🔅 Jumia’s Struggle to Stay Afloat
Plus: Marburg disease in E. Guinea, Is China the sticking point for Zambia's debt talks?, South Africa’s state of emergency, Ghana’s taxing problem, And much more... ☕
Photo of the day: Cape Verde
Markets:
🔺 Nigerian SE: 54,496.31 (+0.24%)
🔺 Johannesburg SE: 79,858.02 (+0.11%)
🔻 Ghana SE: 2,410.20 (-0.17%)
🔻 Nairobi SE: 127.74 (-0.13%)
🔺 US S&P 500: 4,136.13 (+0.028%)
🔺 Shanghai Composite: 3,293.28 (+0.28%)
Zambia's Debt Talks: Zambia’s finance minister has had enough. In an interview with the Financial Times, Situmbeko Musokotwane said time is of the essence in sorting out the country’s $13 billion of external debt this year. But there’s a problem: China’s call for the World Bank and other multilateral lenders to also offer debt relief is causing a snag in the negotiations. Zambia’s debt-laden situation was made worse by the onset of COVID-19. Government data showed that China was owed nearly $6 billion of the total $17 billion external debt at the end of 2021.
US Inflation: Prices in the US are going up, but not in the way we want. Inflation is still above 6%, with housing costs and services like haircuts seeing some of the biggest increases. The Federal Reserve is doing its best to cool the economy but is having a tough time keeping prices down.
*Data accurate as of the close of markets across the continent
ECONOMY
Jumia’s Struggle to Stay Afloat
The continent's first unicorn, Lagos-headquartered Jumia, has been trying to make its name as the “Amazon of Africa,” but success has been hard to come by.
How hard?
Despite 9.4 million orders worth $66.6 million in the third quarter of 2022, the company ended up with an operational loss of $43.2 million.
The customer base was also minimal. They only had 3.1 million active customers in Q3 2022, only a slight increase from 3 million a year ago.
The company's stock has lost nearly 70% of its value, and despite raising over $760 million before its IPO, Jumia's narrative of being 'the Amazon of Africa' is failing to impress shareholders.
Recent months have been particularly tumultuous for Jumia, with a major change in management and the shutting down of their Dubai office. They also discontinued their subscription-based loyalty program, Jumia Prime, in December.
To make matters worse, Amazon is finalising its expansion into South Africa and Nigeria, slated for February and April 2023, respectively.
Why has it failed to catch on?
Jumia has failed to capture its customers' hearts (and wallets). For the most part, people using Jumia are doing it for the convenience of not having to deal with traffic, but not because they are deeply engaged with the brand.
Perhaps the reason why Jumia’s loyalty program, which was meant to create stickiness and boost customer engagement, had a limited impact.
It looks like the only way for Jumia to remain competitive is for it to raise its game and create a genuine emotional connection with its customers. Right now, the company has its work cut out for it.
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OTHER HEADLINES
Across the Continent
🇬🇶 Equatorial Guinea Confirms Its First Outbreak of Marburg Disease | The World Health Organization is calling it: Equatorial Guinea is facing its first-ever outbreak of Marburg disease, an Ebola-related virus. So far, the virus has claimed nine lives and sickened 16 others in the tiny Western African country. It's a scary situation—the virus is spread through contact with the bodily fluids of infected people and surfaces, and without treatment, it can be fatal in up to 88% of people. In the past, the virus has been responsible for some pretty gruesome deaths—in 1967, seven people died after they were exposed to the virus while researching monkeys. In 2004, Marburg killed 90% of 252 people infected in Angola. WHO is sending medical experts to help Equatorial Guinea and protective equipment for workers, but so far, there are no authorised vaccines or drugs to treat Marburg. The best defence against the virus is to avoid close contact with anyone infected.
🇬🇭 Ghana's Taxing Problem | Ghana wanted to make a quick buck by demanding $700 million from investors like MTN, Gold Fields, Tullow Oil, and Kosmos Energy. But South Africa's Foreign Minister Naledi Pandor was not having it. She warned Ghana that if other African countries faced similar challenges, the investors would take their money elsewhere—and the country’s economy would suffer. So, Ghana backed down. The West African nation is in a tough spot. It’s struggling to service its public debt, and it’s been hit hard by the pandemic. Inflation is through the roof, and the currency has lost half its value in the past year. But Ghana’s tax-collecting gambit may have done more harm than good, as investors will now think twice before putting their money in the country.
🇹🇿🇺🇬🇰🇪 East Africa's Biggest Ship | East Africa’s biggest ship, the MV Mwanza, is afloat on Lake Victoria. This monstrous vessel can carry 1,200 passengers, 400 tonnes of cargo, 20 small vehicles, and three trucks. It’s 92.6 metres long, 17 metres wide, and 20 metres high. That’s not all - it’s got an elevator section for people with disabilities, a clinic, a disco, and facilities for a music band to entertain passengers. This state-of-the-art ship will cost the taxpayers over $43 million. Still, it’ll be worth it - with the full utilisation of the MV Mwanza, fuel prices are expected to go down in the countries it will export to, like Uganda, and fair commodity prices should result.
🇿🇦 South Africa: When it Rains, It Floods | South Africa’s President Cyril Ramaphosa has declared a national state of disaster after floods hit seven of the country’s nine provinces. The intense rainfall was brought on by the La Nina weather phenomenon, and has caused massive destruction, including flooded homes, cars, and the loss of basic infrastructure. The government is using the National Disaster Act to procure goods and services and call on the national police and defence force for assistance. It looks like the flooding won’t stop anytime soon, with the government’s weather service forecasting that the weather pattern will remain for the early part of 2023. This is the third time Ramaphosa has declared a national disaster, following the pandemic and flooding in KwaZulu-Natal.
FOOD FOR THOUGHT
Proverb of the Day
“When you show the moon to a child, it sees only your finger.”
— Zambian Proverb.