the first time since the northward movement of the ecosystem that it is receiving significant attention for anything other than leading funding rounds and innovation in Africa.
After news of how Obinwanne Okeke popularly known as Invictus Obi, was arrested by the US Federal Bureau of Investigation (FBI) over $12 million broke earlier this month, Berlin-based Africa-focused e-commerce giant Jumia had on Wednesday, 21 August, 2019 admitted that it is facing class-action lawsuits in the United States as a member of its staff engaged in fraud worth $17.5 million and the company’s financial report revealed that its loss grew by 59.2 percent in one year.
“The problem is that many in Nigeria were happy to own the ‘Jumia is Nigerian’ narrative when some of us where trying to say #JumiaIsNotAfrican,” Rebecca Enonchong, founder and CEO of AppsTech and a long time critic of Jumia tweeted on Wednesday. “Jumia top management has blamed Nigerians for the fraud while this practice is widespread in the group. The whole company is a European scam.”
Read More : US justice department indicts over 66 Nigerians for cybercrime, money laundering
According to a report by the Wall Street Journal, Jumia said it discovered two instances where independent sales agents and sellers worked with employees to profit from what sellers pay to use the online platform and commissions that sales agents earn. Jumia said it fired several employees and sales agents and removed sellers on the platform who were involved in the scheme.
Jumia currently has a market cap of about $800 million with annualized forward revenues of about $175 million.
During a brief call with a group of analysts, Jumia’s co-founder and co-CEO Sacha Poignonnec said the issues were isolated and would have little impact on the company’s merchandise metrics and financial statements.
“We are constantly reviewing and improving our systems and controls,” he said.
Inside a Jumia Technologies AG distribution warehouse in Lagos, Nigeria. Photographer: George Osodi/Bloomberg
The findings backed up warnings made by short-sellers Citron Research in a report in May, which brought an abrupt end to a share-price rally following Jumia’s initial public offering in New York the previous month.
Despite assurances by Poignonnec, Jumia’s latest misadventure could further undermine the image of the Nigerian tech ecosystem still reeling from the bad publicity it got from Invictus Obi’s fraud revelations.
An 11-page affidavit had detailed how Invictus Obi was identified as the culprit of a $12 million fraud. He was subsequently arrested and charged. But Invictus Obi and Jumia may seem like warm up exercises compared to the 80 Nigerians the FBI said they have indicted.
“This is how ecosystems are hurt and credibility of entire environments damaged,” Sim Shagaya, co-founder of Konga, Jumia’s local rival in Nigeria, said in a Twitter thread on Thursday. “They achieved what they wanted. But ultimately they were shortsighted. The market, consumers and investors, always win.”
According to the FBI on Thursday night “Nigerian scammers” have defrauded Americans to the tune of $1.1 billion between January and June this year. The FBI said the suspects who have been charged in the United States are part of a widespread conspiracy that stole millions of dollars from businesses and elderly individuals through a variety of scams then laundered the money.
14 of the people involved were arrested in the United States on Thursday, the US Attorney in Los Angeles told reporters while announcing a 252-count indictment that was unsealed. At least three other defendants were already in custody.
Enonchong calls it a “serious problem” that must be quickly addressed to reposition the reputation that genuine tech founders and entrepreneurs have most painstakingly built.
“I have been going on about this for the last 3 weeks before any of the cases,” tweeted Bosun Tijani, co-founder of Co-Creation Hub, one of Nigeria’s foremost innovation hubs. “We need our government and financial service sector to act now. A robust and systematic approach is needed!
For Pantami and other authorities it is not time for ‘Thanksgiving’ for being appointed head of a ministry that have lacked leadership and direction for the past four years under his predecessor. It rather calls for rolling up the sleeves and getting to work.
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