Jumia's unicorn flotation: Harbinger of change, or lone outlier?

Africa's first 'unicorn' - a company valued at $1bn or more before acquisition or IPO - has just burst onto the world stage. But is Jumia a unique one-off, or merely the first of many?

Almost everyone has heard the adapted quotation from the ancient Roman naturalist Pliny the Elder: ‘Ex Africa semper aliquid novi'. This is usually interpreted to mean something like ‘there's always something new coming out of Africa'.

In the world of enterprise tech, it hasn't been true in modern times. Major new startups based on innovative, disruptive technologies have come from everywhere but Africa: many from the US and Asia-Pac, quite a few from Europe, a handful from Latin America. But out of Africa, nothing: until this April.

On April 12, shares in Jumia Technologies AG made their debut on the NYSE. The initial offering was 17.6 per cent of the company in the form of 13.5 million American Depository Shares at $13-16 a share: in other words the company's total worth was deemed to be approximately $1.1bn before it went on the market. This valuation turned out to be on the low side, in fact, as the Jumia shares climbed to a peak of almost $48 before settling to a fairly steady price in the mid-thirties, giving the company a market cap of around $2.75bn today. It had clearly been worth substantially more than $1bn before the IPO.

Companies which manage to grow to more than $1bn before flotation or acquisition are, of course, rare enough to be known as ‘unicorns'. The context of the old line about new things out of Africa perhaps fits reasonably well here: Pliny was repeating an earlier Greek saying dating back to Aristotle's time, referring specifically to the idea that fantastic beasts were always appearing in Africa.

Very few Africans are buying online: Opportunity

Jumia AG, as its name implies, is actually a German-based company: but it was founded in 2012 as Africa Internet Group, it is 29.7 per cent owned by South African telco MTN, and its business is entirely in Africa. That business is e-commerce: Jumia has sometimes been referred to as ‘Africa's Amazon'. The company is Africa's first unicorn.

Looked at one way, the potential for e-commerce in Africa is huge. The 14 countries in which Jumia operates (including South Africa, Tanzania, Egypt and the Ivory Coast) account for 74 per cent of all consumer spending on the entire continent. At the moment just 1 per cent of this spending is done online: in many developed nations this figure is well above 10 per cent (Britons are the world's keenest online shoppers: the UK online spend proportion for 2018 was 18 per cent).

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