Jumia has spent the past three years making its business leaner and cheaper to run, while chasing profitability. Now it has an additional $50 million that can help it reach that goal faster.
But the capital alone will not make Jumia profitable. The e-commerce company has increasingly been building around cheaper and more relevant supply, higher monetisation, lower fulfilment costs, and tighter fixed costs in recent years.
Jumia, founded in 2012, was burning about $200 million a year by late 2022, triggering a leadership overhaul and a renewed focus on profitability. It has aggressively cut costs while clarifying its identity, exited unprofitable verticals, stopped stocking categories such as groceries, pulled out of several countries, and reduced staff count.
“A meaningfully stronger balance sheet will de-risk our path to profitability and reduce our financing risk in a volatile macro environment,” Francis Dufay, Jumia’s chief executive officer, said of the raise on the company’s earnings call on Wednesday.
Jumia announced the $50 million raise, alongside its second-quarter results on Wednesday. It is anchored by a $25 million investment from the International Finance Corporation (IFC), the World Bank Group’s private-sector investment arm, with existing leading shareholders and selected new investors participating.
The investors have agreed to buy 9.1 million Jumia American Depositary Shares (ADSs) at $5.52 each, with the transaction expected to close in the second half of August.
The $50 million equity raise gives Jumia room to gradually increase working capital, capture attractive supply opportunities, invest in fulfilment to lower unit costs, and drive platform usage as it continues to improve its economics.