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$17 million fraud rocks Jumia as company battles with several US lawsuit

Jumia is currently involved in some issues which are threatening to drown it. The company is facing several lawsuits in the United States.

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Jumia VAT charges on online transactions will cripple e-Commerce businesses

Jumia is currently involved in some issues which are threatening its corporate existence. The company is facing class-action lawsuits in the United States as a member of its staff engaged in fraud worth $17.5 million and the company’s financial report revealed that its loss grew by 59.2% in one year. 

Jumia’s staff and some members of the Jumia Force (Jumia’s agents) were said to have inflated the volumes of order on the marketplace. 

Although Jumia claimed the fraudulent activity didn’t affect its figures in the financial statement, the improper order accumulated to $17.5 million in Gross Merchandise Volume (GMV) value between Q4 of 2018 to Q1 and Q2 of 2019. 

Why GMV matters: GMV is the metric used by e-commerce companies to identify the total values of merchandise sold through their online platforms 

Jumia reportedly adjusted its GMV figures for Q2 2018 financial report due to the internal fraud the company discovered. 

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The fate of the staffs who were involved in the improper orders is not known yet, as the company is still reviewing the case. The suspects have, however, been suspended pending the outcome of the probe. 

Mastercard buys Jumia shares, Jumia get $56 million from Mastercard, Jumia NYSE IPO listing, MTN, Jumia Investors

Jumia store

Why the improper fraud: Such unethical activity is not new in the corporate environment. Workers usually embark on fraudulent activities to meet their companies’ demand/target and navigate through office pressure. One of the most recent was the account scandal that hit one of the biggest banks in the United States, Wells Fargo, in 2016. 

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The company sacked 5300 employees for secretly opening two million bank and credit card accounts without the customers’ knowledge while the customers were charged for accounts they didn’t openWells Fargo received the unwarranted fees while the sacked workers made more money and boosted their sales figures. 

[READ MORE: Akin Alabi questions Jumia’s operating model, Jumia responded]

Financial mess: Despite Jumia’s topline, active customers, marketplace revenue and gross profit grew within the year, the company’s growth was overshadowed by its net losses which significantly increased by 59.2% between last year and this year. 

The highlight of Jumia’s financial statement

  • Jumia’s topline second-quarter revenue grew to €39.2 million from €24.8 million a year ago.  
  • Net losses increased significantly from €42.3 million last year to €67.8 million this year. 
  • Active customers grew by 500,000 to hit 4.8 million in Q2 of 2019 when compared to Q1 of 2018. 
  • GMV increased by 69% year-on-year. 
  • Marketplace revenue grew 90% year-on-year. 
  • Gross profit according to Jumia also surged by 94% year-on-year. 
  • Jumia’s stocks drop by 13% as at yesterday’s trading. 

Note that since entering the e-commerce business in 2012, Jumia has lost N362.3 billion ($1 billion) in total. 

Jumia Food

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Class action lawsuit: The problem with the inflated numbers that arose from the improper orders of Jumia’s staff is that it increased the trust issues Jumia is struggling with among investors since listing its shares in the United States. 

Jumia has been accused of disclosing misleading information to favour the company and portray them as a healthy company to investors. This has led to class action lawsuit centered on “alleged misstatements and omissions” in its Initial Public Offering prospectus. 

While the lawsuit is still in its early stage, the accusations have been taking a toll on Jumia’s stock in the New Yock Stock Exchange (NYSE) where it had opted for an unusual listing of its sharesJumia’s stock price had peaked at $49.77 when it debuted. It has, however, crashed to N12.27 today (at the time of this report) although it was $12.21 yesterday, August 21, 2019. 

[READ ALSO: DEAL: Jumia has sold its real estate assets portal to EMPG’s Mubawab]

Identity problem: Jumia also has an identity problem apart from the speculations of misinformation that has dragged down the brand on the Stock Exchange. While Jumia had positioned itself as an African e-commerce platform over the years, it was only after it listed on the NYSE that it was revealed that the company is a German registered company. The identity of the company has further caused confusion as many still don’t know if it is a Nigerian company or not. 

