Want To Make Money In Africa? Start by Solving Any of These 5 Serious Challenges

When most people look at Africa, there are two very strong but opposite images that emerge:

Some see a continent where there are too many challenges and others see a land of vast opportunities. The interesting thing is, Africa’s biggest business opportunities look like scary difficulties. That’s why most people miss them.

This article looks at five opportunities entrepreneurs can explore to create significant impact on the continent.

1) Agribusiness
The United Nations estimates that Africa’s agribusiness sector could be worth $1 trillion by 2030, and there are several lucrative opportunities for entrepreneurs who start businesses, no matter how small, that help to solve the food shortage problem in Africa.

The opportunities in Africa’s agribusiness space is massive. The continent has 60 percent of the world’s uncultivated arable land, a conducive climate for agriculture, and an overwhelmingly young population that guarantees a vast labour pool. These agribusiness opportunities include vegetable farming, cassava farming, livestock farming (fish, chicken, pigs, ostrich, snails).

2) Jobs
On the surface, it looks like there aren’t enough jobs in Africa. When you look closely, you find there’s a structural gap in Africa’s job market: employers of labour are having a hard time finding suitably qualified candidates to fill vacancies.

What if there was a quicker, more effective and affordable way to match open job positions with the best candidates?

Several smart African entrepreneurs are already rising to the challenge.

In Nigeria, Jobberman.com, which was started by three university undergrads in 2009, has become Nigeria’s Number One job search and recruitment portal. To date, it has helped to match more than 40,000 people with jobs.

3) Health and Well-being
The size of the continent’s pharmaceutical market is expected to reach $65 billion by the year 2020.

To meet the demand for health services, the continent needs a consistent supply of medicines and doctors. However, at the moment, most medicines consumed in Africa are produced overseas. What Africa needs is a strong base of drug manufacturing companies that are based in Africa, and entrepreneurs like Uganda’s Emmanuel Katongole are already taking advantage of this huge opportunity.

4) Education
Inadequate access to quality education at all levels is a nagging problem across the continent. With many public schools falling below the mark, there is an opportunity for entrepreneurs to provide affordable quality education.

Some entrepreneurs on the continent are already taking a swing at the problem. Omega Schools, based in Ghana, is a chain of low-cost private schools that offers basic primary education to children from poor families at an incredibly low and affordable fee (less than $1 a day per student). Bridge International Schools in Kenya uses a similar low-cost model to provide affordable education to thousands of children in East Africa for less than $5 per month per student.

5) Transportation
As Africa’s population and economic strength grows and the continent becomes more urbanised, the demand for transportation will grow exponentially, especially in towns and cities. And governments alone cannot meet this demand.

Yes, entrepreneurs cannot build roads and public transport systems, but they can create solutions that can help people get to their destinations quickly and more efficiently.

City transport services like Nigeria’s OgaTaxi, a social ride-pooling app, have joined global players such as Uber and Taxify which have entered the African transport market to crack the continent’s transport problems and harvest the opportunities in this emerging market.

Do you still see problems instead of opportunities?
It’s the same with everything in life. This article is intended to open your eyes to the possibilities around you.

Have you noticed a serious problem or suffering in your environment? What will you do about it?

 

British Council Enterprise

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Posted in Africa, Agriculture, Entrepreneurship, Fintech, Nigeria | Tagged , , , , , , | Leave a comment

11 Business Opportunities in Africa That Could Make More Millionaires in 2018

The term “millionaire” is taking on a new meaning in Africa.

It’s no longer just about the size of your bank account; any shady politician, corrupt bureaucrat, or unscrupulous businessman on the continent can easily claim to be a millionaire.

But Africa’s new and emerging generation of millionaires are not just excited about money. They’re also passionate about impact; they want to create value that touches and improves people’s lives.

It’s called impact entrepreneurship. It’s the new way of making money and doing good, at the same time.

It’s a model that is proving that profit and ambition do not always have to come at another’s expense.

Remember, the bulk of Africa’s “old school” millionaires made their money from resource extraction and sheer opportunism. Often, their wealth had to come at the expense of the common good and the natural environment.

But Africa’s new wave of entrepreneurs is showing no keen interest in the continent’s finite resources; its timber, gold, copper, oil and diamonds. Rather, they’re far more interested in a much more valuable resource: problems.

Africa is a continent overwhelmed by serious problems, from unemployment and illiteracy, to hunger and inadequate electricity.

As you’re about to find out in this article, this new generation of millionaires is focusing on the continent’s problems because solving these problems will unlock massive streams of wealth, jobs and prosperity for the continent.

Most of these problems are tough, widespread and decades old. But while they are scary and frustrating to most people, entrepreneurs see them for the breathtaking opportunities they really are.

This article profiles 11 of the most promising business opportunities in Africa that will make more millionaires in 2018.

Let’s meet them…

1) Crowdfarming

Across the world, agriculture is big business and most farmers are financially well-off. But not yet in Africa.

According to the United Nations, Africa’s agribusiness industry is expected to be worth $1 trillion by 2030.

And it makes perfect sense. The continent has a huge domestic market, owns 60 percent of the world’s unused arable land, and has abundant labour resources, and a favourable climate in most parts.

Still, Africa spends over $30 billion on food imports annually.

A big part of the problem is, most of Africa’s food is still produced by smallholder farmers in rural areas. They are largely poor people who use crude farming methods, and have very limited access to capital.

But what if all of us in the cities pool funds together, invest in these rural farmers, and take a share of the profits at harvest time?

Wouldn’t that significantly boost food production, cut down the continent’s food import bill, and make more money for both the investors and the farmers?

This business model is called “crowdfarming”, and it’s a trend that could totally transform the face of agribusiness in Africa.

In Nigeria, two crowdfarming platforms — FarmCrowdy and ThriveAgric — enable working-class Nigerians to crowd-sponsor farming projects and earn a share in the returns at harvest time. Last year, FarmCrowdy raised $1 million from US investors to expand its operations.

In Somalia, Ari.Farm is an online marketplace and crowdfarming platform that enables investors from across the world to play in the Somali livestock market.

In South Africa, Livestock Wealth, helps investors to own pregnant cows, and track them through a mobile app. Once the calf reaches seven months, it is sold to a feedlot or slaughterhouse and the return for the beef goes to the investors.

As Africa’s population doubles over the next 30 years, the business opportunities in Africa ‘s agribusiness space are very likely to produce a league of millionaires who made their money while pulling thousands of farmers out of poverty.

2) Waste

For decades, waste has been a huge and nagging problem in Africa’s urban areas.

Currently, most of the waste generated in Africa is either burned, buried or thrown away. As a result, more than 80 percent of solid waste produced on the continent ends up in landfills or gets dumped in water bodies.

And as the continent’s population continues to rise, the waste problem will only get worse.

So, what do we do with all the growing heaps of filthy waste before we find ourselves in the middle of the worst environmental crisis the world has ever known?

In South Africa, the solution appears to be to convert waste into animal feed.

AgriProtein is a business that grows maggots from waste collected from markets, households and businesses. The maggots are processed into a highly nutritious protein supplement that substitutes fish meal in animal feed. The company has raised up to $30 million in funding, making it one of the best-funded insect farming businesses to date.

In Ethiopia, the solution is to convert waste into electricity.

The Repi waste recycling factory in Addis Ababa will produce 50 megawatts of electricity from waste collected from across the city. The facility is expected to supply 3 million homes with electricity, and avoid the release of millions of tons of CO2 to the atmosphere.

Across the continent, entrepreneurs are hard at work trying to squeeze out value from waste, and in the process, they’re creating an industry that could provide both low and high-level jobs for thousands of people.

From the trend of waste recycling and transformation initiatives I’ve observed, there’s only one place this is heading to.

I predict that over the next decade, waste will become a valuable commodity that households and businesses can sell for money. And the waste is likely to return to the food chain, to the electricity grid, or in some other recycled form.

3) Drones

In Africa, it appears there’s much more to drones than chasing terrorists and taking breathtaking altitude photographs.

Drones are finding some of their most versatile and impactful roles in Africa and are helping with everything from logistics and farmland management, to humanitarian deliveries and conservation support.

In Rwanda, Zipline is a drone delivery startup that delivers blood and medical supplies to clinics in the country. After successful pilot operations, it is now expanding into neighbouring Tanzania.

Aerobotics is a South African business that uses its drones to provide bird’s eye surveillance for farmers that provides critical information that can boost crop yields by up to 10 percent. It now operates in 11 countries, including the US, Russia and the UK.

In other parts of the continent, drones are playing more roles in humanitarian efforts to deliver aid to remote and conflict-ridden areas. They are also being used to monitor deforestation and illegal mining activities as part of efforts to conserve the continent’s forests and wildlife.

As you know the drone industry is relatively new and still emerging. At this rate, there is still a wide range of possibilities for drone technology in Africa.

And those entrepreneurs who can adapt drones to solving serious problems on the continent will open new and uncharted territory that could unlock wealth, jobs and more business opportunities in Africa.

4) Affordable housing

Africa is experiencing the world’s highest rate of rural-to-urban migration. And by 2030, it is projected that up to 50 percent of the continent’s population could be living in towns and cities.

Urbanisation is great, but where will all these people live? And even if the governments tried, they cannot build homes fast enough to meet the teeming demand for accommodation.

In Nigeria, Africa’s most populous country, the housing deficit is estimated at 20 million homes. In South Africa, the deficit stands at 2.3 million homes.

Africa’s housing crisis opens a lot of interesting opportunities for several industries; from cement production and furniture making, to building contractors and mortgages.

