Bolt Now Pay Later ⚡️

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Here's the tour plan for today 🧭

• Bolt's new Ride Now Pay Later feature launches in Nigeria ⚡️

• Tech Roundup

• Tech Twitter

Alright, lets get this tour started 🦍

Ride Now Pay Later

Last week, ride-sharing company Bolt partnered with CredPal to launch a ‘ride now pay later’ service in Nigeria.

It will let riders hop on at no cost and pay off their trips at the end of the month.

It’s a move that has been called ‘mobility innovation’ - and could earn Bolt more market share in Africa’s mobility space.

But does buy now pay later work in Africa? Let’s dig in.

What’s a Bolt?

Bolt is one of the world’s biggest ride-sharing companies, based in Estonia and valued at $8.4 billion.

Now, not everyone is acquainted with Bolt.

I took my first Bolt at 5am when I touched down at Nairobi Airport.

My driver had to stop for fuel (which he asked me to get for him).

When I did, he tried to pay me back with chewing tobacco - which I politely declined. It was 5:30am.

But I was most surprised by how cheap it was - $10 USD for a 45-minute trip from the airport.

In Australia that would cost about $80. And it wouldn’t include chewing tobacco to make me feel better about it.

Bolt started in Europe but has been honing in on Africa, building a company tailored to the continent.

To the point that they’re skipping a US expansion altogether.

CEO Markus Villig commented:

‘The growth opportunity for us as a company is much bigger in Africa, than what it would be in a developed country where everybody has cars and public transport is available.'

And he’s right. People across Africa need to move from place to place. But they have two big barriers to easy movement:

1. Cars are expensive to buy upfront and even used vehicles are out of reach for most of Africa’s population.

2. Public transport infrastructure is low quality and ineffective.

Africa's mobility space is one of the biggest opportunities for disruption with tech, and ride-hailing revenue on the continent in 2020 was $2.5 billion.

And with opportunity comes the opportunistic.

We’ve seen global companies like Bolt and Uber launch in Africa.

In May last year, Uber celebrated trip number 1 Billion in Africa.

And they are gunning for more growth, expanding to another 20 cities in Africa since then.

Local players have also taken swings in their countries.

RIDE is the market leader in Ethiopia, and Yego dominates Rwanda’s ride-sharing market.

But on a continent with 54 countries, 12% of ride-hailing revenue (~$300 million) comes from just one country. Guess which one?

Nigeria is home to 15% of Africa’s ride-hailing users.

Most of this is concentrated in Africa’s ‘New York’ - Lagos.

Lagos’ traffic situation is one you might experience in a nightmare.

If you don’t nail the timing, expect to be caught for 3 hours moving just 10 kilometers.

And in a city with poor public transport the easiest option is to call a Bolt or Uber to move from place to place.

But the trips add up.

In a Quartz article, a young professional spent $200 USD in one month on Bolt and Uber - that’s 3 times the national minimum wage.

Bolt Now Pay Later - Innovation or just risky?

That’s where Bolt’s Ride Now Pay Later might come in.

In Nigeria, only 7 out of 10 people have access to credit.

Ride Now Pay Later means that you can guarantee your rides for the month.

Through Credpal, users get a credit limit and can pay off their balance - usually in sync with their payday.

Bolt’s move to let users pay later could be an answer to pricing affordability, and guarantee mobility for their users.

And it’s not the first time we’ve seen this a rideshare company do this. Other mobility services - like Ola - integrated this into their app in India in 2019.

While some are praising this move - calling it fintech innovation - others are critical.

I fall into the critical camp. Why?

Buy Now Pay Later doesn’t work in stronger markets with higher GDP per capita.

Let’s look at the Australian company, Afterpay.

Afterpay is the leading Buy Now Pay Later company in Australia, acquired by Block (formerly Square) for $27 Billion.

It might just be one of the best timed acquisitions ever.

Now, one in five Afterpay users in Australia are missing payments, and 15% of users missing payments are using loans to make their repayments..

Afterpay is now valued at $14 Billion and lost $500 million in the first half of 2022 financial year.

Launching the same product in Nigeria (with a GDP per capita of $2,000) does not sound like a smart move.

Letting consumers with lower earning power access credit doesn't sound like innovation to me. It sounds risky.

Instead, let’s look at what mobility innovation does look like.

Pay As You Drive

In Kenya, Matatus are minibuses that are used as share taxis.

They’re everywhere. And 70% of commuters in Nairobi (Kenya’s capital city) use them to get around.

You can hop on for just 50 cents a trip.

BasiGo is a startup introducing electric buses in Kenya.

Bus drivers’ biggest expenses are vehicle costs and fuel.

Electric buses neutralize fuel costs.

But electric buses are more expensive than diesel buses.

Which is why BasiGo launched a ‘pay as you drive’ model.

Drivers pay 17c per kilometer for the bus, which includes battery costs, charging costs, and maintenance.

This brings costs down for drivers and keep transport prices cheap for passengers.

If they can pull it off, it will be one of Africa’s most valuable companies.

I think Bolt and Credpal will find themselves in trouble replicating a buy now pay later model in Africa and expecting better results.

What do you think? Am I plain wrong, or do you think I’m on the money? Let me know here on Linkedin.

Tech Roundup

• Kenya's High Court has asked the Central Bank and Safaricom to stop charging people for transferring money between their mobile wallets and bank accounts. During the COVID pandemic, the charges were lowered by almost half to help people use less cash and use mobile money instead.

• Meta’s content moderation partner for Africa, Sama, has closed their content moderation arm in Kenya and dropped their contract with Meta. It comes after a former content moderator accused the two companies of forced labor and union busting.

• Ethiopia's businesses lost $145.8 million from internet blackouts in Tigray in 2021 due to the recently concluded civil war. Other African countries also lost millions in economic value from restricted internet access.

Tech Twitter

Just to prove my point on Lagos traffic..

I bet they all left the house at the same time too..

And one serious one.

A friend of the newsletter, Emeka, wrote an incredible article on Diaspora. Read it here.

And that's a wrap!

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Catch you soon!

👋🏾 Caleb