For the first time ever, it looks like the mobility market for startups in Nigeria is getting clearer for investors and future mobility startup founders. Opera’s Africa-focused fintech startup, Opay, is giving the first hint about this reality. After several insinuations in the media about Opay’s troubled Super App, the startup has finally come clear on it, declaring that “some of our business units including the ride-hailing services: ORide, OCar as well as our logistics service OExpress will be put on pause.” 

For a startup that has secured more than $170 million in funding — $120 million in November, 2019 to add to its $50 million series A round which it raised in June of 2019, backed by Chinese investors— to confront its Nigerian market, this looks like the beginning of an uncertain journey to shore up investors’ confidence, and hopefully not its last throes of death, especially as the startup had poured enormous resources into asset and labour acquisitions and incurred heavy operational costs on its ride-hailing units. 

Important to note, however, is the fact that Opay ’s decision to shut down its mobility business units in Nigeria appears rather record-breaking: the startup barely launched its ride-hailing services a year ago; and among the major locally made players in the Nigerian ride-hailing ecosystem — Max.ng; Gokada — it is the first and fastest to shut down its mobility operations, even though it is 12 times more funded than the above-listed mobility startups combined.

“This is due to the harsh business conditions which have affected many Nigerian companies, including ours, during this COVID-19 pandemic, the lockdown, and government ban,” the startup noted in a statement.

“Globally, ride-sharing businesses have been heavily impacted by the pandemic. But several months ago, foreseeing this issue, Opay had already taken preemptive steps to restructure our business focus away from rides. It is worthy to note that this final restructuring has minimal impact on Opay as a whole business,” it added.

The picture below charts the perfect story of Opay’s venture into mobility business in Nigeria.

Read also: Nigeria’s Largest City Lagos Bans Bikes On Its Highways. Here Is What It Means For Bike-hailing Startups

In analysing the possible reasons for the suspension of Opay ’s mobility operations in Nigeria, it is important to note that two factors stand out the most — government ban and COVID-19. While ORide’s launch was assisted by the $50 million funding Opay secured from investors in the second quarter of 2019, Opay was so inspired by the success of its ORide that in the fourth quarter of 2019, it added OCar to its mobility vertical and supported it with a new $120 million fund-raise. Thus within 5 months, the fintech startup had moved twice on the same vertical. However, 8 months after the startup last spread those wings, things began to turn south, signalling that COVID-19 could have played a bigger role in its latest decision, and that the Lagos state government’s policy to ban commercial bike activities on its major highways might have dampened the spirit of both the startup and its investors about committing more funds in the short term in those areas.

“Opay will continue to invest in and grow in the eCommerce space, aligning its customer and business eCommerce units which will continue to operate and grow. We believe a financial platform coupled with goods’ platform will form the future of Nigeria’s technology development,’’ Opay further noted in the statement.

For curious investors and founders in the Nigerian mobility space, Opay’s decision to shut down its operations is only one side of a coin; the success of the remaining players in the ecosystem will help to properly shape the story of innovative disruptions within the African mobility ecosystem as far as Nigeria, Africa’s most populous country, is concerned.

However, one thing still remains clear from all these: it is yet unclear if any African startup can make it to the super app level. For now, it looks like Opay would be sticking to its long-time friend — fintech — which has been in operation in Nigeria since 2018. That is, it will be doing what it knows how best to do, even if it means moving a million times on that vertical. Doing this would perhaps position it strategically to mine the opportunities abundant in the Nigerian financial industry, and possibly become a category king in that sector.

“It is important to clarify that ride-sharing businesses have been only one part, and not a major part of Opay’s diversified business in Nigeria,” the startup noted in the statement.

“During the pandemic, we have seen continued demand for our offline mobile agency, and online digital payment, which remain the core of our business. From January to April, 2020 for example, we witnessed a 44% growth of offline and online transaction value in the midst of the pandemic and lockdown,” it further added.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer