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Strategic Shifts Propel Jumia to Sustainable Growth: Q4 2023 Earnings Highlights

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The year 2023 witnessed Africa’s e-commerce giant, Jumia Technologies AG (NYSE: JMIA), taking very decisive steps towards reducing its losses and setting the company on a path of sustained growth and profitability. While some of these steps have caused quite a stir across different ranks and concern about the company’s future, Jumia’s earnings report for the fourth quarter of 2023 has proven that the decisions to go leaner and crash its overhead costs were all prescient.

Trimming Expenditure

In Q4 2023, the company opted to trim its sales and advertising expenditure to $6.2 million, scaling back investments in consumer incentives like vouchers and free shipping. This marked a substantial 62.8% decrease in advertising spending compared to Q4 2023. Moreover, its general and administrative expenses, excluding share-based compensation,  were reduced to $12.3 million. This strict adherence to its cost discipline strategy appears to be paying off.

Cutting Losses and Bolstering Sales

Lower losses were not the only highlight of the Jumia Q4 2023 earnings report. All indications show that the company’s decision to pivot from fast-moving consumer goods (FMCG) to focus on priority categories: Phones, Electronics, Home & Living and Fashion and Beauty. Cumulatively, on all five categories, the company recorded 88% on items sold and 95% GMV in Q4 2023 as opposed to the 80% on items sold and 93% GMV recorded in Q4 2022. The spike in these categories came on the heels of the company identifying and leveraging new sourcing routes.

Recall that in the second quarter of the year 2023, Jumia CEO, Francis Dufay, highlighted the company’s focus on building supply in the markets it served across Africa. According to him, “Building supply is the right thing to do, especially in a tough market and macroeconomic context. People want cheaper products and better deals. And that’s what we’re building on our platform.” The company’s strong performance in its priority categories in Q4 2023 coupled with the rise in Average Order Value (46% as opposed to the 13% recorded in the fourth quarter of 2022) shows that the company’s leadership is on to something.

Increased Value Proposition and Strategic Marketing Tactics

Combining a focus on priority general merchandise categories and more cost-efficient supply routes has led to a stronger value proposition, as evidenced by increasing repurchase rates. In the fourth quarter of 2023, Jumia recorded a 1% increase in 30 days repurchase rate by new customers, across all categories — this is when compared to the repurchase rate of new customers in the same period in 2022. The company also recorded a 3% increase in 90 days repurchase rate, across all categories, for new customers in Q3 2023 cohorts versus the same cohort of new customers in 2022.

Evidently, Jumia’s results are not mere happenstances. In 2022, Jumia made significant changes across board, following the change in leadership. Of these changes, the two prominent ones — targeted at cost discipline and return on investment —  were based on the overriding need to move the company towards sustained profitability in the not-too-distant future. In line with this, Jumia has over time modified its priority marketing channels, shifting focus from paid online advertising to more relevant and efficient channels. The first being CRM and SEO channels that have so far engendered significant increases in the share of visits on Jumia’s physical goods platform. The second, and perhaps the most prominent, is on-the-ground activation campaigns and the J-Force.

This second tactic has been highly instrumental in increasing the e-commerce giant’s market share, particularly in smaller cities where physical presence drives trust and adoption. Amplifying its efforts with this tactic, in 2023 alone, Jumia delivered an impressive amount of orders to rural areas and secondary cities. With its strategies for 2024, it is expected that the company’s impact with these tactics, not just with increasing Jumia’s market share but with bridging the digital divide for rural communities as well, will significantly increase.

Bright Predictions for JumiaPay

Jumia’s Q4 2023 financial earnings report revealed that 2023 was a good year for the digital payment platform, in terms of adoption. Under the JumiaPay umbrella, Jumia recorded a 41% increase — from Q4 2022 — in transactions conducted on the platform. Of this, 27.7% were purchases for physical goods. 

Uncoincidentally, this increase can be linked to the company integrating more relevant options — including pay on delivery and Buy Now, Pay Later (BNPL) — on the JumiaPay platform. It is predicted that with the encouraging figures recorded under this platform in 2023, coupled with Jumia’s efforts at simplifying payments through the payment channel, a considerable increase will be recorded in the coming quarters.

