OPay may be running at a 70% loss on investors funds
Opera Market shares have declined rapidly lately; The company’s share currently stands at 30% since its IPO
Prior to its IPO, Opera’s ownership was transferred to a Chinese Investor group, and its current CEO has been reportedly involved several shady transactions– Inappropriate funding of external businesses– since appointment.
- Poor Owner-Investor communication as well as lack of transparency.
- Major stake in Loan Businesses which are mostly operated through apps offered on Google Play Store; as such, violates a lot of terms and conditions on the platform.
- Unfavorable Government decision- State Law/Uncertain market
Africa and Nigeria especially have been a “final destination’ for Opera’s investment lately, and there seems to be a lot of ‘untold’ truth about the Chinese company’s most recent activities.
According to a recent report by Hiddenburg- a research website, Opera was found guilty of several misconducts in its operations across the board. That is aside from other crises that could be of great disadvantage for the company in its new market- Nigeria.
The Opera-backed OPay has been subjected to a lot of checks lately after the report that– the platform could be possibly involved in what is known to be exploitative loans– broke out on the internet. According to the original reporter of the new findings, Hindenburg research, the following Opera lending apps- OPay’s Okash (Nigeria), OPesa (Kenya), and CashBean (India) has been guilty of offering predatory loans with deceptive or unclear terms.
While the report also revealed a record of illegal lending practices in the U.S. following the recent purchase of the company by Chinese-based investors, the same allegation could be the case with what is happening in the Africa region now as well. Opera’s lending apps which are been deployed via Google Play Store may have been violating a lot of policy on the platform including transparency.
The lending apps are reported to be deploying ”deceptive ‘bait and switch’ tactics to lure in borrowers and charging egregious interest rates ranging from ~365-876%.”
“Most of the Opera’s lending business is operated through apps offered on Google’s Play Store. In August, Google tightened rules to curtail predatory lending and, as a result, Opera’s apps are now in black and white violation of numerous Google rules.” the report read further.
Findings also revealed that the apps’ claim to offer a maximum annual percentage rate (APR) of 33% or less is not true as the actual percentage rate charged goes as high as 438% in the case of OPesa, while that of Okash and CashBean are also not excluded in the misleading.
While the interest rate is not the only misleading factor here, the company also spells out a repayment period between 60 to 90 days which– although is in line with Google’s 60-days minimum– is contrary to the actual duration which is no longer than 29-days (for OKash), and 15-days in some cases, although the time duration varies across the respective platforms.
According to a reliable source, the research into the current situation has been prompted by the recent dip in the company’s market share from 5% to 2%, as well as a massive default in its lending business amounting to about 50% in the non-refunded revenue.
In an attempt to protect its users from predatory loans, Google Back in August 2019, published a new set of rules to guide lending apps operation on the Play Store, however, a lot are still violating some of the most important rules by tweaking their product description to mislead the audience.
If at the end of the day, Opera is found guilty of the said offense, then just maybe the company may have to face numerous lawsuits from individuals who have been victimized, and most likely get kicked off the PlayStore platform except for otherwise reason- a possible readjustment in its terms and policy. If eventually the unexpected happens, Opera will also be at risk of forfeiting a greater share of the revenue generated from short-term loan business which currently accounts for more than 42% of the company’s revenue.