Editor’s Note: March 14, 2019

Is African e-commerce a good investment?

Jumia, the Nigeria-based e-commerce start-up, has filed for an IPOon the New York Stock Exchange, which could value the company at $1.5bn

Ostensibly it’s the crowning achievement of a narrative around African e-commerce dating back to 2012, when Jumia was founded. It was among a number of start-ups to raise millions in funding, fueling talk of a retail revolution, and earning it the label of being the “Amazon of Africa.”

Yet the response to the news has been muted. 

Part of the problem is that it hasn’t quite worked out. The realities of fragmented, expensive and unpredictable markets saw the hype fade by 2015.

This is reflected in Jumia’s financials. While it has 4m customers in 14 countries, the company reported a €170.4m loss with just €130.6m in revenue for 2018 according to its SEC filing.

The really bad news for the “Amazon of Africa” is that the giants of e-commerce, including the real Amazon, are warming to Africa. China’s Alibaba, which has a market cap of $468.41bn, has justannounced a partnership with Kenyan mobile money platform M-Pesa.

It will be hard for Africa’s e-commerce start-ups to compete.

The IPO is a bid to stay in the game, and the market will soon reveal if there’s any appetite left.

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