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China-backed OPay bets big on Nigeria’s fintech opportunities

By Oluwatosin Adeshokan, in Lagos
Posted on Tuesday, 26 November 2019 13:44

REUTERS/Nyancho NwaNri/

Chinese investors are backing a start-up that launched in Nigeria's fintech space in 2018 with $120m, just as MTN readies to enter the mobile money business in the country.

Chinese-backed OPay claims to be recording phenomenal growth in Nigeria, just as South African telecoms giant MTN prepares to enter the mobile-money business there.

After launching in 2018 to bring services to Nigeria’s unbanked, Nigeria-based fintech company OPay raised $120m in November in Series B funding from a group of Chinese investors including Meituan-Dianping, Source Code Capital, IDG Capital, Sequoia China and GSR Ventures.

  • In 2016, the Opera browser and app company, which owns OPay, was acquired by a consortium of Chinese investors for $600m and is looking for new revenue streams.

OPay declared that in December of 2018, it had 3,000 mobile-money agents in Nigeria. In July 2019. that number had grown to 40,000 active agents. Currently, there are 23 commercial banks spread across 5,000 bank branches in Nigeria. OPays agent network is one of the biggest in the country.

OPay’s growth claims have led to experts questioning the numbers. In comparison, “Paga shops,” as they are locally known in reference to the country’s biggest digital-payments company has just a little over 23,000 agents.


December 2017: OPay launches in Kenya after an incubation period by Opera.

February 2018: OPay launches OKash; a quick-loan platform, managed by O-Play Kenya.

August 2018: Opera acquires a controlling stake in PayCom; a Nigerian fintech founded by Telnet Nigeria, launching OPay in Nigeria.

July 2019: Opay raises $50m in a funding round dwarfing many others in the Nigerian tech space.

November 2019: Opay raises $120m Series B funding.

The race is on

This investment shows a race to conquer Nigeria’s fintech space.

  • Visa is in advanced talks to buy a 20% stake in Interswitch, Nigeria’s largest electronic payments company.
  • The $200m deal comes ahead of Interswitch’s potential IPO in London in early 2020.
  • PalmPay, a payment service from China’s Transsion Holdings recently announced a $40m seed funding round.
  • Flutterwave is also a Visa partner, and it has launched a consumer payment product for Africa called GetBarter.

Despite a fixation on cash in Nigeria, OPay claims that it processes $5m worth of transactions daily – a number that is disputed by industry experts.

Diversification strategy

OPay has since diversified, adding new services to its payment platform.

In June, it launched ORide, a bike-hailing service, OBus, a bus transport service, OFood, OWealth and OTrike. Last month, it launched OKash loans to compete in an already saturated digital lending market in Nigeria.

But this latest round of funding by OPay begs the question of what happens if OPay runs out of steam. To achieve its numbers, OPay has been providing its services at a subsidised rate. For a long time, rides on ORide were incentivised with discounts when the wallet option is used. But just like Lyft and Uber are experiencing, free lunches can only last for long.

OBus has taken an indefinite suspension because, according to Opay, they “are currently restrategising to double down on the third-party business model, which enables bus owners and vendors to lease their buses to OBus.”

But according to Eran Feinstein, the CEO of DPO, a pan-African payments service provider based in Kenya, OPay raising money shows that there is a market for the taking. “There is a fear that OPay is growing quickly and might end up going bust like Jumia in Cameroon, but Opera is a company that has been tried and has been tested,” he explains.

Bumpy rides

But OPay’s business operations have not been smooth sailing in Nigeria. In Lagos, ORide riders are frequently harassed by the National Union of Road Transport Workers (NURTW).

An agreement brokered by the Lagos State government on behalf of bike-hailing start-ups and the NURTW introduced a ₦500 ($1.4) daily ticket to allow them to operate anywhere in the state without the fear of harassment.

Oluwatosin Ajani, a Lagos-based economist fears that the unfavourable business conditions in Nigeria might make the investments terrible in the long run:

  • “Jumia in Cameroon seemed like a great idea until it was not and they needed to shut down. Obviously, it is a great chunk of money that has been invested that will need to be recouped, but unfavourable business policies in Nigeria might see investors skip over Nigeria entirely.”

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