Andrew Left, Founder of Citron Research, has released a report stating that they have a "smoking gun" which proves that JUMIA is a fraud and that the stock is worthless. JUMIA shares, at the time of publishing, were down 20% on the day on the New York Stock Exchange (NYSE).

The e-commerce company which operates across several African markets and is popularly (or infamously, depending who you ask) known as the "Amazon of Africa", listed on the NYSE earlier in 2019 to much fanfare and a $1 billion valuation.

"In order to raise more money from investors, JUMIA inflated its active consumers and active merchants figures by 20-30% (FRAUD). The most disturbing disclosure that JUMIA removed from its F-1 filing was that 41% of orders were returned, not delivered, or cancelled. This was previously disclosed in the Company’s October 2018 confidential investor presentation. This number is so alarming that is screams fraudulent activities. Instead, JUMIA disclosed that 'orders accounting for 14.4% of our GMV were either failed deliveries or returned by our consumers' in 2018. Assuming 41% of orders were returned, not delivered, or cancelled in 2018, this implies that almost 30% of orders were cancelled in 2018. Since Jumia primarily sells consumer electronics, which should not have this high of a cancellation rate, it wreaks of fraud," writes Left in the report.

Discrepancies in JUMIA's filings. Citron Research.

The African unicorn

To date, at least as far as Africa's technology startup ecosystem is concerned, the focus has been largely on whether JUMIA is really African or not and not much has been reported on its actual business. However, In the iAfrikan Daily Brief titled "Startup Funding Ponzi Scheme" on 9 May 2019, I had noted how JUMIA, with no buyers in sight and only one possible exit option available (i.e. list on the NYSE), was akin to a Ponzi scheme given that it has been struggling for years to make it across Africa.

Left's report highlights "material discrepancies" between JUMIA's confidential investor presentation from October 2018 and what the e-commerce company reported to America's Securities Exchange Commission (SEC).

These discrepancies include:

Inflating active customer and active merchant numbers by 20% to 30%.

Not reporting that 41% of orders were returned, not delivered or canceled.

"JUMIA pays commissions to a sales force of Nigerians that place orders for other people using their ID numbers, Jforce Consultants. Sales through Jforce Consultants account for 30-40% of net merchandise value for JUMIA. Last month, JUMIA amended its F-1 and added language that JUMIA 'recently received information alleging that some of our independent sales consultants, members of our JForce program in Nigeria, may have engaged in fraudulent activities.' This language was missing from the original F-1 from just a month earlier."

This is a developing story and we have reached out to all parties involved and will update it as new information becomes available.