Reflecting on Jumia’s performance so far, under its new management and particularly within the 2023 financial year, one would say it is safe to echo Jumia CEO, Francis Dufay’s sentiment, “Jumia has never been in a better position to capture the unique e-commerce opportunities in Africa.”

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Doing Business in Nigeria: Interswitch Founder reiterates need for focus on business’ unit economics

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As Nigeria, arguably one of the principal economic powerhouses of Africa, continues to attract global attention against the odds as a destination which cannot be ignored for investment and business opportunities, the 2024 edition of the ‘Doing Business in Nigeria Conference’ which held on Saturday 13th April in Lagos, the nation’s commercial capital served as a pivotal event for entrepreneurs, investors, and business leaders seeking to tap into the country’s vibrant business landscape. Delivering a keynote on the theme ‘Doing Business in Nigeria: The Opportunities, Challenges and Realities’, Interswitch Group Founder and Chief Executive Officer, Mitchell Elegbe set the tone for deliberations at the conference, sharing robust insights and perspectives hinged on over 22 years operating in Nigeria, from where the company has expanded into other African markets, being in the driver’s seat of one of Africa’s most influential digital technology businesses. Among other incisive pointers, Elegbe walked participants through the dynamic trajectory of Interswitch’s business operations, starting from 2002 when key infrastructural elements such as power and telecoms were at a nascent stage. The Interswitch Founder acknowledged that Nigeria is probably not one of the easiest markets in the world to do business, however stressing that compelling business opportunities exist only where there are challenges, pointing out that regardless of the challenges and constraints in the local operating environment, some particular industries and sectors have consistently bucked the trend and shown great promise. In his view the performance of these outliers is attributable to factors such as the ability to adapt and innovate within the local market hinged on pragmatism and nimbleness, understanding of consumer behaviour and agile responses to changing business landscapes. According to Elegbe, who set things in context through the lens of fintech businesses, there are significant differences between the typical Silicon Valley business model and what is necessary for sustainable success in a market like Nigeria, particularly in the current global investment climes. In his words, operating in the Tropical Savannah that Nigeria is, as he described it, warrants the business to ensure products/services are designed to meet people at their points of need, whilst essentially ensuring proof of concept, focus on unit economics and scaling to achieve volumes in spite of thin margins, with a view to driving profitability as an early priority. He emphasized that Unit economics are instrumental in evaluating the economic sustainability and profitability of the business model, providing insights into whether the business is generating sufficient value to justify the associated costs. Other keynotes were delivered by Wole Adeniyi, The Chief Executive Officer, Stanbic IBTC Bank, who was represented by Olu Delano, Executive Director for Personal and Private Banking as well as Binta Max-Gbinije, Chief Executive, BMG Seven Limited, each bringing unique perspectives and expertise to the discussions. The conference agenda was thoughtfully curated to address key themes and topics relevant to doing business in Nigeria, with sessions covering market entry strategies, regulatory compliance, risk management, investment incentives, innovation, and sustainability, among other salient themes. Beyond the informative sessions and workshops, the Doing Business in Nigeria Conference 2024 provided platforms for networking and collaboration, including a business pitch session targeted at emerging entrepreneurs.

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Interswitch Kicks Off InterswitchSPAK Nigeria 6.0: Calls for Registration, Doubles Value of Winnings

