This strategic decision is designed to streamline resources and concentrate efforts on markets exhibiting greater growth potential throughout the continent, particularly Nigeria and others.
In a statement issued on Wednesday, the company indicated that this choice was made as Jumia assesses its performance in the two nations, which represent a minor fraction of its overall business.
For the year ending December 31, 2023, and the first half of 2024, Jumia reported that South Africa and Tunisia contributed only 3.5% and 2.7% of total orders, along with 4.5% and 3.0% of gross merchandise value (GMV), respectively.
Challenging decision
Jumia is confident that reallocating resources to more successful markets will significantly improve operational efficiency and foster growth.
In remarks regarding the decision, Jumia CEO Francis Dufay characterized the exits from these two markets as a challenging choice.
“Since taking on the role of CEO, I have prioritized initiatives to strengthen our business and guide us toward profitability.
“After careful consideration, we reached the difficult conclusion to terminate our operations in South Africa and Tunisia, as both markets contribute a minimal share to our overall business.”
Additionally, the competitive landscape and macroeconomic factors in both markets have constrained the growth potential of each country, resulting in contributions to our overall business that have not met our expectations.
"Making such decisions is always challenging, and we extend our sincere appreciation to the team members in both countries who have dedicated themselves to serving our customers daily. We also wish to express our gratitude to our suppliers, vendors, and logistics partners in these regions. We are truly thankful for their commitment and support to Jumia," he stated.
The e-commerce leader is confident that reallocating resources to its remaining nine markets throughout Africa will better position the company for future growth.
Jumia is set to exit South Africa and Tunisia, allowing the company to concentrate on its remaining markets, which include Nigeria, Algeria, Egypt, Ghana, Ivory Coast, Kenya, Morocco, Senegal, and Uganda.
Following a 64% reduction in operating losses for 2023, bringing the total to $73 million, Jumia’s CEO, Dufay, has been implementing various strategies aimed at minimizing losses and achieving profitability.
He expressed optimism that the company would return to growth this year while continuing to decrease its losses. Dufay noted that recent quarterly results have demonstrated significant progress towards Jumia’s strategic objectives, positioning the company for revenue growth and enhanced cash management in 2024.
In an effort to address ongoing losses and pursue profitability, Jumia reduced its workforce by 20% in the fourth quarter of 2022, resulting in the departure of 900 employees.
Additionally, the company decided to discontinue its food delivery service, Jumia Food, which had been identified as unprofitable.