African techies and “Africa Rising” enthusiasts are willing the NYSE listing of African “unicorn” Jumia to succeed, and hopes are high the listing will go off well. But if you read the company’s pre-listing statement, it does illustrate just how amazingly difficult e-commerce in Africa actually is.
Yet, the company is hoping to raise around $1.5bn on the listing, which is backed by everyone you can name, including Morgan Stanley, Citigroup, Berenberg and RBC Capital Markets. Goldman Sachs would normally be there, but they actually own part of the company.
And reading the recently released US Securities and Exchange Commission F-1 listing documents, you can understand why. These documents should be taken with a pinch of salt because they are massively cautionary, basically in order to prevent investors from suing. Hence, every warning under the sun is issued, including the warning that the company might never actually make money.
The problem was that there was an “insufficient cash reconciliation system”. There is now an automated system that allows the company to monitor transactions on a daily basis.Even though we have taken measures to reduce the risks of fraud and uncollected receivables, these risks — whether facilitated by our employees, sellers, partners or consumers — remain, due largely to the prevalence of cash on delivery in many of our markets”.
There is also a bit a dispute about whether it is an African company at all, except in the sense of where it operates. It was set up by two French entrepreneurs, Sacha Poignonnec and Jeremy Hodara in 2012, who are still joint CEOs; it is still registered in Germany, its tech centre is in Portugal and most of the management sit in Dubai. But it does have a bunch of African senior management including Tunde Kehinde, Raphael Kofi Afaedor, and notable Nigerian CEO Juliet Anannah.
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