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Jumia co-founders step down from African ecommerce platform

Jumia Technologies AG founders Sacha Poignonnec and Jeremy Hodara both quit as co-heads of the Africa-focused online retailer.

The retailer has struggled with persistent losses since a high-profile New York listing. Poignonnec and Hodara, former colleagues at McKinsey & Co., founded Jumia in Lagos, Nigeria, in 2012 as a way to introduce ecommerce to Nigeria and other African countries where widespread internet use was starting to take off. Often compared with Inc., the company attracted international investors such as Mastercard Inc. and French drinks maker Pernod Ricard SA to achieve unicorn status.

Yet a plan to progress to profitability hasn’t materialized. The company struggled with Africa-specific issues such as a lack of formal addresses and city mapping, while expansion into the likes of food delivery failed to yield a step change. And then there’s Amazon, which is considering expanding more on the continent.

Jumia needs ‘more focus’

“We want to bring more focus to the core ecommerce business as part of a more simplified and efficient organization with stronger fundamentals and a clearer path to profitability,” Jumia Chairman Jonathan Klein said in a statement Nov. 7.

International ecommerce giants have been wary of expanding their reach into Africa, where postal and transportation services are often unreliable.

Amazon has offered cloud services from its base in Cape Town for some years. But it is only now planning to venture into online retail. It plans to first venture into South Africa before approaching Nigeria, Africa’s most populous country, according to media reports.

While Jumia’s IPO at first attracted a surge of interest, a damning report by short sellers Citron, who alleged fraud, sent the stock into a downward spiral. The company later reported that it had identified improper transactions within the Nigerian sales force, where orders had been placed and subsequently canceled.

Francis Dufay, who has held various leadership roles at Jumia since 2014, has been appointed acting CEO, according to a Nov. 7 statement. A search for a permanent replacement for the former leaders is underway.

Amazon’s Africa flagship campus gets go-ahead

The construction of Inc.’s planned offices in Cape Town should be allowed to go ahead, according to a South African court. The decision is a setback for the indigenous people attempting to stop the development.

The ruling from the Western Cape High Court said those opposing the project could not “demonstrate that the right to heritage is at risk of suffering any harm,” while adding that the cultural value of the site is undisputed. “On the contrary, the papers indicated that the development might enhance the land’s resources having regard to the degraded state of the site when the authorizations were granted.”

A court had ruled in March that Liesbeek Leisure Properties Trust should stop work while the court reviewed whether the developer had properly consulted the relevant stakeholders. Liesbeek Leisure Properties is building the site that Amazon is planning to use as a flagship office in Africa. While Liesbeek had continued work after an appeal, it was an early victory for the the Khoisan group opposed to the development.

Leslie London said they had been “outmaneuvered legally because we do not have the deep pockets our opponents have.” London is a professor at the University of Cape Town. He has been involved in the case and spoke on behalf of the group opposing the development.

They plan to take legal advice about next steps and don’t believe it changes their position in another court process that is reviewing the decision to build on the site, which the Khoisan deem a crucial part of their heritage.

“We don’t believe the outcome will change our case in the review,” said London. The Khoisan group filed an affidavit combating allegations against their case late. The court did not accept it.

Plans for Amazon’s Africa offices

Amazon plans to use the new offices to consolidate its employees in the city. It also plans to host new hires for its growing operations. Amazon has been expanding on the continent by building data centers and opening additional offices in Johannesburg and Lagos. The current battles over the Liesbeek site have resulted in project delays for the developer and the company.

The judgment is a “major win for all Capetonians who stand to benefit from the 4.6 billion rand ($260 million) project,” Liesbeek said Nov. 8 in a statement. A representative for Amazon declined to comment.

Africa has a fast-growing, young and tech-savvy population that makes it an attractive market. Still, problems such as spotty internet and power access in many countries have historically limited growth. The numbers of skilled workers and the infrastructure in South Africa has made it an attractive destination for international tech companies looking to expand. That includes Alphabet Inc.’s Google and Microsoft Corp.

The court also said fraud induced the original judgment in March.

It said the respondent misrepresented information relating to the Goringhaicona Khoi Khoin constitution. Additionally, the respondent did not have the authorization to start the proceedings that culminated in the original judgment. The Khoisan leader who filed the case further misrepresented the views of some indigenous leaders without consulting them, it said.

“There was no fraud,” London said. A chief who spoke on behalf of a number of tribes represented the groups who said they weren’t individually consulted. The Khoisan leader who filed the evidence didn’t claim to speak to each one, he said. “All simply terrible that this could not be brought to the judge’s attention,” London said.

Amazon is No. 1 in the 2022 Digital Commerce 360 Top 1000 database. The Top 1000 ranks North American web merchants by sales. It is No. 3 in the Digital Commerce 360 Online Marketplaces database, which ranks the 100 largest global marketplaces.

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