Jumia Technologies AG has announced plans to shut down operations in South Africa and Tunisia by the end of 2024 because of macroeconomic conditions and stiff competition. This strategic move was taken to optimize resources and focus on core markets with better growth potential.
Low Contribution Spurs Decision
A thorough evaluation by CEO Francis Dufay revealed that Jumia’s South African arm, Zando, and its Tunisian operations contributed only 3.5% and 2.7% of total orders, along with 4.5% and 3% of gross merchandise value (GMV) in 2023. These numbers have declined further in the first half of 2024, prompting the decision to exit.
Challenges in the Market
CEO Francis Dufay cited challenging macroeconomic conditions and stiff competition as barriers to growth in both markets.
“Since taking over as CEO, my priority has been to strengthen our business and drive profitability. The macroeconomic conditions in South Africa and Tunisia, coupled with stiff competition, have limited growth in both markets,” Dufay explained.
While acknowledging the difficulty of this decision, he stressed the importance of focusing on regions where Jumia can achieve sustainable growth, expressing gratitude to teams and customers in South Africa and Tunisia.
Refocusing on Core Markets
The company has been navigating challenging market conditions over the past few years, including stiff competition from local and global players and macroeconomic pressures. Jumia reported revenues of $36.5 million in Q2 2024, 25% less than it recorded in the previous quarter and 17% less than it did during the same period last year. Gross merchandise value also fell in Q2.
As Jumia shifts its focus to core markets like Nigeria, Kenya, Egypt, and Morocco, the company hopes to streamline operations and improve profitability. Recent steps, such as shutting down Jumia Foods in 2023 and raising nearly $100 million through secondary share sales, signal its commitment to accelerating growth and strengthening its position in Africa’s most promising eCommerce markets while aiming for a swift return to profitability.
