In this piece, IMA-ABASI PIUS takes a look at the effects of recent government’s policies on start-ups and how the businesses are thriving
If there is one thing every business owner in Nigeria could agree on, it is the fact that running a business in this part of the world is no child’s play. For many, starting a business in Nigeria could be likened to taking a walk across a long, dark alley without having the slightest clue on what lies ahead.
This obviously, is one of the reasons Nigeria ranks high among the nations with the highest startup failure rate in Africa.
While there appears to be over a thousand and one reasons why most startups fail in Nigeria, experts believe that government policies still ranks top amongst some of the major challenges faced by existing startups in the country. According to Femi Egbesola, the national president, Association of Small Business Owners of Nigeria, the inconsistency of government policies in recent years, has not only limited the success rate of existing startups in the country, but has also stunted the entry rate of new startups into the Nigerian market.
A top management employee at Operapay, who spoke with Financial Street on the condition of anonymity as the newspaper sought to unravel the rippling effects existing government policies could be having on startups and how these businesses have managed to thrive, tried to reveal the immediate blowback the recent ban on motorcycle and tricycle by the Lagos State government had on the ride-hailing giant, and how they devised ways to move past this situation.
According to the source, the government’s decision to ban the operation of commercial motorcycles and tricycles along major roads in Lagos, had a devastating impact on not just the ORide brand, but also on the general populace, as over 5,000 riders operating at that time, lost their source of income as most ORide staffs who made up a large percentage of the total Operapay workforce, were laid off.
“Our recent decision to shut down most of our business units in order to focus more on the financial market was largely influenced by the Lagos State government’s ban on the use of commercial bikes and tricycles along major roads in the state. When this ban took effect in February, we were still trying to push the ORide brand in the other 15 states which our services were available to, but evidently, none of these other states were as profitable as the Lagos market.
“In fact, the immediate economic impact was enormous on the company, because prior to the ban, we basically had about eight to ten thousand bikes sitting in the warehouse, plus the over 5,000 bikes plying the streets of Lagos on a daily basis and raking in huge income for the company. So, you could imagine how devastating it was for us to let go of our major source of income as a result of the ban,” she said.
In her opinion, the company’s decision to move past the current situation and fully make the transition into the Fintech market, was a huge step which was necessary, as they still intend to provide affordable solutions to some of the existing problems faced in the country, regardless of the major setback caused by the ban and recent lockdown.
The explained further, “Right now, we are looking to capitalise on the financial challenges faced in the country. In the world today, we have moved past a point where our daily business transactions are dictated by the amount of cash we have at hand. Opay intends to disrupt the conventional way value is being transferred from one person to another, by creating a means through which everyone can enjoy how their daily business transactions are done.
“During the lockdown, we noticed that most of our financial services were really thriving, especially the QR Code payment medium. Recently, we’ve been getting more requests from merchants who intend to integrate this method of payment into their businesses and we are looking to take advantage of that, now that the lockdown has been eased.”
In an attempt to get more information about how other related startups are faring even after the ban, Financial Street tried to speak with Max NG and Gokada all efforts proved abortive. In the case of Max NG, an arrangement to speak with a representative was later cancelled as the company said it was no longer interested in commenting on the issue.
The year 2020 has been a year filled with many twist and turns for startups across the country, as they have had to deal with challenges which in various ways, have posed great threat to their existence. In the midst of the crisis, the persistence of the startups to consistently keep pace with the stifling Nigerian market has proven to be instrumental in their fight for survival.
However, for others who seem to be suffering severe setbacks as a result of some government policies which might be affecting their means of operation in various ways, there is an immediate need to go back to the drawing board, if they intend to remain in business and be successful.