Glovo plans to double investment in Africa in next 12 months

Jumia Technologies AG

07/09/2021 07:00

By Joan Faus
    BARCELONA, Sept 7 (Reuters) - Spanish delivery app Glovo is
expanding its operations in Africa, its leading region for
growth, and plans to double its existing investment there to 50
million euros ($59.3 million) over the next 12 months, its
co-founder said. 
    Glovo's overall revenues have doubled in the past six
months, said Sacha Michaud, who is also vice-president of public
affairs.
    "Africa is a massive opportunity, (and) is going to be a key
part of Glovo's business going forward," Michaud said. "We have
been growing very well there and we believe we are in a position
to lead the market."
    Glovo started operating in Nigeria around six weeks ago, in
the business capital Lagos. It plans to enter Tunisia in October
through a service in the capital Tunis, and last month expanded
to a second city in Ghana, Tema.  
    Nigeria, with a population of around 200 million, is the
largest of the 23 countries in which the Barcelona-based company
has a presence. Glovo is the market leader in 80% of the
countries in which it operates, Michaud said. 
    Glovo plans to operate in around 30 countries within a year,
with most new openings in Africa, where it is now to be found in
six countries, he said, including Morocco, Uganda, Kenya and
Ivory Coast.  
    Michaud said revenue growth has been fuelled by a steady
rise in orders, with its quick grocery service being its
fastest-growing unit. 
    
    CHALLENGES
    The company is still making overall net losses, though it is
operationally profitable in some markets, such as Southern
Europe, he added.
    Executives are still considering taking Glovo public within
three years, he said, while stressing it wants to remain
independent, and currently has a solid cash position after
raising 450 million euros in April.
    Michaud said he was not phased by weak infrastructure and
the unpredictable regulatory environment in countries like
Nigeria, insisting Glovo was in it for the long haul and that it
hands autonomy to its local managers. 
    With food and drinks delivery service Jumia Foods - a unit
of New York-listed e-commerce platform Jumia Technologies
 4JMAy.F  - as one of its main competitors in Africa, Michaud
said he was confident Glovo could lead the market early on in
Nigeria thanks to its multi-category approach.
    Grocery sales account for half of its business in some
African countries, he said.
    Were the bet on Africa eventually to turn sour, the company
would not rule out exiting the region as it did in Latin America
last year, when it sold its operations to Delivery Hero
 DHER.DE  - which owns a 37% stake in Glovo - for up to 230
million euros.
    "If the market is not working or we don't think it fits into
the strategy, then we will make the right decision," Michaud
said.
 ($1 = 0.8425 euros)

 (Reporting by Joan Faus in Barcelona; Additional reporting by
Libby George in Lagos; Editing by Inti Landauro and Jan Harvey)
 ((joan.faus@thomsonreuters.com;))