African e-commerce startup, Jumia, has received $56 million from Mastercard Europe ahead of its unusual initial public offering (IPO) on the New York Stock Exchange (NYSE) of the United States.
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Purpose of the investment: Mastercard Europe made the investment in a private trade for the exchange of Jumia‘s shares. The shares, however, will be offered to Mastercard Europe at a price determined by investors ahead of the floating of shares.
The benefit of the partnership: The deal will create a strategic partnership to grow e-commerce operations and support the digital transformation of the African continent. Mastercard will also offer its expertise in payment solutions and technologies to upgrade Jumia‘s payment system.
This is a business relationship that started three years ago
Mastercard and Jumia have a business relationship that dates back to 2016 when both companies partnered to launch Mastercard Payment Gateway Solutions in several markets. Also, Jumia received the support of Mastercard to launcg JumiaPay which facilitates transactions for consumers and sellers.
According to the Chief Executive Officer of Jumia, Sacha Poignonnec, the partnership will strengthen the objectives of both companies and cement Jumia‘s position as the e-commerce leader in Africa.
“We are delighted to strengthen our existing partnership with Mastercard and consolidate Jumia’s position as the leading e-commerce platform in Africa.
“This investment highlights the strategic synergies between the two companies, as we both seek to develop the payments ecosystem and drive financial inclusion across Africa.”
Also reacting to the development is the Executive Vice President of Mastercard (Middle East and Africa), Elcin Yanik, who said the investment shows the commitment of Mastercard in transforming Africa’s digital payments landscape.
“Mastercard has been rapidly expanding its presence and partnerships in Africa, bringing new technologies to the continent that help to enhance the consumer experience and enable greater access and inclusion.
“This partnership with Jumia underpins Mastercard’s commitment to transforming Africa’s digital payments landscape.
“In recent years, we have invested heavily in technology, people and local markets, and have seen tremendous growth in online payments in particular. We look forward to working with Jumia to enhance the region’s digital infrastructure and ecosystem.”
There’s growth despite e-commerce struggle in Africa’s retail market
The challenge of e-commerce in Africa: The retail market has been dominated by the brick and mortar businesses, with only a few people depending on e-commerce platforms to purchase goods. This reflects in the contribution of e-commerce in retail volumes which is just 1%.
Confidence booster: But with over 400 million internet users across Africa, industry experts like Sami Louali, the Executive Vice President for Corporate Development and Financial Services, Jumia, believe there’s growth opportunity.
“Brick and mortar stores still dominate the commerce industry in Africa, but e-commerce is rapidly on the rise.”
While commenting on the partnership between Jumia and Mastercard, Louali said the financial services company will provide unparalleled capabilities to help create further awareness about Africa’s booming e-commerce sector. Adding that the deal will also ensure a secure, seamless and reliable payment system for Jumia‘s customers.
