So much more than Opay: Welcome to the Operaverse
Back in August 2020 I wrote a piece about the Operaverse. In this newsletter I discuss a few predictions from that very article in light of recent news about Opay & China's tech crackdown
Whew! I’ve been absent and for that I sincerely apologize. August was such a month. A little piece on my laptop malfunctioned rendering it useless. In the days that followed, I discovered just how hard it is to get a laptop fixed quickly in Kenya. Exasperated by the uncertainty and overwhelmed by the mounds of work piling up, I decided to buy a new one. At which point, I found out just how expensive buying imported tech products in Kenya can be. The laptop that I wanted is sold at about a 58% markup at authorized retailers here when compared to its price at similar stores in the US or UK. The shop salesman broke down the markup as a combination of value added tax, sales tax, and of course, his cut.
In light of this, I’d like to take a moment to celebrate entrepreneurs that are making affordable hardware solutions in Kenya. For more on this, read this piece about a young entrepreneur named Muthungu Anthony.
Opera Isn’t Just About Opay
Since I’ve been gone there's been a big moment in the world of China, Africa and technology that I watched and took notes on for this very newsletter.
In late August, Opay, an eWallet and digital payment platform launched by Opera, a once Norwegian software company that is now headed by Chinese tech mogul Zhou Yahui, raised $400 million in new financing led by SoftBank Vision Fund 2. The company is now valued at $2 billion.
Way back in August 2020, I wrote one my first long form piece about the Opera conglomerate and their plans in Africa. I laid out the history behind Opera’s leadership, how Opera was importing Chinese tech strategies to Africa, and raised some important questions about the future of data in Africa.
I was inspired to write this piece after striking up a friendship with an Okash employee (Okash is Opay's automated lending service) who I met in the first few weeks of my arrival to Nairobi from Beijing. She was in charge of collecting debt from loan defaulters on behalf of Okash.
During our chats together, she told me how she got her start in the world of debt collection as the head of a round robin investment group.
It went like this.
She had a WhatsApp group full of friends and acquaintances that would contribute a certain amount of money to a fund. At the end each month a different person from the group would be cashed out with the full amount of the group’s contribution.
“What if one person doesn’t pay?”, I remember asking her.
“I will make sure they do,” she said. And she continued to tell me a few of her methods of getting people to pay what they owe.
Her experience as an informal fund manager landed her a job with OKash. She eventually became one of the top loan reclaimers in her department.
In exchange for sharing her fascinating experience, she only asked that I help her verify her Wechat account (if you register outside of China you need a registered user’s verification) so that she could communicate with manufacturers in China directly to get shipments for her growing online business.
Back when I interviewed her, the Operaverse was just starting to ascend in Africa.
Remember ORide?
In my 2020 article I called the Opera conglomerate ‘an interconnected nexus spanning file sharing, news, digital payments, ride hailing, food delivery and news’.
I felt, and still feel, that they deserved this colorful description. This is not only because I love fanfare, but because, at the time, they were on a campaign to solidify their presence in Africa by any means necessary.
In fact, in 2019, when the conglomerate launched their ride hailing service ORide in Nigeria, it was speculated that they’d poached top employees from Nigerian tech companies including Gokada, another top Nigerian ride-hailing service.
I really like Fakoyejo Olalekan’s article on the topic .
In the piece I wrote about the Operaverse, I also gave a little background on Opay and the strategy behind it referencing case studies from China’s own tech boom. One of my major takeaways was that Opera, through its network of heavy hitting executives, would have no problem acquiring more funds to expand if needed.
Check out that here in the article I wrote titled: The China-Funded Mobile Browser That’s Zeroing in on the African Market.
Another related phenomenon that I spoke about recently was the influx of Chinese tech investment to Africa in light of the difficulties tech companies were having in the West.
You can read it here.
What I didn’t see happening was that a major tech crackdown would break out right on China’s home turf, forcing some Chinese tech companies to curtail their plans for expansion. But, rather than upending this theory, I actually think it’s added to it.
China’s Tech Crackdown (and Africa)
Right now, China is going through a major tech crackdown. It’s fascinating. I’ve been keeping up with it via SupChina.
Read, ‘China’s Big Tech Crackdown’ A Guide, if you’re interested in learning more.
So now, in addition to suspicion from the West, Chinese tech companies are facing regulators at home who are ready to lawdown the law.
Though the crackdown is focused on regulating private tech companies that collect Chinese citizens’ data, it’s also impacting the expansion of Chinese tech companies abroad. So, some tech companies that focus on China as their primary market aren’t doing as well as they have been.
An oft referenced crackdown case is Didi, a rideshare app founded in China in 2012 that has since expanded to over 12 different countries. Despite its global expansion, China is still its highest earning market.
On June 30th, 2021, Didi IPOed in the U.S. raising $4.4 billion by the end of the day. Two days later, the Cyberspace Administration of China (CAC), China’s cybersecurity watchdog, announced that they’d launched an investigation into Didi for data privacy concerns and ordered all Chinese app stores to remove Didi’s app. The result was a 5% drop in Didi’s share price on the day of the announcement and an additional 25% drop the following week.
Betting on the Future aka Africa
Owing to China’s tech crackdown, some Chinese tech companies may not be a safe bet in the short to medium term.
(According to some, this also depends on what sector China’s tech industry they occupy. If you’re interested in learning more about this watch this video)
But, these companies carry with them bang up teams, innovative ideas, and experience gained in one of the world’s most vibrant tech markets. So, in many ways, they’re still super valuable.
Opay is a fantastic example.
Opay is a company whose strategy and leadership oozes Chinese tech industry realness (read the article I wrote for more) AND just so happens to be involved in a growing market that’s going through a fintech boom.
Softbank Vision Fund 2, who led Opay’s new round of financing, is part of the Softbank Group ( a holding company out of Japan), which has invested in Chinese tech companies before with some success (prior to this troublesome crackdown).
In 2019, Softbank Vision Fund (not to be confused with Vision Fund 2) paid $11.8 billion for a 20% stake in Didi. They’ve also invested in Full Truck Alliance, a commercial freight platform out of China.
So, it’s no surprise that Softbank Group would continue to look at Chinese companies, especially those involved in Africa.
Let’s go back to Didi again. Remember! They’ve also received investment from Softbank Group via its Vision Fund.
Right before Didi listed in the US, they entered South Africa during a pandemic in a move that seemed random. But, some speculated that it was an effort to increase the company’s value ahead of their US IPO.
I say this to highlight that it may be harder to scale in China and list in the West, but there’s still a market that’s ready, growing, and full of gaps that need innovative solutions. And that is Africa.
China’s tech boom might not be over. Maybe the smart ones have, and will continue to, shift to the next big thing while investors are watching. My advice to those in the African tech ecosystem is to get ready and start mapping strategies to win the race to the bottom.
You take steps toward this by subscribing to this newsletter and learning about China’s most famous apps and what they’d look like in Africa.
There’s so much more that I could say on this, but now is not the time. I guess you’ll just have to keep reading.
See you next week!!!
Here are some articles referenced in this newsletter:
https://techpoint.africa/2019/09/12/opay-nigeria-poached-execs/
https://nairametrics.com/2019/08/15/is-oride-behind-gokadas-shutdown-of-operation/
https://supchina.com/2021/08/02/chinas-big-tech-crackdown-a-guide/
https://fortune.com/2021/07/09/didi-ipo-stock-data-crackdown-china-wall-street-investors/
https://techcrunch.com/2021/03/29/didi-chuxing-expands-to-south-africa-to-take-on-bolt-and-uber/