Jumia has shut down operations in a second African country within one week

On the move.
On the move.
Image: Reuters/Joe Penney
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The largest e-commerce operator in Africa just became smaller—again.

A week after it quit operations in Cameroon, Jumia has shuttered its business in Tanzania as well, citing the need to “focus resources” on other markets as part of an “ongoing portfolio optimization effort.” Simply put, the company is looking to reduce operating costs by focusing on larger African markets where e-commerce is currently a more viable proposition.

This means that Jumia now operates in just 12 of Africa’s 54 countries, with Egypt and Nigeria counting as its largest markets. While it’s still the largest e-commerce player on the continent, Jumia’s shrinking size somewhat contradicts its pitch to investors ahead of a landmark New York IPO in April. At the time, it touted its pan-African operations and ambitions as a core strength.

But with the company still racking up major losses, it seems to be struggling with managing operations and uneven growth across several fragmented markets that remain largely underdeveloped with respect  to digital payments, delivery and logistical infrastructure. In its filing with the US Securities and Exchange Commission ahead of the IPO, Jumia admitted there was “no guarantee” it will break even and become profitable in all of its African markets.

Like the shutdown in Cameroon, Jumia’s operations in Tanzania ceased abruptly. Last week, the company had claimed that it had no plans to pull out of more African markets. Analysts will now be wondering about the fate of its other smaller markets, such as Uganda and Rwanda.

But Jumia’s grand plan to curtail losses and boost revenues goes beyond simply pulling out of smaller markets. The company has advanced plans for a partial pivot to fintech as it looks to spin-off Jumia Pay, its in-house payments solution.  In addition to payment processing for third-party users, Jumia Pay’s off-platform strategy will include facilitating payments through QR codes as well as powering mobile point-of-sale systems.