It’s no surprise Africa’s richest man, Aliko Dangote, has expanded his presence in cement production across several countries on the continent. His interests in cement now make up a significant portion of his net worth.

But beyond conventional housing, there is an interesting trend of homes being built from cheap and durable alternatives, like shipping containers.

In Cape Town (South Africa), building contractors like Berman-Kalil are offering sustainable and affordable housing options by converting decommissioned shipping containers into low-cost homes.

In Kenya, entrepreneurs like Denise Majani are also converting shipping containers into amazingly creative residential and office accommodation at half the price of contemporary housing.

These alternative options are significantly cutting down the cost of building homes, making them affordable to a larger segment of the population.

So far, most of Africa’s housing developments have focused on the premium and elite segment of the market. While the large margins from this segment have been very lucrative for investors, the biggest opportunities will emerge from providing housing at scale, and at affordable prices.

5) Automobiles

As more Africans migrate to the cities, the big urbanization wave has caused a surge in demand for transportation services.

Currently, there are just about 44 vehicles per 1,000 people in Africa. This is significantly below the global average of 180, and lower than the motorization rates of other developing regions like Latin America, Oceania and the Middle East.

Estimates suggest that vehicle sales on the continent could reach 10 million units per annum within the next 15 years.

It’s no surprise the big name automobile brands like Toyota, Volkswagen and Mercedes are already digging into the African market by setting up assembly plants on the continent.

But what is more interesting is the emergence of “Made in Africa” automobiles.

The Mobius II is a luxury SUV built in Kenya and is set to hit the market in 2018. It is being advertised as “an affordable, no thrills, but robust and classy SUV that’s built for African roads.”

In Nigeria, Innoson Motors — a homegrown car maker – has released a range of private cars.

And in Uganda, Kiira Motors is developing Africa’s first hybrid cars. It has already launched Africa’s first solar-powered bus.

There are also promising indigenous automobile makers in Ghana, Tunisia and Sudan.

Currently, just about 50 percent of Africa’s roads are paved. As the continent’s development drive continues, this percentage will rise and so will the demand for automobiles and transportation services.

This rise in demand will create several interesting business opportunities in Africa and open supporting industries including dealerships, spare parts, auto-service shops, auto financing, and even ridesharing services.

6) Local products for export

Africa spends billions of dollars on imports every year. This includes both food and non-food items.

But beyond the traditional commodities – crude oil, minerals, cocoa, coffee, timber etc. — what else of value can Africa actually export?

It happens there are a lot of local products on the continent that have the potential to become global brands. The problem is, we often overlook or look down on them.

But a few interesting entrepreneurs are now turning local African products into global brands and best-sellers.

Take Nilotica for example, a rare type of Shea butter that is used in luxury beauty products sold around the world. The trees that produce this butter only grow at the source of the Nile River; in Northern Uganda, South Sudan and Ethiopia.

By working with local women in the region to process the butter, Leila Janah – an American entrepreneur — has built LXMI, a luxury beauty brand with a range of skincare products that sell in over 300 beauty stores across the world.

Another example is fonio, a forgotten cereal that has been grown in Africa for more than 5,000 years.

Largely regarded as a “miracle” grain, fonio is gluten-free and rich in several nutrients that are deficient in most other major grains, such as rice, wheat and barley.

By processing fonio into products like crackers, cereals and pasta, one Senegalese entrepreneur and ex-chef — Pierre Thiam – has put this ancient food on shelves in New York, with plans to roll out to other stores across the USA.

Nilotica and fonio are only just two examples of several local African products that have global potential. And in 2018, more smart entrepreneurs will carve niches for themselves by exploring these products and transforming them into international brands.

Will you be one of them?

7) Startup funding

The buzz of entrepreneurship activity on the African continent has caught the attention of a growing number of investors, both within and outside the continent.

The potential returns on investment in Africa is currently one of the highest in the world, and has become too obvious for investors to ignore.

Since 2012, the amount of seed funding and venture capital flowing to Africa has grown 1,400 percent. And the trend continues to look up.

In 2017 alone, African tech startups received $560 million in funding from local and international investors. This amount represents a 53 percent jump from the $366 million raised one year earlier, in 2016.

And the biggest deal of the year was a $69 million investment in TakeALot, a South African e-Commerce startup.

Also, Silicon Valley accelerators such as 500 Startups and Y Combinator have increased the number of African startups that are admitted into, and receive funding, through their programmes.

Currently, South Africa, Kenya and Nigeria are in the spotlight and take the lion share (about 75 percent) of the investment inflows.

It’s important to note that every year, the size of venture capital investments that take place around the world exceeds $100 billion. Currently, Africa gets less than 1 percent of this global deal flow.

It’s still very early days in Africa’s startup funding space, and 2018 will certainly attract more investors looking to explore emerging business opportunities in Africa, and take their positions in lucrative deals.

8) Fintech

Africa’s underdeveloped financial services industry presents very tough, important and widespread problems that need to be solved.

After more than 50 years of banking on the continent, just about 34 percent of adults in sub-Saharan Africa have bank accounts or access to formal financial services.

It is clear the traditional model of banking is too slow, inflexible and incapable of spreading financial access at the pace the continent requires.

But with the spread of mobile phones and the Internet across Africa, the continent’s entrepreneurs are leveraging technology to deepen financial access in ways the banks never have.

Last year, Flutterwave, a Nigerian fintech startup, raised $10 million in funding from a group of investors led by Greyloft, a US-based venture capital firm.

To date, it’s one of the highest Series A round investment in an African startup.

And there are a wide range of opportunities that are opening up in Africa’s financial services space.

They include bill payments, bulk disbursement, international remittances, merchant payments, mobile airtime top up, mobile banking, person-to-person transfers, peer-to-peer lending, micro insurance, and several other interesting opportunities.

In the area of overseas remittances for example, Africa loses more than $1.4 billion annually in charges alone. Western Union and MoneyGram have been longtime monopolies in the remittances segment, and are clearly ripe for disruption.

Opening up, growing and disrupting Africa’s financial services market will certainly transform millions of lives on the continent and create a league of millionaires in the process.

Fintech will surely remain one of the top business opportunities in Africa to watch in 2018.

9) Low-cost private schools

According to this report titled: “The Business of Education in Africa”, it is estimated that 1 in 4 African students – a total of 66 million – will be enrolled in private schools by the year 2021.

Rapid population growth, poor funding, corruption and neglect have caused a serious deterioration in the quality of education in public schools on the continent.

As a result, more African parents are looking to private schools to ensure their kids get a good education. And the demand for this alternative is skyrocketing.

For example, in Nigeria, the number of low-cost private schools in Lagos, its commercial capital, is estimated to be as high as 18,000. By comparison, in 2010-11 the city had just 1,600 government schools.

And this trend of low-cost private education is leading entrepreneurs to come up with several interesting models.

In Tanzania, the Silverleaf Academy is a chain of low-cost private primary schools that charge a daily school fee of $1.50. The school uses a technology-based approach and offers a curriculum taught by internally-trained teachers.

In Nigeria, the Lekki Peninsula Affordable Schools is a stand-alone low-cost school that charges an average annual fee of $125. The school has received up to $75,000 in funding from Village Capital and Pearson Affordable Learning.

As more players enter the low-cost private education space on the continent, I suspect the fierce competition will improve the quality of education, drive down school fees, and afford many children the chance of a decent education.

Rather than set up exclusive private schools for the elite, who says entrepreneurs can’t make good returns and find tons of fulfillment in educating children en masse?

10) Urban logistics

The future of Africa is in the cities. And by 2030, up to half of the continent’s 1.4 billion people will be located in the cities.

Currently, about 60 African cities have a population of over 1 million people. At the top of the pack are cities like Lagos (21 million), Kinshasa (10 million), and Cairo (9.5 million).

And one of the biggest problems that appears to be worsening with the growth of Africa’s urban populations is congestion. Most cities on the continent do not yet have well-diversified transport systems, so getting around town can be a very frustrating endeavour.

It’s a logistical nightmare that worries both consumers and businesses.

Thankfully, some African entrepreneurs are already hacking this problem.

In Kenya, Twiga Foods uses technology to pool the orders of several urban retailers, saving them a trip to the market by delivering to their doorstep. It is now the largest distributor of a number of basic food staples in Kenya, and the startup raised $10.3 million last year.

In Nigeria, MAX is a fast-growing startup that provides last-mile delivery services. Last year, it launched an on-demand motorcycle courier service for clients who have critical deliveries that need to beat the notorious congestion on Lagos roads.

As we go into the future, more entrepreneurs will figure out ways to outsmart the complex problems and frustrating challenges of logistics in urban areas.

In 2018, urban logistics will likely remain one of the most promising emerging business opportunities in Africa.

11) Healthcare services

With poorly-funded public hospitals, and a significant brain drain of African doctors to countries outside the continent, waiting for the government to fix the continent’s healthcare sector will not work.

Also, waiting for international “donor” funds (which are channeled through governments) will not work too. We have been doing the same thing for decades and very little has changed.

With 25 percent of the global disease burden, a rapidly growing population, and a rising middle class, Africa’s healthcare market presents a huge opportunity.

According to the IFC, Africa’s $21 billion healthcare market could double in size in just 10 years.

Currently, a growing number of Africans are seeking medical help outside the continent, in places like India, the Middle East and Europe. This growth in outbound medical tourism costs Africans millions of dollars every year.

To arrest this ugly situation before it gets much worse, Africa needs a private-sector led transformation of its healthcare industry that requires both the innovation of local entrepreneurs and investment from local and international investors.

