Jumia shuts down operations in Tanzania as it pursues profitability

Jumia has shut down its e-commerce business in Tanzania. Users in the country will no longer be able to buy and sell goods from the retailer’s website, Jumia.tz.

In a statement to TechCabal, Jumia said its Tanzanian exit is “part of ongoing portfolio optimization efforts.”

“While Tanzania has strong potential and we’re proud of the growth we’ve collectively seen stemming from Jumia’s adoption, we have to focus our resources on our other markets,” the company wrote.

“It is important now than ever to put our focus and resources where they can bring the best value and help us thrive.”

However, the company said its classifieds listing business, Jumia Deals, will continue to function in Tanzania.

This is the second market Jumia has made an exit in less than two weeks. On November 19, the company announced its exit from Cameroon. In a statement, Jumia’s CEO, Sacha Poignonnec said: “we came to the conclusion that our transactional portal as it is run today is not suitable to the current context in Cameroon.” 

Jumia’s e-commerce business is now only available in 12 African countries, no longer the 14 it was when the company listed on the stock exchange in April.

The Cameroon exit is perhaps understandable. The country is facing a crisis in its Anglophone southern region; politically it is unstable and economically 37.5% of the country’s 22 million people live below the poverty line. Only 24.2% of the population has internet. For more context, there are only 2.7 million Facebook users in the country. So Cameroon may have been tough to operate in.

But Tanzania is a different story. The country is relatively stable and has recorded GDP growth of over 4.5% annually for the last seven years. 23 million, representing 37.8% of the country’s 61 million people have internet access, buoyed by smartphone adoption. 

So why exit Tanzania?

Importantly too, Jumia’s exit from the two countries comes just a few weeks after it disclosed its third-quarter financials. During its earnings call, it did not inform investors about plans to exit any market. When asked how Jumia was performing in different markets, Poignonnec told analysts that “we do not disclose this information.” “What I can tell is that we see a lot of momentum pretty much across the board,” he said, “but we don’t disclose that.”

Jumia now willing to close shop in African markets that are underperforming.

However, he did disclose that the company plans to become profitable by the next five quarters. “We want to start seeing over the next five quarters the trend in absolute,” Poignonnec told analysts. He added: “We want to see the cash burn going down and we want to see the adjusted EBITDA going down, again, over the next five quarters.”

So it appears closing shop in underperforming markets is the plan?

Rebecca Enonchong, the board chair of AfriLabs Foundation and a prominent observer of the technology ecosystem, says she’s not surprised by the latest exits.

“I think some countries were there for proof of geographical scale, so much of this was to package Jumia for sale,” she told TechCabal.

“Now I think they are stuck in it for the long haul. Rocket Internet isn’t good at that. It takes a lot of adjusting.”

Update: This article has been updated with quotes from Rebecca Enonchong

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