Olalekan is a certified media practitioner from the Nigerian Institute of Journalism (NIJ). In the era of media convergence, Olalekan is a valuable asset, with ability to curate and broadcast news. His zeal to write was developed out of passion to shape people’s thought and opinion; serving as a guideline for their daily lives. Contact for tips: [email protected]

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Hospitality & Travel

Aviation Unions threaten to shut airspace on Monday, as NLC insists on strike

All aviation workers are directed to withdraw their services at all aerodromes nationwide on 28th September 2020.

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Major aviation unions in Nigeria have threatened to shut the nation’s airspace in support of the Organised Labour nationwide industrial action expected to commence on Monday, September 28, 2020.

The unions are the National Union of Air Transport Employees, National Association of Aircraft Pilots and Engineers, Air Transport Services Senior Staff Association of Nigeria and the Association of Nigeria Aviation Professionals.

This was disclosed by the General Secretary of the National Union of Aviation Employees, Aba Ocheme, in a statement, according to Vanguard.

The unions reportedly asked their members to withdraw services from all aerodromes nationwide indefinitely.

He said, “As such all workers in the aviation sector are hereby directed to withdraw their services at all aerodromes nationwide as from 00hrs of 28th September 2020 until otherwise communicated by the NLC/TUC or our unions. All workers shall comply.”

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Meanwhile, the Nigeria Labour Congress on Friday also insisted that it will go on with its planned mass action scheduled for Monday, September 28.

In a communique by its General Secretary, Comrade Emmanuel Ugboaja, the NLC asked its members across the nation to come out in large numbers to protest the increase in fuel and electricity prices.

The order was given despite a fresh court order obtained by the Federal Government, barring the NLC and the Trade Union Congress from embarking on their planned strike scheduled to commence on Monday.

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Ugboaja explained that the NLC has asked all National Leadership of affiliates in Abuja to mobilise at least 2,000 of their members to Unity Fountain, Abuja for the mass rally which takes off at 7am.

Also, affiliates are expected to mobilise the same number of members to the NLC Sub-Secretariat, 29, Olajuwon Street, Yaba, Lagos, which is the take-off point for the Lagos action at 7am also.

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Business

It would be difficult to find loans to finance rail to Niger Republic – Cheta Nwanze

Finding loans to finance rail to the Niger Republic would be difficult, says Cheta Nwanze.

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It would be difficult to find loans to finance rail to Niger Republic- Cheta Nwanze

Cheta Nwanze, Lead Partner at socioeconomic research firm, SBM Intelligence, says that it would be difficult to find loan financiers for the proposed $1.9 billion rail project from Kano to Maradi in Niger republic.

Cheta, in an interview with Nairametrics on Friday, explained that it appears that Nigeria is more keen on the project than Niger Republic.

Back story: Nairametrics reported this week that the Federal Executive Council has approved the disbursement of $1.96 billion, for the railway line from Kano in Nigeria to Maradi in Niger Republic.

According to the report, the President is also expected to commission the Warri-Itakpe standard gauge rail line, running through Kogi, Edo, and Delta States.

“Nigeria is investing so much in this rail line, given that we are Niger’s 4th largest trading partner,” Cheta said.

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He added that Niger, although being landlocked already, has an existing infrastructure for its imports and export services, which is much better utilized than Nigeria’s export infrastructure.

“The majority of their imports from France, China, and the USA come in via the port of Lome, precisely because the port in Lome works, and the rail link in Togo is much better than ours.

“Nigeria, on the other hand, has let its Apapa port to become a wreck, while transportation between Lagos and Kano/Jibia is a nightmare, if we’re being charitable with words.”

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(READ MORE: Trade and Investments, a way out of Nigeria’s economic troubles – Fola Fagbule)

According to him, with the reality of the Apapa congestion and other factors, finding fund for such project, when debt to service ratio is high and amidst reduced oil revenue, will be difficult.