Gladly, this transformation is already happening.

In East Africa, a growing number of Indian hospital groups, like Narayana and Gurgaon, are setting up hospital facilities to tap into the continent’s healthcare market.

In Kenya, Dr. Maxwell Okoth, a young medical doctor and entrepreneur, started a chain of low-cost hospitals with only $3,000. He is now setting up a 100-bed multi-specialty hospital which will have a cancer center, radiology center, pediatric unit, and several other specialties.

In Nigeria, Lifebank – a startup that develops smart ways to deliver critical blood supplies to hospitals in busy cities – raised $0.2 million to support and expand its operations.

Across the continent, more entrepreneurs are exploring creative alternatives to solving Africa’s significant healthcare problems.

There is no doubt their efforts will not only transform the continent’s healthcare industry, but will unlock millions of job opportunities in the process.

2018 will continue the reign of business opportunities in Africa
Millionaires in Africa should no longer be determined and celebrated by the size of their bank accounts, but by the size and scale of the problems they’re solving on the continent.

Africa is a continent that significantly rewards problem-solvers, and provides a rare opportunity in today’s world to make a lot of money, while doing a lot of good at the same time.

It is now abundantly clear that entrepreneurship holds the keys to Africa’s transformation; not global pity, and certainly not foreign aid.

The winners in 2018 will be those entrepreneurs and investors who apply their creativity and determination to solving serious problems on the continent.

By John-Paul  Iwuoha

Posted in Africa, Entrepreneurship, Nigeria | Tagged , , , , , | Leave a comment

A case for national LPG and clean cooking strategy in Nigeria

In 2013, my brother ventured into sales and marketing of Liquefied Petroleum Gas (LPG), colloquially known as cooking gas in Nigeria. I visited his plant and a couple of months later, he persuaded me to follow suit. I carried out an independent feasibility study and in 2016, I ventured into the business. I have since been exposed to the alarming energy poverty in Nigeria and I think something drastic needs to be done to address the acute household energy challenges many Nigerians are facing.

The International Energy Agency and other organisations describe energy poverty as lack of access to electricity and clean cooking and heating systems. According to the World Bank, around 1.1 billion people don’t have access to electricity, and almost three billion still cook with polluting fuels like kerosene, wood, charcoal, and dung.

Available data shows that a large percentage of people in Nigeria and other Sub-Saharan African (SSA) countries still rely on these polluting fuels for cooking. Kirk Smith, Professor of Global Environmental Health at the University of California at Berkeley, said “A typical wood fire is about 400 cigarettes an hour worth of smoke.” Cooking smoke causes respiratory, cardiovascular, and other illnesses that have been found to be responsible for nearly 500,000 premature and preventable deaths annually in SSA.

Studies have also shown that aside from the adverse effects of dirty energy on human health and the environment, energy poverty also slows socio-economic development. To address these energy challenges and also provide opportunities for transforming the cooking sector, the World Bank launched the Africa Clean Cooking Energy Solutions (ACCES) initiative along with 15 African countries.

Launched in 2012, the mission of ACCES is to promote market-based clean cooking in the SSA region. By increasing access to modern technologies and cleaner fuels, the initiative seeks to alleviate the adverse health, environment, and socio-economic impacts of traditional cooking practices in SSA.

The World Bank is also working in partnership with Global Alliance for Clean Cookstoves to provide clean cooking solutions to 100 million households that are still using inefficient cookstoves and solid fuels for cooking. The partnership, announced at the Cookstoves Future Summit in New York in 2014, is a five-year efficient clean cooking and heating partnership. The partnership was forged to initially support clean cooking programmes in 12 countries, including Nigeria.

Energy poverty in Nigeria creates a feedback loop that contributes to the perpetuation of poverty, which has become a serious concern particularly since Nigeria was stated to have overcome India as the world’s poverty capital. This means that the country can begin to alleviate poverty by leveraging market-based clean cooking solutions, which are affordable and sustainable.

In this regard, Nigeria needs a national strategy that will entail promoting awareness to households regarding the adverse consequences of cooking smoke; aiding poor citizens to start using cleaner, safer cooking options, including LPG, natural gas, biogas, or efficient cookstoves. Nigeria is a net exporter of LPG; therefore, availability should not be an issue. Barely 15% of its production are consumed locally with the rest exported.

In 2015, total consumption of LPG in Nigeria was a paltry 400,000 metric tonnes. This translates to per capita consumption of less than 2.5kg, compared to per capita consumption in South Africa (7.28Kg), Ghana (9.45Kg) and Morocco (66.27Kg).

India’s LPG and clean cooking reform provides a case to study. India started its LPG reform years ago but not without challenges. The country created incentives to discourage diversions of subsidized cooking gas to the black market. In 2012, the government of India embarked on a Direct Benefit Transfer Scheme for LPG, also called the Pratyaksha Hastaantarit Laabh (PAHAL) programme. The programme is regarded as one of the largest cash transfer programmes in the world. Beneficiaries have unique identification numbers that allow for monitoring and effective payment. There is also a cap of six subsidised LPG cylinders per household per financial year.

A similar scheme can be adopted in Nigeria to ensure that people at the bottom of the financial ladder can receive adequate support to enable them switch to efficient cookstoves or LPG. With Nigeria’s enormous natural gas reserves, ranked 9th in the world, LPG and natural gas in general have the potential to revolutionise not only our cooking but every facet of the economy – from household energy to transportation and commerce.

In 2016, at the Nigeria LPG Association conference, Vice President Yemi Osinbajo, reeled out the administration’s gas policy. According to him, the gas policy aims at stimulating a gas-based industrialisation. While this is a noble goal, let there be a transition to clean cooking for millions of Nigerians before we can move to industrialisation. The low LPG penetration needs to be addressed and very quickly.

To enhance the accessibility, affordability and acceptability of LPG, there needs to be a regulatory framework that supports the usage of LPG by all. This would entail having a more favourable LPG pricing policy.

Price subsidies should be introduced on LPG, while the subsidy for kerosene should be phased out. One way to discourage the use of kerosene is to phase out the subsidy on the fuel. The economy as well as people’s health would be more positively affected by a subsidy on LPG than the existing one on kerosene. The LPG subsidy can also be less burdensome on the government than the kerosene subsidy if it targets only low-income households. In Ghana, Jordan, Mexico, Morocco, and Thailand, the governments keep the retail prices of LPG artificially low, while in Brazil and Dominican Republic, LPG vouchers were introduced for poor families. These are two different models for transmitting LPG subsidies.

Despite Nigeria’s gas policy, it is worrisome that LPG is still on the list of VATable items. Most LPG equipment are imported. Therefore, a policy to promote the use of LPG should exclude taxes and tariffs on the equipment. The government should also provide support for low-income households to be able to acquire clean cookstoves, as it is done by the Ministry of Environment in Ethiopia.

 

At the NLPGA conference mentioned earlier, the vice president also announced the existence of an inter-ministerial committee on the expansion of the domestic market for LPG. He is the chairman of the committee. But till date, I am unware of any policy statement or pronouncements by the committee. Part of the committee’s terms of reference is the transition of four million households to LPG within two years.

Goal 7 of the United Nations Sustainable Development Goals (SDGs) calls for universal energy access, improvement in energy efficiency, and increase in the use of renewable energy by 2030. For this to be achieved in Nigeria, the government should show more commitment by matching words with action and putting together an aggressive LPG and clean cooking strategy.

 

@jideolutuyi

Posted in Entrepreneurship, Gas, Lagos, Leadership, Liquefied Petroleum Gas, LPG | Tagged , , | Leave a comment

Social investment has higher returns than infrastructure

In March 2018, principal founder of Microsoft and co-chair of the Bill and Melinda Gates Foundation, Bill Gates, was in Nigeria. He came into the country quietly but he did not leave without stirring up a hornet’s nest. While speaking at the Expanded National Economic Council meeting in Abuja on March 22, Gates had some home truths for the ruling class. Armed with charts – including a modelling of Nigeria’s economic growth since 2000, prepared by a research institute at University of Washington – Gates did not mince words in his presentation at the meeting.

Gates admonished the council, saying the most important choice the government needed to make now was to maximize Nigeria’s greatest resource, which is the people. In his words, “If you invest in their health, education, and opportunities – the “human capital” we are talking about today – then they will lay the foundation for sustained prosperity. If you don’t, however, then it is very important to recognize that there will be a sharp limit on how much the country can grow.”

With references to available data, he posited that much of Nigeria still looks like a low-income country. According to him, “In upper middle-income countries, the average life expectancy is 75 years. In lower middle-income countries, it’s 68. In low-income countries, it’s 62. In Nigeria, it is lower still: just 53 years.”

But the comment that generated so much uproar was the Microsoft billionaire’s damning verdict on the administration’s Economic Recovery and Growth Plan (ERGP). In his opinion, the economic plan prioritizes investment in physical capital over human capital. Whether the government will heed Gates’ advice remains to be seen.

Be that as it may, it should be noted that what Gates said is not news in Nigeria. It is something we are confronted with on a daily basis at different levels. It is a reality that is captured and presented to us in the Human Development Index (HDI) report published yearly by the United Nations Development Programme (UNDP). Inclusive of the two areas Gates hammered on, the HDI measures the average achievement in a country in health, education and income. The index consists of composite statistics used to rank countries by levels of human development.

