Ghana’s economic situation has become increasingly worrisome both at home and abroad, with numerous companies announcing their departure from the market.
Despite the country’s abundant natural resources and relatively stable political environment, various economic difficulties have prompted significant players across diverse sectors to exit.
One major factor contributing to this business exodus is the instability of the Ghanaian cedi, which has not only impacted profit margins but has also worsened challenges for companies reliant on imports, further driving up inflation and import costs.
Alongside currency issues, Ghana has faced energy crises, evident in frequent power cuts, known locally as ‘Dumsor,’ and rising utility expenses, which have disrupted production and raised operational costs as companies turn to expensive alternatives like generators.
In light of these economic challenges, numerous prominent companies have opted to halt operations in Ghana, citing reasons ranging from strategic repositioning to unsustainable operating conditions.
Amidst these economic difficulties, Pulse.com.gh has compiled a list of six companies that have closed down due to financial hardships.
Glovo, a well-known delivery service provider, has announced its decision to halt operations in Ghana starting Friday, May 10, 2024.
The announcement, conveyed through a notice to one of its clients, states that Glovo’s official customer app will no longer accept orders from that date onwards.
Glovo cited the need for an “extended period of time” to strengthen its market position and achieve profitability as the rationale behind its decision. The company will redirect its resources to enhance operations in the other 23 countries where it operates.
Despite ending services in Ghana, Glovo has assured its clients that any outstanding payments will be settled in accordance with the company’s terms and conditions, albeit within due time.
Glovo’s entry into the Ghanaian market was part of its broader strategic expansion within Africa. In October 2021, the company invested €25 million ($30 million) to introduce its food delivery services to six African countries, including Ghana.
The Ghanaian launch, which took place in March 2021, was accompanied by a commitment from Glovo’s Co-Founder, Sacha Michaud, who pledged an investment of 3.5 million euros during the same year.
Glovo’s decision to exit Ghana highlights the competitive landscape and challenges faced by delivery service providers in emerging markets. Its departure creates a gap in the local delivery ecosystem, raising questions about potential opportunities for other players to step in.
As Glovo shifts its focus to other markets, stakeholders in Ghana’s delivery sector must assess the implications and adapt their strategies accordingly.
Jumia, the prominent pan-African e-commerce platform, announced the discontinuation of its food delivery service, Jumia Food, effective December 2023.
The decision followed a thorough assessment of prevailing market conditions and economic dynamics across its operational regions, revealing the unsustainable nature of the food delivery business.
Jumia cited the need for strategic realignment, emphasizing the necessity of the decision amidst the challenges posed by the current economic climate in the regions where Jumia Food operated.
As part of its restructuring efforts, the company unveiled plans to facilitate a seamless transition for employees previously involved in the food delivery segment.
These employees are anticipated to be redeployed to support the company’s thriving physical goods operations within the affected countries.
The move comes after a series of financial setbacks for the firm, including a substantial 41 percent year-over-year loss totaling $49.8 million in the fourth quarter (Q4) of 2022.
In response to these challenges, Jumia had previously implemented cost-cutting measures, resulting in the termination of over 900 employees, aimed at optimizing operational efficiency and enhancing financial sustainability.
Jumia’s decision to close its food delivery operations highlights the intricate landscape of e-commerce and food delivery services in Africa, where companies must navigate diverse market dynamics and economic realities.
While the shutdown of Jumia Food marks a strategic shift for the company, it underscores the importance for businesses to adapt to changing market conditions and make strategic decisions to ensure long-term viability and growth.