Jumia Kenya faced a significant financial loss of $150,000 due to an unfortunate incident involving an employee who manipulated vendor payment records, as revealed in a filing by Jumia Technologies AG in May 2023.
The company discovered the fraud in September 2022 and promptly took action. The Jumia Kenya employee faces punishment.
The eCommerce platform, which operates under Jumia Technologies AG, acknowledges the risks associated with fraud and fictitious transactions on its platform.
It can be challenging to detect and address fraudulent activities, especially given the industry’s fragmentation and the large number of users.
Although the financial impact of this specific incident was not substantial, amounting to less than $150,000, Jumia Kenya recognizes that any similar illegal, fraudulent, or collusive actions by its employees could severely impact its operations, finances, and overall prospects. Such activities could also expose the company to legal risks and adverse publicity.
Fraud: A Pressing Issue Not Only in Jumia Kenya Employee Fraud Case
Fraud is becoming a pressing issue for companies in Kenya amid the opportunities and challenges brought by technology.
Safaricom recently fired 33 employees for fraud-related offenses, a notable increase from the previous year’s 24 dismissals.
I&M Group’s Rwanda unit experienced a loss of $10.3 million (Sh1.46 billion) due to fraudulent customer withdrawals within three months, prompting investigations to recover the amount.
Similarly, Absa Bank Kenya reported losing Sh107.7 million to fraud in the last year but managed to recover Sh59.1 million. They also successfully stopped fraud totaling Sh428.5 million during the same period.
The financial sector in Kenya faces significant challenges, with fraud evolving rapidly alongside the growing preference for digital solutions among customers, according to Absa.
Jumia, operating in 23 African countries, including Kenya, is also affected by losses from fraud. Despite its widespread presence, the company has yet to achieve profitability, posting a substantial $238.3 million loss (Sh33.8 billion) last year, including Sh12.3 billion from Kenya alone.
Jumia Kenya has experienced other instances of financial loss in the past, such as consumer cyber fraud and robbery, resulting in significant amounts being lost.
These incidents underscore the importance of implementing effective measures to combat fraud and protect the interests of both the company and its customers.
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