The search for an alternative to the conventional assessment of development based on metrics such as Gross Domestic Product (GDP) led to the introduction of HDI. It was first published in 1990, under the supervision of Mahbub ul Haq, a former finance Minister of Pakistan, with technical assistance from the Nobel Laureate economist, Amartya Sen. The HDI has, since inception, been measuring human development under three basic dimensions, namely: a long and healthy life, knowledge, and a decent standard of living.

However, since 2010, the index has been using four components to measure those three dimensions. The HDI components are: life expectancy at birth (used to measure attainment of long and healthy life); mean years of schooling received by people aged 25 and above (measuring ability to acquire knowledge); expected years of schooling for children (measuring ability to acquire knowledge); and Gross National Income (GNI) per capita using purchasing power parity (PPP) (measuring achievements of decent living standards). From the foregoing, one could see that the knowledge dimension has two components while the other dimensions have one each.

Responding to Bill Gates’s observations, the Vice President, Professor Yemi Osinbajo, reeled out the government’s efforts with regard to investment in the Nigerian people. He mentioned the Social Investment Programme (SIP) launched in 2016. The SIP comprises of a scheme to provide jobs for unemployed graduates; a school feeding programme; a micro-credit scheme for small businesses; and a cash-transfer scheme for our poorest and most vulnerable. The SIP is a key component of the ERGP.

Although there have been criticisms surrounding the school feeding programme, there is evidence that it has achieved some success. Notably, it has reportedly increased primary school enrollment by 30%. It currently caters for about seven million children in 22 states across the country. The jobs scheme has provided 200,000 jobs to previously unemployed graduates. According to the government, about 300,000 will soon be employed under the N-Power programme. Meanwhile, about 300,000 households have been recipients of the conditional cash transfer initiative.

Looking at these numbers, one doesn’t need a special analytical skill to conclude that the achievement of the SIP thus far is unremarkable. Approximately 83.5 million Nigerians are living in extreme poverty, as the socio-economic conditions of the country deteriorate. Over 16 million people are unemployed. Moreover, the government’s spending does not focus on the actual components of human development.

The 2016 HDI report ranks Nigeria in the 152nd position out of 188 countries. The country, which simply retained its ranking in the 2015 report, was closely followed by Cameroon in the 153rd position and Zimbabwe in the 154th position.

What the Nigerian government is facing is not even a chicken-and-egg problem. The evidence across the development world suggests that investment in human capital and human development must take place before investment in physical capital can boost productivity. But the Nigerian ruling class seems to be unaware of this basic fact as seen in the misallocation of huge proportions of national budgets to infrastructure.

For Nigeria to transit from low human development to medium or high human development, the federal and state governments must begin to increase spending in quality health care, as well as accessible, affordable and quality education. The government must also provide a conducive environment for businesses to thrive and income levels to increase. There must be a credible and strategic development plan geared towards poverty alleviation and improvement in the standard of living of the people.

To improve the country’s standing in terms of expected years of schooling, adults who missed the opportunity to have an education while they were young should be encouraged to go to school or participate in a semi-formal education programme that is no less engaging. Average number of years of education in Nigeria – currently six, compared to 13.3 years in Britain – can be enhanced by making higher education programmes more affordable and accessible. For instance, online learning and after-work education programmes should be promoted.

In a PWC report, titled: “The Future of Nigeria: Three critical levers for improving HDI,” it was argued that the national polices should be guided not just by improvements in GDP but also a broader measure of development such as the HDI. The report lists some areas in which Nigeria must improve to move up on the HDI rankings. These areas include the ease of doing business; labour productivity (from the current $3.61/hour to about $12.05/hour in 2030); and anticorruption.

China is the only country, since 1990, to emerge from being in the low human development segment of the HDI to high human development. It ranked 90 out of 188 countries in the 2016 HDI report, with a GNI per capita of $13,345 and life expectancy of 76 years. Nigeria’s GNI per capita is less than half of China’s (at $5,443) and life expectancy in Africa’s largest economy is 53.1 years. In India, there have been arguments that the rise in incomes has not translated into higher quality of life for many Indian citizens. The country ranks 131 on the 2016 HDI with life expectancy of 68.3 years, GNI per capita of $5,663 and 6.3 average schooling years.

From the foregoing, we can deduce that high GDP growth rates or economic development (rising income levels) alone does not always translate to high human development. It is important that policymakers focus on social investment policies that improve employment, education and healthcare.

The primary objective of government should be to improve the quality of life of its people by putting in place economic and social programmes that promote investment in people. Outcomes of such policies would be measurable not only in terms of how many people are lifted above the poverty line but also have sustainable means of livelihoods.

The HDI has its limitations. Some critics have wondered why it doesn’t capture many aspects of the human life such as social and political freedom, protection against violence, insecurity and discrimination, among others. Nevertheless, the index is still considered an important step in the domain of measuring human development.

Bill Gates did not only challenge the economic policy of the current administration; he also provided possible solutions backed up with analysis of historical data. Perhaps the Microsoft founder has earned the right to make his policy recommendation, having committed about $1.6 billion in Nigeria mostly in the fight against deadly diseases. The ball is now in the government’s court.

@jideolutuyi

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June 12- Let the healings begin.

Buhari’s declaration on June 12 has huge significance for Nigeria’s democracy. Many have described it as a political masterstroke and they are right. It was a strategic political move. Those who sold the idea to the President should be commended and the President should also be commended for heeding to their advice.

Aside the political aspect, it also heals many wounds. This is one of the major righting of an old wrong done by government in the country and it is not only significant, it is phenomenal. Last year, this government also announced that pension will now be paid to those who were part of Biafra police.

For those who don’t know, June 12 was a major wound especially to those from the South Western part of Nigeria and for those who don’t know it was as a result of June 12 that OBJ was conscripted to the presidential race in 1999 and his victory ensured just to placate the southwest. To those who argue that Buhari was part of a government that incarcerated Abiola, that’s correct but you see one thing about stuffs like this is that it doesn’t matter who does it, but knowing that it’s the right thing to do is what matters. If IBB had done this himself it would still have been huge.

Some have argued that this was done to garner votes from the south west. That remains to be seen but it will sure have some effect on some demographics especially to those between the ages of 48 and 75years old. My mum called me yesterday and asked,”sho gbo nkan ti Buhari se” (Did you hear what Buhari did? She went on and on and could noticed she was elated about it. And just so we are clear, this is very different from the MAULAG/UNILAG debacle.

Saying sorry and righting wrongs of the past has always been the hardest for any government.

Righting the wrongs of the past by government is not new, it is now common in advanced societies. It heals old wounds and binds the society together. In 1988 then PM of Canada Brian Mulroney apologized in the House of Commons for the internment of Japanese- Canadian during the Second World War.

In 2008, Prime Minister Harper apologized for the head tax imposed on Chinese immigrants between 1885 and 1923 and in 2017. Current Canadian PM Justin Trudeau apologized for the abuse and cultural loses at residential schools in Newfoundland and Labrador.

Ten years ago In Australia, then Prime Minister Kevin Rudd apologized to the indigenous people of Australia for the laws and policies of successive governments that inflicted profound grief, suffering and loss to them. Ian Hamm, an aboriginal welcomed the apologies and said he’s been waiting a lifetime to hear it.

For the first time in History, the British government in 2013, formally apologized for the colonial crimes committed by the British Imperial officer’s during the 1950s “Kenya Emergency”. Compensation running into 19.9million pounds (about $31million) was also announced to benefit about 5,228 Kenyan claimants.

In 2010, the British government also apologized to children from London slums sent to work in colonies from later 1800s to 1939. Seven Canadians travelled to London just to hear that apology in the British parliament.

What President Buhari has done is huge, yes it has political undertone for now but it will open doors for other wrongs that needs to be right by the Nigerian government. Some of which include:

The Biafra war

The Odi Massacre

The Zaki Ibiam Massacre

The maltreatment and eventual death of Funmilayo Ransome- Kuti

The killing of Nigerians daily by the Police and Army

The extortion of Nigerians daily by SARS and the Nigerian Police

The killing of Ken Saro-Wiwa and others

The degradation, underdevelopment and pollution of the Niger Delta and many more

These healings will go a long way. Buhari has open the

floodgate, let the healings begin.

@jideolutuyi

Posted in Uncategorized | Leave a comment

Raising the effectiveness of philanthropy in Nigeria

Growing up, I watched my dad engage in several philanthropic activities. He gave to people and causes he cared about. Much of the beneficiaries of these philanthropic deeds were extended family members, the local community, friends and religious organizations. Sometimes, the beneficiaries were strangers. This is typical of Nigerian philanthropy and giving, which are largely motivated by cultural beliefs and obligations, rather than generosity.

In Nigeria, as it is in many parts of Africa, philanthropy is at the core of what binds society together. Philanthropic giving generally supports poverty alleviation and sometimes helps to provide assistance towards education. But much of these giving is not measurable in terms of its impact, and it hardly produces the desired results.

On his 70th birthday in 2016, my dad formalised his philanthropy by setting up a private foundation. Sadly, he passed away four months after the launch of the foundation. Supported by a great Board of Trustees, I am now saddled with the responsibility of providing strategic direction and leadership that will produce measurable impact and results for the activities of the foundation.

Hitherto, I had obtained a certificate in Social Impact Leadership from University of California’s Haas School of Business. The course was offered in partnership with Philanthropy University. The pivot of this certificate programme was social impact philanthropy and investment. But in spite of the knowledge that I acquired through this programme, my role at my late dad’s private foundation has exposed me to the world of philanthropy in a different way.

