The company had a habit of firing workers for the flimsiest of reasons, and it tried as much as possible to outsource all operational risk to employees and suppliers. Describing the daily experience of working in this environment, a former Jumia sales agent I spoke to said:
- “Our department was called J-Force. We were paid mostly on commission and a basic salary of N40,000 (roughly $110). If you met your target, you got commissions and N40,000. If you didn’t, you got no basic pay. They were basically using the hell out of us. Afterward, they even cancelled basic pay. They just wanted to be the Amazon of Nigeria without putting things in place first. They would set unrealistic targets and expect you to do magic to meet them. People left the company at every opportunity they got. They also fired some people for no reason.”
Unsurprisingly, the J-Force sales team that worked under such extreme pressure was the very same team implicated earlier this year in instances of fraudulent order inflation.
Aware that their ability to earn an income every month was tied solely and directly to the ‘orders placed’ metric (and not necessarily successful sales), members of this team gamed the system by using phantom orders to generate about $17.5m worth of fake gross merchandise value (GMV) between Q4 2018 and Q2 2019.
Jumia insists that it never officially sanctioned such behaviour, that the employees responsible have been fired, and that it had no material impact on their financial reporting.
But the difference between carrying out fraud and encouraging it with a mix of workplace culture and loopholes is wafer thin.
In any case, Jumia’s managerial behaviour is directly reflected in the behaviour of its management alumni who themselves made their way into Nigeria’s young e-commerce ecosystem.
When in Doubt, Blame the Africans
In 2016, I myself worked as a Public Relations person at an e-commerce startup launched by one of Jumia Nigeria’s founding Co-CEOs.
While I never had any official access to actual sales numbers, I was constantly instructed to reply to media questions about the company’s growth with a barely believable 20% month-on-month growth figure.
I did not believe this statistic, so I struck up a friendship with an analyst in the know, who informed me that the company was in fact stuck somewhere between about $27,000 and $33,000 gross monthly revenues.
This figure had remained unchanged for the best part of a year, but I was hired to unwittingly package a stagnant company with unclear growth potential as a burgeoning 20% monthly growth phenomenon.
Unsurprisingly, I did not last long in that position.
In Jumia’s case, this dynamic was heightened by the fact that the company refused to carry out any of its high level operations in Africa, choosing instead to maintain an executive team in Dubai and a development team in Portugal.
Essentially, Jumia was a growth numbers monster, incentivising underpaid sales personnel to inflate order figures while treating employees as little more than expendable little units of business capital.
Instead of building a business in the traditional sense, Jumia’s management team were perhaps blinded by the aim of packaging the company as “Africa’s Amazon” to a hungry IPO investor audience.
There are a growing number of cynically-conceived tech startups, whose plan is to exploit and underpay workers, underserve customers and suppliers where possible, outsource all risk to employees and suppliers, crank out fantastic growth numbers and rake in millions from American investors who knew no better and are left ‘holding the bag’.
Let’s hope Jumia is not one of them.
But it is a growing problem, argues Telnet Nigeria Group Executive Director Adewale Adetugbo.
Explaining the emphasis on vanity metrics in Tech while ignoring local circumstances and market and employee feedback, he says:
- “When you ask are founders in tune with the street, I will ask “Why should they be?” Are they solving a problem relevant to the streets? There is a lot of money (relatively) that has found tech sexy in Nigeria. If you raise $5 million, do you care what the street thinks?”
A poisoned ecosystem
This kind of cynical, scorched earth business practise has percolated into the space and poisoned the very idea of what running a tech business in Africa should be about.
Jumia’s own story has created a negative sentiment that future African tech IPOs will have to contend with, as the biggest NYSE IPO out of Africa in 2019 ended in a trail of tears, accusations of fraud and class action lawsuits.
Cameroonian tech entrepreneur Rebecca Enonchong, whose tech workspaces once hosted Jumia Cameroon, offers a withering assessment of the company.
She believes that Jumia only had a presence in some countries to provide a veneer of geographical scale.
- Now she says, the company’s strategy is to cut off underperforming markets and try to actually run a genuine business unlike before – something she believes they have never actually demonstrated any capacity to do.
Post-IPO, an existential question for Jumia
Despite all that was manifestly wrong with the original Jumia model and the company’s current troubles as it struggles to transition into a sustainable business with solid fundamentals, there may yet be a glimmer of hope.
Most of the optimism is around Jumia Pay and a pivot towards fintech; from the ‘Amazon-of-Africa’ to the ‘Paypal-of-Africa’.
According to African tech entrepreneur and investor Victor Asemota, merely making it to IPO was in itself a great achievement, and the fact that its shares are now publicly traded on the NYSE, giving the company access to American investor money is objectively a positive.
- “Listing is always a positive. To be honest, I believe they all didn’t know what they were doing when they started. Interestingly the marketplace model they evolved to had been helpful to a lot of small businesses. The problem was that it didn’t fit their narrative. During listing, they were surprisingly honest about mistakes. Whatever spooked investors is another matter. I don’t know if it is a Jumia matter or an African matter. All I know is that being there is an achievement and real investors think in decades and not quarters.”
He does however disagree with the company’s post-IPO decision to downsize operations instead of pursuing acquisitions to improve integration – something he believes, would have improved its long term survival chances.
It promises to be a long and anxious wait for every stakeholder in the Nigerian and African e-commerce space, as the world waits to see whether Jumia can actually build a solid e-commerce business in Africa – a business underpinned by solid fundamentals like completed deliveries, repeat sales and fresh customer recruitment. Or, indeed, a fintech business.
The company clearly once had the money and the human capital to grow into the success story it sold itself as.
Now, as Jumia shares trade at a 65% discount to their IPO price, all anyone can do is wait and see what happens.