“With these realities in mind, I find it difficult to imagine who will extend such a loan to Nigeria, especially since, as far as all the information available to me indicates, Niger does not seem as keen on pushing this as Nigeria does,” he added.

However, the media aide to President Buhari, Garba Shehu, disclosed that the Federal Government is not constructing a rail line from Nigeria linking Kano-Dutse-Maradi into the Niger Republic, as it will only stop at the designated border point.

Maradi is 55km from the Katsina border Town of Jibia.

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Coronavirus

COVID-19 Update in Nigeria

On the 25th of September 2020, 213 new confirmed cases and 2 deaths were recorded in Nigeria

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The spread of novel Corona Virus Disease (COVID-19) in Nigeria continues to record increases as the latest statistics provided by the Nigeria Centre for Disease Control reveal Nigeria now has 58,062 confirmed cases.

On the 25th of September 2020, 213 new confirmed cases and 2 deaths were recorded in Nigeria, having carried out a total daily test of 10,526 samples across the country.

To date, 58,062 cases have been confirmed, 49,606 cases have been discharged and 1,103 deaths have been recorded in 36 states and the Federal Capital Territory. A total of 494,577  tests have been carried out as of September 25th, 2020 compared to 484,051 tests a day earlier.

COVID-19 Case Updates- 25th September 2020,

  • Total Number of Cases – 58,062
  • Total Number Discharged – 49,606
  • Total Deaths – 1,103
  • Total Tests Carried out – 494,577

According to the NCDC, the 213 new cases are reported from 17 states- Lagos (51), Plateau (51), FCT (29), Rivers (18), Ondo (12), Oyo (9), Osun (8), Gombe (7), Ogun (7), Kaduna (5), Enugu (4), Edo (3), Jigawa (3), Kano (3), Benue (1), Delta (1), Sokoto (1).

Meanwhile, the latest numbers bring Lagos state total confirmed cases to 19,174, followed by Abuja (5,644), Plateau (3,373), Oyo (3,248), Edo (2,620), Kaduna (2,389), Rivers (2,305), Delta (1,801), Ogun (1,796), Kano (1,737), Ondo (1,620), Enugu (1,289), Ebonyi (1,038), Kwara (1,028), Abia (881), Gombe (864). Katsina (848), Osun (826),  Borno (741), and Bauchi (692).

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Imo State has recorded 566 cases, Benue (481), Nasarawa (449), Bayelsa (397),  Jigawa (325), Ekiti (317), Akwa Ibom (288), Niger (259), Adamawa (237), Anambra (234), Sokoto (162), Taraba (95), Kebbi (93), Cross River (87), Zamfara (78), Yobe (75), while Kogi state has recorded 5 cases only.

READ ALSO: COVID-19: Western diplomats warn of disease explosion, poor handling by government

Lock Down and Curfew

In a move to combat the spread of the pandemic disease, President Muhammadu Buhari directed the cessation of all movements in Lagos and the FCT for an initial period of 14 days, which took effect from 11 pm on Monday, 30th March 2020.

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The movement restriction, which was extended by another two-weeks period, has been partially put on hold with some businesses commencing operations from May 4. On April 27th, 2020, Nigeria’s President, Muhammadu Buhari declared an overnight curfew from 8 pm to 6 am across the country, as part of new measures to contain the spread of the COVID-19. This comes along with the phased and gradual easing of lockdown measures in FCT, Lagos, and Ogun States, which took effect from Saturday, 2nd May 2020, at 9 am.

On Monday, 29th June 2020 the federal government extended the second phase of the eased lockdown by 4 weeks and approved interstate movement outside curfew hours with effect from July 1, 2020. Also, on Monday 27th July 2020, the federal government extended the second phase of eased lockdown by an additional one week.

On Thursday, 6th August 2020 the federal government through the secretary to the Government of the Federation (SGF) and Chairman of the Presidential Task Force (PTF) on COVID-19 announced the extension of the second phase of eased lockdown by another four (4) weeks.

READ ALSO: Bill Gates says Trump’s WHO funding suspension is dangerous

 

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