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Interswitch, Africa’s leading digital payment and commerce company, has announced the commencement of the sixth edition of its annual National Science Competition, InterswitchSPAK, in Nigeria with a significant boost in prize monies and added incentives for more participants, as the company doubles-down on its long-term support for STEM advancement across Africa. The competition, a Corporate Social Responsibility (CSR) initiative of the Interswitch Group, now in its 6th edition in Nigeria (and 5th edition in Kenya, where it also runs) aims to foster interest in Science, Technology, Engineering, and Mathematics (STEM) subjects among senior secondary school students across the country. Schools in Nigeria can now register up to twenty (20) SS2 Science Students each, marking an unprecedented scale of participation. Registration for students will be open until May 10th, 2024, and it is free of charge to all applicants. The qualifying examination is conducted entirely online, allowing candidates to take it from the comfort of their school, home, or any convenient location. The Computer Based Test (CBT) exams are scheduled to hold from Tuesday, May 14th, to Saturday, May 18th, 2024, from 8 am to 6 pm daily. Participants have the flexibility to choose the most suitable day, time, and venue for their exam, with two trials available. Following the online qualifying examination, the top 81 students will proceed to the semi-finals and finals to compete for the coveted title of Nigeria’s Best STEM Student. This year’s edition, with a prize pool of over 30 million Naira, marks a 140% increase from the erstwhile 12.5 million Naira in prize winnings, demonstrating Interswitch’s unflinching commitment to educational development by doubling cash prizes for winners. The first prize winner will receive N15 million tertiary scholarship spread over 5 years, a laptop, and monthly stipends. The second-place winner gets N10 million spread over 3 years and a laptop, while the third-place winner will get N5 million for 1 year. In addition to the top three prizes, cash rewards are also available for the participants who secure the 4th to 9th positions. Furthermore, the top 18 semi-finalists will also receive cash prizes. The competition also recognizes the contributions of teachers and offers cash rewards for the top 27 contributing teachers. Interswitch will also purchase JAMB e-PINS for the top 200 preliminary qualifiers to enable them register for the Joint Admissions and Matriculation Board (JAMB) examinations free of charge. Speaking on this year’s edition of the competition, Cherry Eromosele, Executive Vice President & Group Chief Marketing and Communications Officer at Interswitch Group said “We are excited to kick off another edition of InterswitchSPAK, the 6th in the series in Nigeria, and this year promises to be bigger and better than ever before. By doubling the prize pool and expanding opportunities, we are not only investing in the winners but also in the entire ecosystem of STEM education. We are thrilled to see the impact this initiative has had over the last 5 editions and look forward to witnessing the brilliance and innovation of Nigeria’s young minds in this year’s competition”. The last edition saw Abraham Daramola, a student of Hallmark Secondary School, Ondo State, emerge as the winner, while the duo of Emmanuel Omoegbeleghan from The Crescent International School, Ogun State, and Emmanuel Angelo-Hyuwa from The Ambassadors College, Ogun State, came second and third, respectively. Secondary schools are hereby advised to visit the InterswitchSPAK portal to register their best science students in Senior Secondary 2 (SS2) for the competition. All eligible students and schools are encouraged to visit the website, www.interswitchspak.com, for more details on how to participate in the competition.

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Ecobank MySME Growth Series: Proper Packaging and Basic Certification are Critical for SME Exports, Says Expert

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Lagos, April 9, 2024 – Small and medium enterprises (SMEs) in Nigeria have great potentials and opportunities to earn foreign exchange (forex) if their products are well branded and packaged to meet international standards. Managing Director/Chief Executive, Export and Sell Limited, Nduka Udeh made this submission in his presentation titled: Earning FX By Exporting to USA and Canada, delivered at the Ecobank MySME Growth Series webinar. He stated that it was important for exporters of SME products to take into consideration the nature of their products while packaging and making shipping arrangements as well as an effective use of multi sale channels in US and Canada. According to him, many foreign markets particularly, United States and Canada are interested in Nigerian products and the SMEs can gain greater penetration in these markets that have huge potential but sadly most of their products are often rejected because they are not properly packaged and lacked necessary certifications. “SME products from Nigeria have great potentials in the export market. However, over 70% of food products are held at entry points because exporters don’t pay attention to packaging, local licensing and certifications needed to meet US specifications. The right process can save you so much. Exporters should pay attention to products that would give them maximum profitability, low shipping costs and effective distribution channels. It is important for them to be familiar with the African Growth and Opportunity Act (AGOA)”, He said. Mr. Udeh who is also Chairman of African Import Export Solution, Houston, Atlanta, US advised exporters to explore the opportunities provided by Ecobank and his firm to train and support them on how to navigate the export market, adding that their products are in high demand, and they stand the chance to earn huge foreign exchange. Ecobank MySME Growth Series which started in February this year is designed to empower SME operators across the country. It is part of the bank’s commitment to train over 1 million SME operators in various sectors of the economy in 2024. The training will provide resources for starting a business, registration processes, industry statistics, and essential considerations for running a business. The series cover key topics such as accounting, credit, sales & marketing, taxation, and inventory management. Additionally, articles on key topics like increasing sales, advertising ideas, business management practices, case studies, and leveraging technology will be provided. Ecobank also plans to launch an SME Mentorship program to collaborate with successful entrepreneurs. Taken together, the MySME Growth Series reflects Ecobank’s dedication to fostering growth and success within the SME community.

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