Nigerian travel: entrepreneurship worth covering

Article Event Banner

With 15 million Nigerians hitting the road but most still booking offline, there is reason to invest in online travel. Sally White reports

For Africa, 2015 has not been a great year for travel and tourism. It wasn’t supposed to be like this. The World Travel and Tourist Council had forecast 4% more visitors this year than last. Yet while that is not to be, there seems no shortage of investor money for African online travel start-ups.

The continent’s visitor numbers look a bit dire. The UN World Tourism Organisation’s World Tourism Barometer recorded a first-half fall of 6% in international tourism, with North Africa and sub-Saharan Africa down 10%.  To blame are a nasty mix of the aftermath of Ebola, terrorist attacks and slowing economic growth thanks to falling energy and commodity markets.

So all the more encouraging to find a Nigerian start-up as the top travel story on the world’s news sites one day last month., a Nigerian OTA, has raised $2 million in a seed round. This is only six weeks after its website went live and six months since the owner, Travelbeta & Tours, opened up its offline business. Even America’s top business magazine Forbes thought that this was entrepreneurship worth covering.

In the best of online travel fund-raising traditions, the money was a good deal more than the business itself had clocked. Revenues since July have been $522,000, according to website offers bookings at over 300,000 hotels worldwide and flights to 900 global destinations.

Some other numbers, however, explain why Nigerian investors were backing Lagos-based Travelbeta. The Nigerian Bureau of Statistics states that Nigerians travelling over the last 12 months numbered 15 million, of whom nine million travelled internationally. Yet, according to Travelbeta’s co-founder and chief commercial officer, Onyeka Akumah at a launch press conference, only 300,000 are thought to have booked their tickets via online travel agencies. That is some opportunity!

More plus-factors are that Nigeria’s internet penetration rate is the highest in Africa and rising. Plus, the government has been spending heavily to promote tourism. International consultants AT Kearney point, too, at Nigeria’s sizeable population and growing middle class as offering considerable promise. All of these help explain why Agoda and also have ambitions in Nigeria.

Akumah told Forbes that the money raised by Travelbeta would be used for aggressive online marketing, improvements to the technology platform - especially for mobile - real estate acquisition and increasing staff numbers.

Counting on experience

Another attraction for the financial backers is that Travelbeta’s management team, especially Akumah, seems highly experienced. His track record includes founding Nigerian online marketing and publishing site Anozim, and playing leading marketing roles at Nigerian OTA Wakanow and online retailers Jumia and Konga. (Investors at the latter included the continent’s major tech backers, South Africa-based international multi-media group Naspers and Swedish investment group Kinnevik.)

Chief Technology Officer Wale Ayorinde worked in Silicon Valley, managing technology start-ups, for a number of years. Operations Manager David Asuku has been in the Nigerian travel business for over 15 years and has also worked at Wakanow.

The business plan is to build an international network. And that, of course, will require more funding. But with its market opportunity Travelbeta should not find funding a problem. There are excellent precedents. Another Nigerian OTA, the well-backed Jovago, lists links with 200,000 hotels around the world and offices across Africa, Asia and Europe. It has been incorporated into Google Hotels Ads.

Jovago was founded by Africa Internet Group (AIG) and is backed by mobile networks MTN and Millicom and German internet start-up group Rocket Internet. AIG is present in almost every African country with more than 3,500 employees. Some of its companies alongside Jovago include Jumia, Kaymu, Hellofood, Carmudi, Lamudi, Zando, Lendico, and EasyTaxi.

Expanding into Nigeria from South Africa has been OTA Travelstart. It has grown over the last five years to include emerging markets throughout Africa the Middle East and Turkey. Travelstart Nigeria was launched in 2012.

Then there is, a Nigerian hotel booking site which raised $1.2 million in May to expand across Africa. It attracted money from a range of investors including a venture capital firm launched by eBay founder Pierre Omidyar.

An insight into their judgement on Nigeria can be gained from a new index from management consultants McKinsey. Called iGDP, it measures the percentage that ecommerce contributes to the GDP of a country.

Leading the pack in Africa is Senegal with an iGDP of 3.3% – it has just launched Jgiguene (woman) Tech Hub, aiming to help women into the world of IT-driven businesses. Then comes Kenya with an iGDP of 2.9 per cent – helped by a $14.5 billion project to build a local Silicon Valley. Morocco has also poured money into tech cities and its index registers 2.3%. Mozambique with its close links with Chinese business has an iGDP of 1.6%.

Then comes Nigeria with an iGDP of 1.5%. While this is down the list, there is a promising client base for OTAs indicated in McKinsey’s recognition of Nigeria as the ecommerce hub of Africa. Its clothing websites are especially popular with the fashion-conscious urban Nigerians. They have mobiles and, increasingly, smart phones and are not shy of online purchasing. Just the clients for the OTAs!

Related Reads

comments powered by Disqus