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CAPE TOWN – The imminent listing of Africa’s first tech unicorn, Jumia, is a major milestone for the African tech eco-system for a number of reasons.

Jumia filed for an IPO on the New York Stock Exchange on 12 March 2019. Founded in Lagos in 2012 with Rocket Internet backing, Jumia now operates multiple online verticals in 14 African countries spanning Ghana, Kenya, Ivory Coast, Morocco and Egypt. Goods and services lines include Jumia Food (an online take-out service), Jumia Flights (for travel bookings) and Jumia Deals (for classifieds).

Jumia processed more than 13 million packages in 2018, according to company data. Jumia offers lessons on what it takes for an African tech start-up to become a global player.

There are three key pillars that enabled Jumia to be a leader in the continent and those include among others: Africa focus, mobile and data.

African focus

Most tech start-ups on the African continent make the mistake of trying to be a Silicon Valley start-up. These start-ups create products that address the needs of just a few, products that are ideal for more advanced markets. They also do this by serving local markets by using channels that are only accessible to a few.

Jumia was not confused about who they wanted to serve. Although the company's Africanness is disputed, no one can argue about who Jumia is serving. Jumia is serving the African market, period.

Jumia understands Africa’s GDP is expected to grow by 6 percent in 2019 and at a 5.9 percent compound annual growth rate from 2018 to 2023, compared to 3.5 percent for major advanced economies (G7) and 5.6 percent globally. The first African unicorn understands half of the world’s population growth towards 2050 is projected to be driven by Africa. Jumia understands the African market very well.

Mobile

The understanding of the African market is also seen in the manner in which Jumia serves its market.

Jumia was built to be a mobile-centric company that serves its market through mobile devices. Africa has emerged as a “mobile-first” market, in which consumers access the internet for the first time using a mobile device.

Jumia leadership understands investment in global information and communications technology infrastructure in Africa totalled over $1.6billion (R23bn) in recent years and telecommunications operators are committed to making additional significant investments in cellular network infrastructure in order to meeting the rising demand.

Mobile broadband in Africa is expected to increase to 73 percent by 2022. This increase represents approximately 600 million new subscribers, bringing the total number of Africans with 3G or 4G connections to over 1billion. This is a greatest opportunity that has been identified by Jumia that should be understood by local technology startups.

Data

Lastly, Jumia has embraced data which they use to serve their business client base. They offer sellers in their eco-system a range of data and analytic services, helping them to be more effective by tailoring and customising their offerings and marketing efforts and in the process improve their pricing and inventory management processes, leading to increased sales. This is one unique advantage that Jumia has over its competitors.

Jumia has not yet turned a profit. The company generated 93.8 million (R1.5bn) in revenues in 2017, up 11 percent from 2016, though its losses widened (with a negative EBITDA of 120 million).

Wesley Diphoko is the founder and editor-in-chief of The Infonomist. He is a regular tech commentator on the SAfm Home Run show on Fridays. Follow him via Twitter at @WesleyDiphoko.

BUSINESS REPORT