After months of denials, JUMIA Group has finally admitted to some internal fraud related to its sales and orders.
This relates to what JUMIA says were orders that were placed on the e-commerce platform in Nigeria only to be later cancelled. As a result, JUMIA says it has laid off some of its employees and JForce sales staff that were involved in the fraud.
What is curious is that given that the fraud amounted to approximately $18 million, JUMIA so far says it was not aware of it until it conducted an investigation leading up to the Q2 earnings call on 21 August 2019. As a result, at some point during trading on 21 August 2019, JUMIA stock fell as much as 17,4%.
“Now, before I wrap up, I would like to give you a bit of context and color to the sales practice review, including in our release, when we became aware of allegations concerning improper sales practices, we started a review. This was disclosed in our prospectus and we are now proactively giving you an update. This is part of our continued effort to be very transparent with the market. As you can read, so far, we’re talking about isolated instances that had only a modest GMV impact and virtually no impact on our financial statements. We are constantly reviewing and improving our systems and controls to help us avoid such instances in the future,” said Sacha Poignonnec, Co-Founder and Co-Chief Executive Officer at JUMIA, during the Q2 earnings conference call.