Philanthropy is regarded as any goodwill to fellow human beings, especially efforts towards promoting their welfare. It could take several forms, including giving of money, time, expertise, skills and assets. Over the years, the act of giving to impact lives has evolved and the benefits of philanthropy to the socio-economic development of countries, especially developing nations, cannot be overemphasised. Even in developed countries, philanthropy is contributing in no small measure to the betterment of the society. In the United Kingdom, private giving averages around £9 billion each year.

In the United States, more than $800 billion resides in foundations and donor-advised funds. Fund for our Economic Future, a philanthropic collaboration dedicated to advancing economic growth and equitable access opportunity for the people of Northeast Ohio, has raised more than $100 million to improve regional economic competitiveness. Since it was launched in 2007, New Economy Initiative (NEI) has granted a total of $97 million to organizations and programmes supporting entrepreneurs. NEI is a $134 million philanthropy-led entrepreneurial development strategy in southeast Michigan. Its support has helped entrepreneurs and small businesses generate $2.9 billion in economic output and created 17,490 jobs.

Philanthropy or charitable giving is currently at an exciting stage of development in Nigeria. Over the past few years, there has been an increase in institutional philanthropy and the field now consists of private, corporate, family foundations, public foundations and a range of others. Some notable private and corporate foundations in the country include Dangote Foundation, MTN Foundation, UBA Foundation, Tony Elumelu Foundation, Danjuma Foundation, Airtel’s Touching Lives, Toyin Saraki’s Wellbeing Foundation, among others.

But it remains to be seen how these philanthropies have impacted the socio-economic development of the country. According to Michael Milken, Chairman of the Milken Institute, “Philanthropy is much more than charity, it’s a profound commitment to understanding the needs of society and then rolling your sleeves to help get it done.” There is, therefore, a need to move towards a more strategic philanthropy and impact measurement. Even as individuals you can ensure that your giving is strategic, measurable and impactful.

Milken also observes that philanthropy is more than just writing cheques. For instance, Kokun Foundation is a well-known foundation that feeds the poor and gives money to poor people on the streets. Some of the foundation’s deeds are phenomenal. A few of its videos on social media have brought viewers to tears. While one cannot fault these good deeds, giving away money is not always enough. There is a thin line between charity and what Andrew Carnegie, one of the wealthiest businessmen of the 19th century, once referred to as “indiscriminate charity.” According to Carnegie, this sort of philanthropy only rewards bad habits, rather than encourage good ones. Kokun Foundation will achieve greater results if it starts to measure its long-term impact.

The impact of one’s giving can be increased by developing a more in-depth understanding of the challenge one seeks to address, and then defining a clear vision and a detailed strategy with an action plan. The strategy must also include a tool to measure impact. This is what is lacking when we see wives of state governors in Nigeria launching foundations and philanthropic projects that cease to exist soon after their spouses leave office.

Perhaps philanthropic organisations and the wealthy in Nigeria could learn a thing or two from Carnegie. After retiring in 1901 at the age of 66, Carnegie committed the rest of his life to philanthropy. He was known for impactful philanthropy. Amongst his philanthropic efforts was the founding of the Carnegie Technical School in 1900, and later the Carnegie Institution that is known today as Carnegie Mellon University, one of the world’s leading research universities. He also built about 2,811 libraries across the world. To him, philanthropy was an essential tool for addressing some of society’s socio-economic challenges.

According to the Nigeria 2014 Wealth Book, Nigeria had over 16,000 high net worth individuals (HNWIs) in 2013, who collectively owned about $90 billion in wealth. The number of HNWIs is estimated to grow by 7% to reach over 18,000 in 2018. Meanwhile, the wealth of these individuals is expected to grow by 27% to reach $123 billion this year. It is time for the well-heeled in Nigeria to support towards making a positive change in society. Nigerians need to start feeling the impact of this wealth. Nigerian communities need more and better access to health care, clean water, food, and education. As Carnegie said, “Successful men should help lift the unsuccessful into more productive lives, and a man who neglects this duty and dies rich, dies disgraced.”

For philanthropy to have a more meaningful and stronger impact, there has to be strong collaboration between wealthy individuals, private sector and governments. Interestingly, governments of developing countries have started taking keen interest in philanthropy. Governments of Brazil, South Africa, India, Indonesia, and China have already engaged in solid partnerships with philanthropic actors.

African philanthropy is also beginning to take a central role in the areas of social development and sustainability. In 2009, Liberia established the Liberia Philanthropy Secretariat to help funders identify the right partnerships. In 2015, the African Union launched the Africa Union Foundation to mobilize voluntary contributions in support of the AU’s Agenda 2063. Kenya and Ghana have collaborated with the United Nations Development Programme (UNDP) to establish their own philanthropic platforms.

To further strengthen and improve the role of philanthropy as a partner in development, the Nigerian Government should provide an enabling environment for foundations to thrive. The government also needs to explore how it can introduce regulations to strengthen transparency and accountability for foundation’s grantees.

There is the need for effective fiscal policy to encourage philanthropic giving by corporate organisations. Although there are a few bodies eligible for tax deductible donations listed in the Companies Income Tax Act (CITA), this is hardly enough and the framework is a bit obscure, mostly because the focus of tax authorities is on increasing revenue. Therefore, the government is not looking at providing more robust incentives for charitable donations.

Unlike Nigeria, South Africa has become known as a nation of givers. The country possesses a legal environment that incentivizes giving. It has a well-established corporate social investment (CSI) sector with an estimated R7.8 billion (approximately USD700 million) CSI in 2013. The country also has the largest philanthropic infrastructure on the continent, hosting at least 17 local and regional institutions.

In the end, becoming an effective philanthropist means planning to optimize your giving. Just like any important decision, investment, business or personal, a thoughtful longer-term strategy enables you to determine what you want to achieve and how to do so effectively. To become more effective, foundations can also partner with themselves by developing common strategies, sharing decision-making and pooling resources together. They need to engage governments strategically while maintaining independence of action and approach.

Posted in Africa, Lagos, Nigeria, Philantrophy | Tagged , | Leave a comment

Where Should You Put Your Money In Nigeria?

Disclosure: This article is written as part of work I am doing for the company in question. I have been paid for this work.

You are a Nigerian and you live in Nigeria. By that geographical arrangement alone, your investment opportunities are mostly restricted to what is immediately available in the country. Thus, the investment portfolio of someone who has $1m will look quite different depending on whether the person is in America or Nigeria. In Nigeria, you might just be restricted to real estate but in America you might be able to put money in the hottest startup in Silicon Valley among many others.
So what are the options available to Nigerians? You need to ensure you don’t lose your hard earned money. You also need to ensure that the money will be available to you in the future when you need it. And of course you need to ensure that the investment is yielding enough returns such that, in reality, your N100,000 has not turned into N50,000 after 10 years. It is this question that Investment One, an asset management and investment firm in Nigeria, have tried to answer with a new report titled Investment One Top 10: A 2018 report on 10 great places to invest in Nigeria.

Treasury Bills
I’m usually the first person to mock Nigerian banks for their love of Shashe Banking. But the facts of life are that they are not doing anything illegal and the opportunity is available to anyone who wants it, not just the banks. So Treasury Bills, short term lending to the government, is number one on the list. It is remarkable that an investment that carries zero risk can pay up to 22 percent as they did in 2017 but that is the reality. These days t-bills pay around 15 percent so if you are looking for a worry free place to park your money that meets all the investment criteria listed above, then they are your best bet.

Commercial Paper
Once you leave t-bills, there is no other option that is 100 percent safe. So everything else comes down to how much risk you are willing to take with your money. Sometimes, taking more risks brings more returns. It could also be that you take high risks and all your money ends up in smoke. Next on the list is Commercial Papers (CP) — essentially lending to Nigerian companies (including banks). The data compiled by Investment One shows that in 2017, the CP with the highest yield was by FSDH Merchant Bank at 21.84 percent. Dufil Prima Foods Plc also issued a CP in December 2017 with a yield of 17.50 percent. Both of these examples were for nine months.

Government and State Bonds
Next up is government and state bonds. But wait, if t-bills are issued by the government and carry no risk, why are government bonds, issued by the same government, also not risk free? The simple answer is that even though the same government cannot default on bonds, this type of investment, because it lasts for longer than one year, carries interest rate risk. That is, even though they are currently paying up to 17 percent, there is no guarantee that they won’t pay less in say two or five years time.
Things can change in the economy — inflation might come down sharply, meaning interest rates will also likely come down meaning you earn less on your investment in government bonds. But of course, if anything can go down, it can also go up.

Corporate Bonds
Things are getting riskier. We now come to Corporate Bonds brought to you by the same people who brought you CPs but this time for longer. Because they are issued for longer durations, the chance that a company can go bankrupt and the bond you bought turns to smoke is higher than with CPs.
Which is why the credit rating of the issuing company plays an important part in deciding whether or not to invest. According to a sample of recent corporate bonds from Investment One’s research, Lafarge Africa Plc issued a 3 year bond in June 2016 with a coupon (interest rate) of 14.25 percent. It is rated at A+ which sort of says Lafarge has a good chance of surviving until June 2019 when you will be able to get your investment back plus the interest you’ve earned. Fidelity Bank, rated BBB, also issued a 7 year bond in 2015 with a coupon of 16.48 percent. BBB is a higher risk than A+ but then, the riskier one pays more. Your choice.

