Africa’s e-commerce leader, Jumia, has reported significant growth in transaction volumes through JumiaPay, its digital payments platform, following the termination of its commercial agreement with Mastercard. In its third-quarter earnings release for 2024, Jumia disclosed a 10% year-over-year increase in JumiaPay transactions, reaching 3.0 million during the period. This growth has been attributed to expanded usage of JumiaPay on delivery orders, a core focus area since the company ended its partnership with Mastercard in June.
The termination marks a significant shift in Jumia’s strategic direction, allowing the company greater flexibility to work with multiple financial service providers. Previously, Mastercard had been a key partner in expanding JumiaPay’s footprint across Africa’s rapidly evolving digital payments landscape. However, Jumia indicated that its decision to exit the exclusive partnership reflects its ambition to broaden partnerships and to explore new channels for growth.
A Strategic Reset with JumiaPay in Focus
Jumia’s move away from Mastercard was part of a larger shift aimed at boosting digital transactions across its platform, including efforts to streamline payment options and improve the customer experience. The company has focused on increasing cashless payments for deliveries, a segment traditionally dominated by cash across African markets. This approach has yielded results: JumiaPay’s transaction volume saw continued growth in the third quarter, despite broader financial challenges facing the company.
Total payment volume (TPV) on JumiaPay grew by 6% year-over-year, rising to represent 28% of Jumia’s gross merchandise volume (GMV) in the third quarter, up from 26% in the previous year. This was driven by the rising preference for digital payments among Jumia customers, facilitated by the integration of JumiaPay with delivery orders. According to Jumia, this shift towards JumiaPay on delivery shows its potential as a long-term enabler of the e-commerce platform’s growth across Africa’s diverse and emerging markets.
Third-Quarter Financial Highlights Reflect Mixed Performance
While JumiaPay has posted robust transaction gains, Jumia’s overall financial performance for the third quarter of 2024 shows a mixed picture. The company’s revenue declined 13% year-over-year to $36.4 million, though it grew 9% on a constant currency basis. Marketplace revenue, encompassing commissions, fulfillment, and value-added services, saw a modest increase, up 7% year-over-year to $20.6 million, or up 37% on a constant currency basis.
First-party sales, however, fell by 29% due to lower corporate sales in key markets like Egypt and adverse foreign exchange impacts. The company’s gross profit rose 3% year-over-year, reaching $22.9 million, but expenses have increased, with fulfillment costs rising by 5% due to one-time warehouse consolidation costs and order growth. Despite these rising expenses, Jumia has emphasized that its consolidation efforts will lead to longer-term operational efficiencies.
Operating loss increased 10% to $20.1 million, reflecting higher general and administrative expenses that were partially offset by favorable foreign exchange gains. Nonetheless, the company reported a decrease in its loss before income tax from continuing operations, which fell 17% year-over-year.
As of September 2024, Jumia’s liquidity stood at $164.6 million, significantly boosted by the $94.7 million net proceeds from an ATM equity offering. Jumia’s net cash flow used in operations also increased slightly due to strategic investments in technology subscriptions and warehousing infrastructure, which aim to improve the platform’s quality and enhance JumiaPay’s transaction capabilities.
In a sector where liquidity and cash flow are critical for sustaining growth, Jumia’s financial discipline has enabled the company to fund strategic projects without compromising its cash position. By focusing on digital payment adoption, particularly through JumiaPay, the company is also tapping into the continent’s expanding base of internet users, which now numbers over 400 million.
A Changing Landscape in African Digital Payments
The transition away from Mastercard is particularly notable given the companies’ long history of collaboration in promoting digital payments across Africa. Mastercard first partnered with Jumia in 2016 and later deepened its involvement by becoming a strategic investor in 2019. The partnership was instrumental in rolling out JumiaPay, which helped build momentum for electronic payments across Jumia’s e-commerce network. Both companies focused on driving e-commerce growth in a region where digital payments are still in the early stages.
The termination of the agreement highlights the competitive and evolving nature of digital payments in Africa, where a mix of global, regional, and local players are competing to offer solutions suited to the region’s unique challenges, including low banking penetration and a high preference for cash. By opting to broaden its relationships with other financial services, Jumia positions itself to leverage this dynamic environment and better respond to local needs.
Jumia’s pivot indicates its determination to strengthen its position in Africa’s digital payments ecosystem. The company sees JumiaPay as a key growth driver, especially as the continent’s online retail market gains traction. By continuing to expand its digital payment offerings post Mastercard deal, JumiaPay aims to capture a larger share of e-commerce transactions across Africa. This moves Jumia closer to the goal of establishing itself as a fully integrated digital platform.
Jumia’s growth in transaction volumes on JumiaPay reflects the company’s evolving strategy following its split from Mastercard. By diversifying its payment options and focusing on increasing cashless transactions, Jumia is adapting to the complex market conditions in Africa. Whether this approach will yield sustained profitability remains to be seen, but Jumia’s emphasis on digital payments as a core part of its business signals an optimistic outlook for the continent’s e-commerce potential.