The first African tech start-up to list in New York has been performing well on the stock exchange – and MTN in particular has cause to be grateful.
Although shares in Jumia, Africa's largest e-commerce firm, have been trading on the New York stock market for nearly a week, the excitement over the first tech start-up from Africa to float on Wall Street doesn’t seem to have abated yet. Recent reports from South Africa indicate that mobile operator MTN’s shares have risen about 16% so far in April, setting the mobile operator on course for its best monthly performance in almost three years – not least because the value of the mobile operator’s stake in Jumia (estimated at about 30%) nearly tripled in just three days.
Jumia, which operates online fashion retailer Zando in South Africa, listed 13.5 million American depositary receipts at $14.50 each in New York on Friday, April 12. By the close on Tuesday, Jumia’s shares were valued at $43.04, an increase of 197%.
This is good news for MTN’s share profile, especially after the hit it took when Nigeria’s central bank demanded it return $8.1bn in dividends last year.
Jumia itself is performing well in the African market, albeit it is far from profitable at the moment. There’s certainly room for growth (only 1% of retail sales so far take place online in Africa), which a flotation may help to enable. At the moment Jumia, founded in Lagos, Nigeria, by two French entrepreneurs in 2012, operates in 14 countries, including Kenya, Ghana, Algeria, Angola and Senegal, and has around four million customers. Its website sells everything from electronics to clothes. There is also a hotel and flight booking site and a takeaway food delivery platform.
A big selling point for Jumia has been that it accepts mobile money payments across a continent where few people have credit or debit cards. Africa's online retail market remains a tough call but, with Jumia showing it can be done, expect others to find a way to compete (global logistics provider DHL recently launched a competing app allowing consumers in 11 African countries to buy directly from global retailers).
For the moment, however, this is good news for Jumia and other African tech start-ups, and, as long as the stock market price holds up, very good news for MTN.