Eurobonds
Then there’s Eurobonds. Beyond the government, Nigerian companies also issue them, too. Now, in addition to interest rate risk and the risk of the issuing company (or government) going bankrupt, you now have the additional risk of foreign exchange as eurobonds are issued in dollars. But the flip side is that, if the naira suffers another devaluation, your investments in dollars will protect you against that loss.
At the moment, Fidelity, Zenith, GTbank, Diamond and First Bank have outstanding eurobonds all issued in 2013 and 2014 and to mature between 2018 and 2020. The coupon rates vary from 6 percent (GTbank) to 8.75 percent (Diamond). These bonds are traded publicly which means you can still buy into them with the understanding that, depending on the price you pay for them today, you will almost certainly get a different yield from the coupon rates listed above.

Equities
Next we come to equities, or ‘shares’ as we like to call them in Nigeria. The best argument for equities is also the biggest risk about them — in 2017, the Nigerian equities market returned 42.30 percent. So what is it going to return in 2018? If I knew the answer to that, I won’t be typing this article. I will sell everything I own (including one of my kidneys) to invest in Nigerian equities. This is the biggest risk with equities — just because it did well this year is no guarantee that it will do well next year. Indeed, in the 3 years before 2017, Nigerian equities delivered negative returns according to Investment One.
So the solution to this is to always take a long term view when investing in equities. Over time, you’ll likely make money once the good and bad years are taken together. But if you’re looking for something short term, then t-bills remain your best. Don’t put your school fees money in equities. Please.

Mutual Funds
What if you can’t make up your mind about all the different options so far because you like equities, corporate bonds, CPs and other types of assets? If you are in that position, mutual funds make plenty of sense. With mutual funds, the investment company takes money from many different people and then some smart guy working there decides on what percentage to allocate to different assets. You, as the investor, don’t have to worry about this decision making process — you leave it to that smart guy but you have to pay him for this work out of your returns.
Now if the guy turns out to be not as smart as advertised, you may end up paying him most of your returns as fees. According to Investment One, Vantage Balanced Fund, which invests in bonds, real estate and equities, delivered a net 25.06 percent return in 2017. Another fund, Vantage Guaranteed Income, delivered gross 18.41 percent also in 2017. So what does it mean when one fund’s return is stated as gross and another as net. This is an important thing to pay attention to — net is what you get after the smart guy has taken his fees. Gross is before fees have been deducted. To simplify — if you put N100 in a fund and it returns 25 percent gross, you are not going to get N125 at the end of the year. You will get N125 minus whatever the fees for the smart guys are. So always check whether returns are stated gross or net and if they are stated as gross, find out what the fees are.

Real Estate and Venture Capital
Finally, we have Real Estate and Venture Capital. The report does not say how much these returned in 2017 probably because they are so hard to measure. In the case of real estate, there are many different ways to invest in it. Someone might build a few shops in front of his house in Amuwo Odofin and rent them out. Real estate noni. Or someone who made money from oil and gas might build luxury flats in Ikoyi and sell them. Real estate noni. Or a company might set up a Real Estate Investment Trust (REIT) and, just like with mutual funds, take money from many different investors and invest in real estate.
One way to access this type of investment might be through mutual funds. So if you like the idea of investing in real estate but without the stress of chasing tenants all over the place, ask your mutual fund if they invest in real estate. As for venture capital, please I’m not on seat. Only invest in this with money you’re prepared to lose. You can make 800 percent and you can make minus 100 percent.

There you have it. As I said earlier, what you can invest in is determined a lot by where you live. These are some of your best options if you are in Nigeria. The reason why you should invest is because the future will eventually arrive even if you stand still. Investing means you can send your money ahead of you so you are not broke when the future inevitably arrives.
Investment One will like you to make your investments through their firm. By opening an account with them, you can invest in most of the options listed above. Or if you are not yet sure, send them an email to ask questions.
Always remember — just because something returned 25 percent last year does not mean it will do the same this year. It can do more, it can do less. But with any type of investing, it is always better to have a long term view. After all, you are a Nigerian and you live in Nigeria. Neither of you is running away any time soon.
FF

By Feyi Fawehinmi

First published on his blog Aguntasolo.co

Posted in Finance, Government and State bonds, Investments, Nigeria, Treasury Bills | Leave a comment

The content of Nigeria’s foreign exchange reserves

On Monday 20 March 2018, The Guardian Newspapers published an article by Contributor Feyi Fawehinmi titled, “What’s Inside Nigeria’s Foreign Exchange Reserves”. In this article, the writer describes and discusses his perceived rationales for the increase in the country’s Foreign Exchange (FX) reserves. Familiar with the writers mindset on such matters as they have been fairly widely canvassed lately one was inclined to ignore but we all have a shared responsibility to ensure that Nigerians are well informed particularly knowing the penchant of compatriots to latch on and celebrate such rabble rousing writings with radical bent, it behoves all concerned with a better representative perspectives to stand up to be counted by sharing such views for better enlightenment of all. We must not and cannot dismiss Mr. Fawehinmi’s brilliance in using half-truths, veiled innuendos, and outright misinformation to convince fair-minded and well-meaning Nigerians that he knows what he is talking about. That is the reason why a response is imperative for as Edmund Burke once observed, “The only thing necessary for evil to thrive is for good men to do nothing”.

Before we outline the real reasons for the rise in Nigeria’s FX Reserves, let us first highlight why Mr. Fawehinmi’s writing contains many misleading explanations.
First, although he correctly explains how proceeds from the Federal Government’s Eurobond issuances could help boost our FX Reserves, he ominously omits the fact that it is from the same FX Reserves that the CBN supplies FX to the market throughout the year. This is a significant omission. While it is true that the CBN has received US$7.3 billion worth of Eurobond issuances since February 2017, we are aware that the Bank has also supplied US$24.3 billion to the FX Market over the same period. This amount includes sales in the interbank spot market, FX supplies for invisibles/services, clearing of maturing forward positions, weekly sales to Bureau De Changes (BDCs), and sales to small end-users for travel allowances, medical bills, schools fees, and the like. How then can someone’s savings account grow if he receives US$7.3 billion but spends US$24.3 billion?

Second, the attribution of swaps by Nigerian Banks as accountable for the growth in our FX reserves ignores the fact that swaps are part of the FX Reserves of all Central Bank, and therefore Central Bank of Nigeria cannot bulk this reality even when the Reserves were as high as US$23 billion in October 2016. Therefore, the notion that it is a new phenomenon is incorrect and the subtle chastisement of Nigerian banks for engaging in swaps reveals the author’s lack of requisite knowledge of this generally-acceptable worldwide banking practice. It is also curious to note that his computation of the size of swaps by Nigerian banks is higher than what has been published by the International Monetary Fund (IMF), as contained in their latest report on Nigeria, which was published few days ago. Is it rational to expect that the writer has better information on CBN swaps than the IMF?
Third, and in usual confused manner, the author suggests that all the FX inflows into the Investors and Exporters (I & E) Window go into the Reserves. Contrary to this, we are aware that the I & E window operates as a free “willing buyer, willing seller” market, which explains why its operational exchange rate (about N360/US$1) is higher than those of other segments. A significant portion of the inflows into this market do not get to the CBN because they are bought by willing importers who operate in that market. The CBN operates in that market as a “residual” participant: buying excesses and supplying shortfalls, as the case may be. It is therefore not correct to ascribe the total inflows into this market to the country’s FX Reserves.
So, what is really inside Nigeria’s Foreign Exchange Reserves? We are aware that there are three main reasons for the sustained rise in the Reserves. Perhaps, the most significant one has been the sharp decline in the country’s import bill, as a direct result of the June 2015 CBN’s policy to restrict FX access to items which could be produced locally: the so-called “41-items policy”. Despite the initial pushbacks against this policy, it has no doubt heralded significant benefits for the country. Aside from the rebound in local production of affected products and associated boost in employment generation, it has been reported that the country’s monthly import bill fell from an average of about US$5.5 billion in 2014 to US$3.58 in 2015, and about US$2.3 billion in 2017. A linear approximation would imply that the country’s FX Reserves have saved about US$38.35 billion if we use the 2014 import bill or US$15.33 billion if you use the 2015 import bill.
The second reason for the rise in our FX Reserves is simply due to the gradual, albeit persistent, recovery in oil prices. From a low of US$45.5 per barrel as of 23 June 2017, the price of Bonny Light Crude Oil has risen to US$69.6 per barrel as at 21 March 2018. To the extent that Nigeria’s daily oil production has remained stable, one does not have to be a brain surgeon to calculate how much more FX inflows our country’s FX Reserves have enjoyed over this period.
On Monday 20 March 2018, The Guardian Newspapers published an article by Contributor Feyi Fawehinmi titled, “What’s Inside Nigeria’s Foreign Exchange Reserves”. In this article, the writer describes and discusses his perceived rationales for the increase in the country’s Foreign Exchange (FX) reserves. Familiar with the writers mindset on such matters as they have been fairly widely canvassed lately one was inclined to ignore but we all have a shared responsibility to ensure that Nigerians are well informed particularly knowing the penchant of compatriots to latch on and celebrate such rabble rousing writings with radical bent, it behoves all concerned with a better representative perspectives to stand up to be counted by sharing such views for better enlightenment of all. We must not and cannot dismiss Mr. Fawehinmi’s brilliance in using half-truths, veiled innuendos, and outright misinformation to convince fair-minded and well-meaning Nigerians that he knows what he is talking about. That is the reason why a response is imperative for as Edmund Burke once observed, “The only thing necessary for evil to thrive is for good men to do nothing”.
Read More: What’s inside Nigeria’s foreign reserves?
Before we outline the real reasons for the rise in Nigeria’s FX Reserves, let us first highlight why Mr. Fawehinmi’s writing contains many misleading explanations.
First, although he correctly explains how proceeds from the Federal Government’s Eurobond issuances could help boost our FX Reserves, he ominously omits the fact that it is from the same FX Reserves that the CBN supplies FX to the market throughout the year. This is a significant omission. While it is true that the CBN has received US$7.3 billion worth of Eurobond issuances since February 2017, we are aware that the Bank has also supplied US$24.3 billion to the FX Market over the same period. This amount includes sales in the interbank spot market, FX supplies for invisibles/services, clearing of maturing forward positions, weekly sales to Bureau De Changes (BDCs), and sales to small end-users for travel allowances, medical bills, schools fees, and the like. How then can someone’s savings account grow if he receives US$7.3 billion but spends US$24.3 billion?

