African Online Retailer Jumia’s Q4 Losses Narrow On Cost Savings

African e-commerce firm Jumia Technologies said on Thursday that cost savings had helped it reduce fourth quarter losses by 30 per cen from a year earlier, with a further sharp drop expected this year.

Jumia, the first Africa-focused tech start-up to list on the New York Stock Exchange, reported an adjusted loss before interest, tax, depreciation and amortisation of $49.2 million in the three months ended Dec.31 from $70 million in the same period of 2021.

Chief executive Francis Dufay said in light of the encouraging signs that Jumia’s cost cutting initiatives were starting to bear fruit, it expects a sharp reduction in 2023’s annual adjusted EBITDA loss to $100-120 million from $207 million in 2022.

The group cut more than 900 jobs in the fourth quarter and also significantly reduced its presence in Dubai, relocating most of its remaining staff to its African offices.

“We expect these headcount reductions to allow us to save over 30 per cent in monthly staff costs starting from March 2023, as compared to the October 2022 staff cost baseline,” Jumia said.

It also significantly reduced its sales and advertising expenditure, by 41 per cent year on year. While group revenue rose by 7.1 per cent to $66.5 million in the quarter, its marketplace active consumers fell by 15 per cent to 3.2 million as rising inflation squeezed consumer spending while affecting sellers’ ability to secure supply.

Nigerian T-Bills yield spikes strongly to 3.7%

The average yield on Nigerian Treasury bills spiked strongly due to selloffs across tenored in the secondary market amidst a slowdown in financial system liquidity at a time when inflation worries in the local economy increased to 21.82 per cent.

In the money market, there was a decline in liquidity level in the financial system as a result of funding demand, pushing short-term benchmark rates upward into the double-digit range.

Available statistics shows that the open repo rate (OPR) and the overnight lending rate (OVN), ballooned to 16.13 per cent (from 10.75%) and 16.63% (from 11.20%), respectively.

The strain on financial market liquidity position was driven by the settlement of the February Federal government of Nigeria (FGN) primary market bond auction worth N770.56 billion, according to fixed income analysts notes.

As liquidity dropped, investors began to dump their treasury holdings to raise cash and rebalance portfolio positions at the time when the statistics office announced a surge in the consumer price index to 21.82 per cent for the month of January.

With a shift in trading patterns, the Nigerian Treasury Bills secondary market traded with bearish sentiments, as the average yield expanded by 206 basis points to 3.7 cent.

Across the curve, the average yield expanded at the short (+142bps), mid (+322bps), and long (+200bps) segments following selloffs of the 85-day to maturity (+272bps), 113-day to maturity (+366bps) and 344-day to maturity (+393bps) bills, respectively, according to Cordros Capital.