Jumia is the African answer to Amazon

Africa is famous for its wildlife. But unicorns are rarely sighted. So it is no surprise that tech start-up Jumia — billed as the continent’s answer to Amazon — has caused a stir. The shares jumped over 60 per cent when the online retailer floated in New York yesterday, valuing it at about $1.8 billion. The business, founded in 2012 by former McKinsey consultants, grandly styles itself as the leading pan-African e-commerce platform. That is not as impressive as it sounds. In 2018, less than 1 per cent of retail sales were conducted online, compared with nearly 24 per cent in China. A lack of infrastructure and a scarcity of bank accounts has hobbled e-commerce. Rising smartphone use should help… The group hasattracted high-profile backers, including Rocket, Mastercard and South African wireless carrier MTN Group. Its unicorn status was bestowed by a December deal with French drinks giant Pernod Ricard. Its 5 per cent stake equated to a €1.4 billion ($1.6 billion) valuation… Many long-term investors believe in the potential of Africa. They include Jack Ma of Alibaba, sometimes tipped as a potential buyer. But markets are fragmented. Jumia has a lot of challenges to overcome. As the first start-up from Africa to be listed on the NYSE, scrutiny will be intense.