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Timely settlement gives Jumia an edge in Uganda’s e-commerce

Timothy Mugume, Jumia Food Uganda country lead

Timothy Mugume, Jumia Food Uganda country lead

While most Ugandan businesses are used to physical cash payments, there is a gradual shift to electronic commerce that has forced them to move to digital payment channels, which in most cases are done through service providers that do not settle the payments immediately.

Given that majority of Ugandan businesses are micro or small enterprises, operating with small capital, failure to settle their payments on time puts them in cash-flow constraints that could lead to collapse.

Jumia, one of Africa’s biggest platforms with integrated logistics and digital payments services, seems to have understood this principle very well and taken advantage of the market as Uganda’s most preferred e-commerce platform.

According to Timothy Mugume, the Jumia Food Uganda country lead, the firm ensures that vendors are settled in time as per the agreed timelines, which is a key financial inclusion best practice.

“It is important that we follow best practices because most of these businesses do not have a lot of capital and we are cognizant of this; that is why we have flexible payment terms depending on the agreements signed,” Mugume explains.

He urges all market players to respect the same-day settlement principle, given that the ecosystem is heavily reliant on cash flows.

“This is a cash flow business and we must play our role as well; we make it easy for the customers to pay through our various payment channels; we should also settle with our vendors in a timely manner.” he said. 

Even in the lockdown, Jumia has remained relevant in the market by enabling customers have access to whatever goods they want even when they are locked in their homes. The e-commerce platform offers a range of services from food deliveries to groceries, electronics and appliances and pharmaceuticals to customers at affordable rates.

“From the onset of the first lockdown in 2020, we put our partners – vendors and customers – at the forefront because their business continuity was paramount to us. Unfortunately, some businesses have since closed,” Mugume says.

Jumia, according to Mugume, is especially passionate about supporting women-led businesses. In partnership with organizations like the Kampala Capital City Authority and UNDP, the firm has trained women entrepreneurs in various skills including digital and business management, as well as undertaking initiatives that level the playing ground for them to compete effectively.

40-Days 40-FinTechs

Jumia is among the firms participating in the ongoing second edition of the 40-Days 40-FinTechs initiative, organized by HiPipo in partnership with Crosslake Technologies, ModusBox and Mojaloop Foundation, and sponsored by the Gates Foundation.

Mugume commended HiPipo for the initiative, saying that it has helped highlight tech innovations in the country and also created a platform to showcase leading innovations in Uganda and across the continent.

"Fintech and innovation is what we need to pull Uganda out of the challenges of slow economic growth. A platform like this provided by HiPipo highlighting the different ideas does not only stand as a beacon to bring hope to the economy but also highlights this information and shares it with interested parties, which is good for the ecosystem,” Mugume says.

The HiPipo CEO Innocent Kawooya notes that fintech in Africa offers attractive opportunities, adding that investors are rightfully picking interest in various startups offering a plethora of services, ranging from payments and lending, remittances and cross-border transfers, among others.

“Each of these services solves unique sets of challenges. For example; with cross-border payments comes the opportunity to erase the outrageous rates and bureaucratic bottlenecks that stymie transactions and thus trade among African countries,” Kawooya says.

He adds that the 40-Days 40-FinTechs initiative seeks to boost the African FinTech ecosystem to enable innovators enjoy sustainable profitability to help them design and deploy affordable and inclusive financial services for the poor.

Jumia also implements other financial inclusion best practices of transparency and know-your-customer (KYC), among others.

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