Glovo’s shutdown sparks concerns among stakeholders

Glovo, a prominent food delivery platform, has announced its decision to shut down operations in Ghana, effective May 10, 2024.

The company has invested over $3 million into the Ghanaian market over the past two years to expand its operations.

However, citing profitability challenges specific to the Ghanaian market, Glovo has opted for a strategic pivot, redirecting resources to other African markets such as Morocco, Uganda, Kenya, and Nigeria.

The closure of Glovo in Ghana highlights the broader challenges faced by online businesses in the country. Jumia, another significant player, ceased its food delivery operations in the nation last year.

Despite substantial investments, Jumia could not overcome the operational difficulties in the Ghanaian market.

The closure of Google Trader about 14 years ago further emphasizes the challenges faced by tech ventures in the country.

Following the announcement, delivery riders and customers have expressed concerns about the potential impact on employment and inconvenience caused by the loss of these services.

Some restaurants also shared their concerns about how this decision might affect their operations.

A rider indicated, “Some of the riders have only the Glovo app and that’s what they’re based on so while some have Bolt, Glovo and Yango so what it means is that as Glovo is folding in Ghana, it will cause a lot of unemployment in Ghana because the youth depend on it to survive and feed their families.”

A Customer also added, “If they leave Ghana, it will affect the rate of employment and at the same time inconvenience customers who purchase such services. If the government can find a way to at least make it 50/50, I’m sure they are leaving because of the taxation, the VAT they are getting and they are not getting much income from this country. For me, it’ll affect goods and services.”

Meanwhile, a technology analyst, Maximus Ametorgoh, suggested that the shutdown may not solely be due to the economic situation but could also be attributed to the business model not favouring the company in the Ghanaian market.

According to him, the high cost of operations and competition in the country might have contributed to Glovo’s decision to exit the market.

“Net profitability and difficult market and that one it’s not just the economy, it may be a cultural structure that doesn’t favour their model. The cost of operations may be higher because of competition.

“Because if you have a lot of competitors in the state and you have people that are signing up for your service and they are not delivering on time, customers will tell others and rather turn to other services. So for me, profitability doesn’t mean, as in the economic situation but the business modelling that didn’t favour them.”

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