Second, the attribution of swaps by Nigerian Banks as accountable for the growth in our FX reserves ignores the fact that swaps are part of the FX Reserves of all Central Bank, and therefore Central Bank of Nigeria cannot bulk this reality even when the Reserves were as high as US$23 billion in October 2016. Therefore, the notion that it is a new phenomenon is incorrect and the subtle chastisement of Nigerian banks for engaging in swaps reveals the author’s lack of requisite knowledge of this generally-acceptable worldwide banking practice. It is also curious to note that his computation of the size of swaps by Nigerian banks is higher than what has been published by the International Monetary Fund (IMF), as contained in their latest report on Nigeria, which was published few days ago. Is it rational to expect that the writer has better information on CBN swaps than the IMF?
Third, and in usual confused manner, the author suggests that all the FX inflows into the Investors and Exporters (I & E) Window go into the Reserves. Contrary to this, we are aware that the I & E window operates as a free “willing buyer, willing seller” market, which explains why its operational exchange rate (about N360/US$1) is higher than those of other segments. A significant portion of the inflows into this market do not get to the CBN because they are bought by willing importers who operate in that market. The CBN operates in that market as a “residual” participant: buying excesses and supplying shortfalls, as the case may be. It is therefore not correct to ascribe the total inflows into this market to the country’s FX Reserves.
So, what is really inside Nigeria’s Foreign Exchange Reserves? We are aware that there are three main reasons for the sustained rise in the Reserves. Perhaps, the most significant one has been the sharp decline in the country’s import bill, as a direct result of the June 2015 CBN’s policy to restrict FX access to items which could be produced locally: the so-called “41-items policy”. Despite the initial pushbacks against this policy, it has no doubt heralded significant benefits for the country. Aside from the rebound in local production of affected products and associated boost in employment generation, it has been reported that the country’s monthly import bill fell from an average of about US$5.5 billion in 2014 to US$3.58 in 2015, and about US$2.3 billion in 2017. A linear approximation would imply that the country’s FX Reserves have saved about US$38.35 billion if we use the 2014 import bill or US$15.33 billion if you use the 2015 import bill.
The second reason for the rise in our FX Reserves is simply due to the gradual, albeit persistent, recovery in oil prices. From a low of US$45.5 per barrel as of 23 June 2017, the price of Bonny Light Crude Oil has risen to US$69.6 per barrel as at 21 March 2018. To the extent that Nigeria’s daily oil production has remained stable, one does not have to be a brain surgeon to calculate how much more FX inflows our country’s FX Reserves have enjoyed over this period.

The third reason for the improved fortunes on our FX Reserves is truly attributable to the I & E window. Recall the explanation above that the CBN is a residual participant in the market. Given that the amount of inflows in that window have frankly exceeded many people’s expectations and willing buyers have been unable to pick up all the supply, the CBN has bought more dollars in that segment than it has sold. So the Bank’s participation in that market has been a net positive to the FX Reserves.
We do understand the penchant for cynicism about reported progress in any and every sphere of our national life but that does not mean that real progress is not being made, however few and far between. For example, Mr. Fawehinmi dismisses the notion that significantly higher FX Reserves should be highlighted as an accomplishment. Yet, it is not an easy feat, because the higher they are, the more tools and flexibility a Central is able to deploy in times of need. This is analogous to basically having more saving in your bank account which overall should positively impact the country’s credit rating. It is also a matter for the records that the Governor was called all manner of unprintable names during the period of cascading rate of exchange. it is only fair and should be expected that he receives all the plundits as we experience a rebound.
So, while concerned particularly with the benefit of hindsight applaud the CBN for putting in place policies like those on “41-items” and the “I & E” window, which have helped stabilize the exchange rate, improve FX supply, create jobs, and boost economic activities, those with inadequate knowledge should avoid throwing shades on such laudable achievements.

 

By Boniface Chizea

First Published on The Guardian.

Posted in Africa, Finance, Foreign Exchange Reserves, Foreign Reserves, Governance, Leadership, Nigeria | Leave a comment

What’s the fuss about foreign exchange reserves?

Earlier in March 2018, the Central Bank of Nigeria (CBN) announced that the country’s foreign currency reserves were steadily growing and that the reserves stood at $43 billion. This represented almost 100 percent increase from about $23 billion recorded in October 2016 when Nigeria was in a recession. The last time the FX reserves hit the $40 billion mark was in January 2014, five months before global oil prices began to fall in mid-2014. Subsequent to the apex bank’s announcement, the reserves reached $45.3 billion as of 21st March, 2018.

To the current administration of President Muhammadu Buhari and the CBN, the accretion in FX reserves is hardly about economics. They consider it as a tool for wielding political clout. However, many Nigerians have different opinions about the rise in FX reserves. Some people also wonder why the government is accumulating debt at a time its FX reserves are growing. While some of these concerns may have validity, the government needs to educate the citizens on the economic benefits of foreign currency reserves. The man in the street wants to know the importance of foreign currency savings to his wellbeing.

There are even some misconceptions that the Nigerian government’s maintenance of FX reserves is a recent phenomenon. Nigeria has had foreign reserves since the 1960s. According to available data, the country’s foreign exchange reserves averaged $10.9 billion over the last 57 years, reaching an all-time high of $62 billion in September 2008, and a record low of $63.22 million in June 1968.

So, what are foreign currency reserves? Why does Nigeria need them? What’s their impact on the economy? How do they affect the common man? And how much of FX reserves is enough?

In the 5th edition of its Balance of Payments Manual, the International Monetary Fund (IMF) describes foreign reserves as “consisting of official public sector foreign assets that are readily available to, and controlled by the monetary authorities, for direct financing of payment imbalances, and directly regulating the magnitude of such imbalances, through the intervention in the exchange markets to affect the currency exchange rate and /or other purposes.”

Contrary to the misperception that not all reserves are assets, foreign exchange reserves are classified as assets in the balance of payments (BoP) of a country. FX reserves are located in the capital account section of the BoP, which includes foreign direct investment (FDI), portfolio and other investments. These show that reserves are an important element of a country’s international position.

According to some literature, there are seven major reasons a country maintains foreign currency reserves. First, FX reserves are used to maintain a fixed exchange rate for a domestic currency. In a fixed exchange rate regime, the value of the local currency is tied or pegged to some other widely-used commodity or currency. This helps to remove volatile currency movements and provide some level of currency stability. In such a regime, central banks usually commit to buying and selling forex to forestall sudden changes in the exchange rate that might discourage trade and investment.

The second rationale for a country to want to use FX reserves is to keep the value of its currency lower, relative to major trading partners. This is to make its exports relatively cheaper. A third reason is to maintain liquidity in the case of an economic crisis. Foreign exchange reserves enable countries to coordinate trade policy and participate in international trade, which is dominated by the U.S. dollars.

Fourthly, FX reserves provide confidence and assurance to investors, thereby preventing capital flight. Having a currency’s value backed by reserves in stronger currencies shores up confidence in the local currency. A fifth reason for maintaining FX reserves is to meet external obligations such as financing of imports.

A country may use FX reserves to fund critical sectors. China has used this strategy to invest in infrastructure. Finally, a country would want to use its FX reserves to earn returns through diversified portfolios.

While other currencies like the British pound sterling, the Eurozone’s euro, the Chinese yuan and the Japanese yen are common foreign exchange currencies, most global FX assets have been held in U.S. dollars since the collapse of the Bretton Woods system, which lasted between 1944 and 1971, during which time gold was the primary currency reserve for most countries.

To be sure, FX reserves serve different purposes to different countries, depending on the individual nation’s foreign exchange policy as well as other economic factors. Japan purports to have a floating foreign exchange system. However, the country holds the second largest foreign reserves stockpile, after China, the world’s largest holder of FX reserves. China’s reserves (mostly in U.S. dollars) reached $3.16 trillion in January 2018.

In principle, a floating exchange rate regime does not need forex reserves to back the value of the domestic currency’s value. The balance between the supply of and demand for forex should determine the exchange rate. But in practice, countries that claim to allow their currencies to free-float actually don’t. That is why they hold foreign exchange reserves in the event they need to use them to stabilise the exchange rate, apart from using them as savings during potentially future crisis.

In Nigeria’s case, the country moved from a fixed exchange rate system in June 2016, to what is technically referred to as a “managed” or flexible exchange rate regime. This move was expedient in terms of boosting supply of FX in domestic market, stabilising the FX market and gaining the confidence of foreign investors. The Nigerian equities market has since been the darling of global investors. And with the recovery in oil prices, the country’s foreign reserves have had to reverse their depletion course.

So how much reserves are enough? Several years ago, it was enough for a country to have forex reserves enough to cover three to six months of imports. Not anymore. In December 2016, Nigeria’s reserves were enough to cover 12.6 months of imports. For a country like Nigeria, what should be enough is a very subjective question. It would sometimes depend on the policies being pursued by the central bank and also the structure and vibrancy of the economy. Other contingent factors would also include the share in GDP of the traded and non-traded sectors, the level and rate of capital inflows and outflows, as well as commodity prices.

