Citron Research calls out Jumia for being a Fake and a Fraudster


We recently featured Jumia as the first African e-commerce company to be listed on the New York Stock Exchange (NYSE). Never mind that the Africaness of the company is in doubt, given it was registered in Germany and virtually everyone in top management is not an African.

It is now emerging that prior to being listed on the NYSE, the company engaged in a lot of fraudulent practices. That is according to a 12-page report by Citron Research, the stock commentary website.

In the report, Citron alleges that Jumia inflated its numbers prior to the US bourse listing. Something that was done in the backdrop of key investors leaving Jumia.

Take, for instance, the Confidential Presentation of October 2018, where Jumia indicated it has at least 2.1 million active customers. However, those figures were inflated to 2.7 million in its public reports.

In the same report, Jumia indicated it has 43,000 merchants, but in the public report, that figure was inflated to 53,000. The report by Citron Research reads in part:

At the end of 2018, Jumia had a year’s worth of cash left and its two largest shareholders, MTN and Rocket Internet, wanted an exit. Therefore, Jumia filed for an IPO in March 2019, fudged its numbers, and began trading last month.”

Rising Mobile and Internet penetration in Jumia’s markets

The company has witnessed a rising in smartphone and internet adoption across its core markets in Africa. So one would think it was poised to do more business! Well, the company’s revenue fell from $145 million to $131 million and the adjusted loss before tax went from $161 million to $150 million.

The Nigerian market is a tough nut to crack

Jumia learned the hard way that Nigeria, Jumia’s largest and most important market, is not an easy place to do e-commerce for plenty of reasons including logistics, poverty, and a culture of corruption,” says the report.

Jumia agents in Nigeria who would help customers place their orders are alleged to have been involved in a lot of fraudulent transactions. There is an apparent supposed Jumia confidential report addressing this issue:

Recently received information alleging that some of our independent sales consultants, members of our JForce program in Nigeria, may have engaged in fraudulent activities.”

In a public edition of the same report, the above information was edited out. Speculators, therefore, argue that fraudulent activities with Jumia may have contributed to the over 40% of goods returned.

Top Managers also conducting Fraudulent transactions

Jumia was not only being sucked dry by only the agents. Even top managers were involved in fraudulent activities. There are numerous local media reports in Nigeria saying top manage were diverting money from the company’s projects to their individual bank accounts.

They were also using the director owned private companies to accept Jumia orders. At the same time receiving advance payments and never fulfilling the orders.

Business was extremely bad for the company that as much as 41% of its orders were returned, not delivered, or completely canceled. That was revealed in the Jumia’s October 2018 confidential investor report.

Yet in the public report, the company said: “orders accounting for 14.4% of our gross merchandise volume were either failed deliveries or returned by our consumers” in 2018.

The Citron Research further said, “Since Jumia primarily sells consumer electronics, which should not have this high of a cancellation rate, it wreaks of fraud.”

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