Jumia, one of the top e-commerce giants in Africa, may have run into yet another storm, this time, with Nokia, the Finland headquartered phone maker, alleging that Jumia was involved in the sales and distribution of thousands of its cloned phones, Political Economist NG can authoritatively report.

Investigation showed that over 60,000 units of fake Nokia 105 were traced to Jumia which the e-commerce company had already distributed to its outlets in Africa to grow their sales and number.

Nokia 105 is a marque product from Nokia and it is highly sought after in Africa. Since the relaunch of Nokia phones, some of its products have been targeted by crooks who clone them and sell at lower prices to beat competition.

Checks at Nokia also showed that fake Nokia 3310, the rave of smartphones from Nokia and their most sold brand before it suffered market eclipse, had popped up in China soon after it was relaunched in 2017. This raised eyebrows among techies with suspicion of the existence of other fake (Cloned) phones from the Nokia stable in the marketplace.

Political Economist NG reports that fake Nokia 105 phones have surreptitiously found their way into some markets in Asia and Africa. Investigation showed that Africa’s Jumia may have become one of the distribution channels of these fake Nokia phones.

However, it was not clear if authorities at Jumia were aware that the phones were cloned versions or not.

Investigations showed that Nokia is already considering sanctions for channels found to have been used to distribute and sell the cloned versions of its phones. China has consistently remained the hatchery of fake phones which are usually sold for cheap, far cheaper than its original versions.

There are strong indications that Nokia may sanction Jumia for what it considered unethical business practices.

This is happening just as Jumia co-founders, Jeremy Hodara and Sacha Poignonnec, have  stepped down effective November 7 as co-CEOs, according to a statement seen by Political Economist NG.

The two founders have been at the helm of affairs at Jumia and have nurtured its continent-wide growth, taking it to 14 countries before it exited operations in 3 limiting its operations currently to 11 countries.

Jumia has quickly appointed Francis Dufay, who previously held the CEO role at one of Jumia’s  Ivory Coast outpost, to act as CEO, the company’s Supervisory Board said in the statement. Dufay joined Jumia since 2014, and has held multiple senior leadership roles, including executive VP Africa.

Jumia is Africa’s only publicly traded company on the NYSE for over a decade; but that listing has brought more harm to Jumia and has hurt its revenue takings and reputation.

Political Economist NG recalls that on or about April 12, 2019, Jumia sold 13.5 million shares of stock in its initial public offering (the “IPO”), at $14.50 per share raising $196 million in new capital at NYSE.

Trouble started, however,  when on May 9, 2019, Citron Research, a respected firm with a history of in depth research in stock markets and investments, published a report accusing Jumia of overstating certain financial metrics in its April 2019 IPO prospectus and omitting adverse information about the number of returned, undelivered, or canceled orders from the prospectus.

On the strength of this information, Jumia’s share price fell $6.22 per share, approximately 18.8%, to close at $26.89 on May 9, 2019.

Kirby McInerney LLP had put out a notice to concerned shareholders to fill out a contact form which it intends to aggregate to discuss the rights or interests of the shareholders with respect to the matter at no cost to the investors

Kirby McInerney has a rich history of litigation on behalf of investors in securities. The firm’s efforts on behalf of shareholders in securities litigation have resulted in recoveries totaling billions of dollars.

The Citron Research report alleged that it has the “smoking gun” that shows why Jumia equity is “worthless.”

“In 18 years of publishing, Citron has never seen such an obvious fraud as Jumia,” the report said.

A report by marketwatch.com, quoted Citron as dismissing Jumia as an e-commerce fraud which came into the market claiming what it is not.

The report said most of the claims of Jumia that allowed it into the global stock market were outright falsehood including claims of efficiency in delivery, customer numbers and quality of service and products.

Citron further highlighted what it calls “material discrepancies” between the confidential investor presentation from October 2018 and what the company told the Securities Exchange Commission of the United States.

The differences include: inflating active customer and active merchant numbers by 20% to 30%; and that 41% of orders were returned, not delivered or canceled.

Among the risk factors highlighted in the IPO prospectus was the fact that many deliveries failed. Jumia JMIA, -7.59%   said that 14.4% of GMV in 2018 either failed to deliver or was returned.

“Assuming 41% of orders were returned, not delivered, or canceled in 2018, this implies that almost 30% of orders were canceled in 2018,” Citron wrote.

“Since Jumia primarily sells consumer electronics, which should not have this high of a cancellation rate, it reeks of fraud,” the report said.