Jumia Kenya has revealed that one of its employees stole over $150,000 (Sh21.2 million) by manipulating vendor payment records, highlighting the platform’s vulnerability to fraud.
The firm, which has been losing money in the Kenyan market, says it detected the scam in September last year, according to the most recent disclosures to US regulators.
“In September 2022, we discovered that an employee in Kenya manipulated certain vendor payment entries and misappropriated payments in 2021 and 2022,” Berlin-based Jumia Technologies AG said in the filing.
Jumia’s e-commerce platform allows vendors to list goods while sellers are able to order and pay before or on delivery.
The firm says it is a challenge to anticipate, detect and address fraudulent activities given the high number of participants on its platform and the fragmentation of the business.
“While the financial impact, in this case, was not material (below $150,000), any such illegal, fraudulent or collusive activities by our employees could have a material adverse effect on our business, financial condition, results of operations and prospects and could subject us to liability or negative publicity.”
Jumia Technologies AG, the trading group under which Jumia Kenya falls, lists failure to deal effectively with any fraud perpetrated and fictitious transactions conducted on its platform as some of the key risks that could harm its business.
Fraud is a growing concern for many companies in Kenya, with technology having come with its own share of challenges as much as it has created opportunities such as managing costs and faster service delivery.