In 2011, the IMF proposed new metrics for assessing reserves adequacy. The metrics involve taking into consideration the probability of tail events, among other factors. Other guidelines involve benchmarks like percentage of reserves to short-term debt, ratio of reserves to GDP. In 2015, Greece did not have enough reserves to cover the country’s debt payments and current account deficits for the next 12 months. It ended up falling into crisis.

There’s no doubt that foreign currency reserves have far-reaching positive implications for the economy. In a paper by Olayinka Akinlo, titled “Impact of Foreign Exchange Reserves on Nigerian Stock Market,” published in the International Journal of Business and Financial Research, it was established that the relationship between foreign reserves and the stock market has significant policy implications. According to the paper, “Foreign reserves have a positive effect on stock market growth.”

It is instructive to note that while FX reserves are very important to the Nigerian economy, as long as poverty and lack of basic infrastructures continue to ravage the country, the debate on the rationale for accumulating foreign reserves will not abate.

Therefore, the government should refrain from seeking to gain political capital from the accretion of Nigeria’s FX reserves. The reserves should continue to be strictly an economic policy tool. As the country continues to grow its reserves, care must be taken to ensure that mistakes of the past – when reserves were frittered away into private pockets – are not repeated. More importantly, information on the deployment of the FX reserves – as well as the general principles used in managing the reserves – should not be shrouded in secrecy.

Finally, the monetary authorities should know when the level of FX reserves is enough. Stockpiling reserves just for the sake of it could be counterproductive to the economy. Keeping reserves in a foreign land helps to develop that country. We cannot continue to beg and borrow funds to develop the country when we have funds stashed away. The CBN and the Ministry of Finance should devise a means of calculating exactly how much reserves we need at every particular period in time. That way, we would not keep stashing away funds needed to develop our own economy.

@jideolutuyi

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Konga and Nigeria’s e-commerce industry

 

In my column of last month, I wrote about Nigeria’s retail industry and its potential to become the country’s next big industry. I also touched briefly on the gains made by the domestic e-commerce sector. Unfortunately, soon after the column was published, one of Nigeria’s top e-commerce companies, Konga, was acquired by Zinox Technologies Limited, an integrated information and communication technology (ICT) solutions conglomerate.

The deal to purchase Konga was reportedly worth a paltry $10 million. Furthermore, OLX – a leading global online classified advertising platform owned by South Africa’s Naspers, which also owned a majority stake in Konga – announced it was shutting down its Nigeria office. Nevertheless, OLX said its platform will continue to operate in Nigeria, although without an office.

I was jolted by these two news items. I also received a couple of emails from friends asking if I still believed the Nigerian e-commerce industry could survive the tough business environment.

Available details on the Konga deal indicate that Zinox Group, which is also an Original Equipment Manufacturer (OEM), would take over Konga.com, Konga’s e-commerce platform; KOS-Express, the logistics arm of the company; and KongaPay, its integrated mobile money payment channel. Some industry watchers and analysts have flayed the acquisition fee for Konga as being too low.

Some people have claimed Konga was mismanaged. Others say there is a flaw in the e-commerce company’s business model. Still, there are some who think e-commerce cannot thrive in the current Nigerian marketplace. While we cannot confirm the mismanagement charge, the issues regarding the business model and whether or not the Nigerian economy is ready for e-commerce are subjects for rigorous debates.

To put things in proper perspective, let’s take a look at Konga’s funding over the years. After its launch in 2012, the company raised $3.5 million in seed investment from Kinnevik AB, a Swedish investment company. In 2013 the company raised $10 million from another round of fundraising from Kinnevik AB and Naspers. Over a five-year period, Kinnevik AB reportedly invested a total of $36.1 million in Konga, while Naspers invested $91.2 million. All in all, Konga was estimated to be valued at $200 million.

If there is any veracity to the $10 million acquisition fee by Zinox, it would mean Konga lost 95% of its valuation. This is why some commentators have viewed the diminishing fortunes of Konga as a bad omen for Nigerian technology startups. How can a company, once referred to as a giant in the e-commerce sector, a few years ago be sold for a measly sum in 2018? There is a lot for industry watchers and technology entreprenuers to be concerned about.

Konga has been a beacon of hope in the Nigerian e-commerce ecosystem. Today, I can attribute my first e-commerce experience in Nigeria to Konga. Last year was the first time I shopped on Konga when our office furniture was ordered on the e-commerce platform. The transaction was seamless and the items were satisfactorily delivered.

Apart from the harsh operating environment in Nigeria, Konga’s ever-changing policies could also have been responsible for its challenges. For instance, the stoppage of the company’s pay-on-delivery system, among other frequent changes, could have irked many customers and merchants alike. Moreover, it was a surprising disclosure that Konga had an active customer base of 184,000, according to Kinnevik AB’s 2016 second quarter report. This customer base is less than 1% of Nigeria’s population. This is disappointing not just for Konga as an e-commerce company, but also for the Nigerian e-commerce market.

Like every other SME, Konga must have faced challenges. But some of the challenges peculiar to the e-commerce sector include poor road infrastructure, weak electronic payment infrastructure, inadequate power supply and broadband internet, inefficient postal service, and security challenges. Given all these factors that pose a definite growth challenge for technology startups in the country, internet businesses need to come up with solid business models that will stand the test of time. Such companies should also realize that financial success will not come immediately.

Just last year, Kinnevik AB said in its report that Konga was just on its way to profitability, after years of losses. Konga’s rival, Jumia, posted a net loss of about $61 million during the same period. Meanwhile, Yudala, also a large e-commerce platform, doesn’t see much profitability until 2020.

Despite the Konga sale, the e-commerce sector in Nigeria is not bereft of great potential. According to Gabriella Mulligan, Co-founder of Disrupt Africa – an online portal providing news and information on Africa’s tech start-up landscape – Nigeria’s dominance of the African e-commerce landscape is one of the most exciting findings in its report, Afri-shopping: Exploring the African E-commerce Start-up Ecosystem 2017. According to Mulligan, “for the first time, we have clear evidence of the outstanding trajectory of the country’s e-commerce space as being driven by entrepreneurs. While South Africa and Kenya have typically stolen the limelight hitherto in conversations about tech entrepreneurship, this research makes it clear Nigeria is on the brink of huge e-commerce success – and will become the first African country to truly take retail online at a similar scale to Western markets.”

Just over a year ago, DealDey – another online business founded by Sim Shagaya who is also the founder of Konga – was acquired by Ringier Africa Deals Group, a joint venture between Swiss-owned Ringier Africa AG & South Africa-based Silvertree Internet Holdings. This is an indication that investors are still betting on Nigeria’s online businesses.

What is evident from the foregoing is that the absence of a sound business model or the efficient execution thereof, doesn’t equate to the absence of opportunity. Konga’s predicament should be a wakeup call to the rest of the pack in the tech startup ecosystem. They need to review their business models, ensuring they are sound and sustainable. Each of them must eliminate waste and focus on their individual competitive advantage.

Another major challenge in the Nigerian emerging e-commerce sector is trust deficit. Customers are still not able to transact with online businesses, especially where they are required to provide their personal information such as credit or bank card details. Confidence and trust is an essential requirement for acceptance of electronic trading. Designers of online marketplaces have to tackle these challenges and find ways to build enough trust to facilitate transactions between strangers. Trust deficit is the reason over 90% of e-commerce transactions happen through pay-on-delivery.

Online businesses have an obligation to come together to find a solution to this common problem. Without a lasting solution, the online business community may take longer to realise expected success. One way to resolve this could be through regulation. A strong advocacy could begin for the establishment of a separate regulator for the online marketplace and other internet businesses. This regulator could help put in place mechanisms to promote trust among customers and businesses.

As for the new e-commerce startups warming up to hit the market, it must ensure that it has developed a long-term strategy, which will include alternative ways of raising financing pending when their businesses attain critical mass. If you cannot run warehouses and manage inventory, simply opt for an online marketplace that connects buyers and sellers. Ensure your business idea solves a problem; ensure it eases a pain; if it doesn’t do either of these, it’s not sustainable. Start with a moderate-scale model as you continue to finetune and perfect it from there.

From financial fraud, flawed business idea, bad execution of a good idea, and lack of capital, we have had hundreds of very costly startup failures. Some of these are Kozmo.com, which raised $256 million in funding; Boo.com, after raising $135million in funding; and many more. Some of Nigeria’s failed startups include Easy taxi and efritin.com. While many of these companies failed totally, same cannot be said of Konga, given the lifeline it has received through the recent acquisition by Zinox.

It remains to be seen what Zinox will do with Konga. There have been insinuations that the acquisition could lead to the integration of Konga and Yudala, owned by the son of the founder of Zinox, Leo-Stan Ekeh. Regardless of how Konga might thrive as a subsidiary of Zinox, I am still very optimistic of Nigeria’s e-commerce business landscape. The failures of Myspace, Orkut, Friendster, and Hi5 didn’t stop the success of LinkedIn, Facebook, Instagram and Snapchat.

Financial experts have estimated that Nigeria’s e-commerce industry could be valued at $50 billion over the next decade. With mobile telephone coverage currently at 77% of the 185 million Nigerians and internet penetration rate of 50%, the opportunities are enormous.

While it will be foolhardy to downplay the difficulties in creating a very successful e-commerce business, it will be unwise to overlook the enormous opportunities. Indeed, valuable lessons can be learnt from Konga’s situation.

 

@jideolutuyi

 

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