Jumia Food to Exit Nigeria, Uganda, Kenya, 5 Other African Countries, Shares Plans for Workers
- Jumia Technologies will follow the list of companies that are leaving Nigeria in 2023
- In addition, the company also plans to exit business in Kenya and six other African countries
- It cited very challenging economics, adding that the environment is highly competitive
Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.
Jumia Technologies has announced it is shutting down its food delivery business in all seven countries where the unit is operational by the year's end.
Source: Getty Images
The business currently runs food delivery services in Nigeria, Kenya, Uganda, Morocco, Tunisia, Algeria, and Ivory Coast.
The company said the new move will enable it to concentrate on the expansion of its core online retail business.
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This comes after its most recent third-quarter data showed that Jumia has been cutting its losses. Its losses for the third quarter were 67% lower than they were a year earlier.
Legit.ng reported that the second quarter of the 2023 financial report showed that Jumia's active client base fell by one million, now amounting to 2.4 million customers.
Jumia exiting everyday grocery
As part of its effort to aggressively cut costs, Jumia is exiting everyday grocery items and reducing delivery services unrelated to its e-commerce business.
According to the business, this aligns with its strategy to optimize its capital and resource allocation and continue its path to profitability.
It added that Jumia Food is unsuitable for the current operating environment and macroeconomic conditions.
Chief Executive Officer Francis Dufay told Reuters:
"It's a very difficult segment worldwide, with very challenging economics and big losses. It's also an extremely competitive segment across the world and Africa."
"The economics are tough in this market because the costs are very high and there is plenty of competition so there is downward pressure on the commissions that we make and upward pressure on marketing costs because everyone is fighting for customers."
According to the business, many of the staff members currently working in the food delivery company will move to the main e-commerce operation in these nations.
A financial analyst, Charles Abuede said the depicted scenario indicates various interconnected factors.
He highlighted that the challenging business environment in Nigeria, characterized by unfriendly conditions due to multiple taxation issues, poses a significant obstacle to ease of doing business.
He added,
"Businesses grapple with reduced sales attributed to declining purchasing power and the substantial devaluation of the Naira. Additionally, challenges in accessing foreign exchange (FX) in the foreign exchange market, coupled with inconsistent FX policies, compel these firms to increase prices, creating a mismatch with consumers' affordability."
Unilever, GSK, 4 other major foreign companies that exited Nigeria in 2023
A recent wave has swept some multinational companies in Nigeria out of the country due to the toxic environment for business, Legit.ng reported.
This was worsened by the removal of fuel subsidy, which toughened the ease of doing business in the country.
From fast-moving consumer goods (FMCG) companies to energy and pharmaceutical companies, the inability to repatriate funds in Nigeria and the unpredictable local currency against foreign currencies triggered multinationals to bid the country goodbye.
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Source: Legit.ng
