UNICORN: Can A Startup From Nigeria Grow To $100 Billion?

BY GUEST AUTHOR 
ECOSYSTEM, FEATURES, STARTUPSOCTOBER 28, 2015

The spark for this post came from a discussion on Radar.

Despite the dominance of US, the rest of the world also produces their unicorns with global or regional relevance. For example, AliBaba came out of China; MyTeksi a Malaysian car hailing startup is spreading across Europe, while WeChat is a big contender in chat app space, worth $50billion in valuation. Everybody knew Nokia and Blackberry in their hey-days when they ruled the world as top mobile devices. One is from Finland and the other Canada; same with Samsung and Xiaomi which are not from US, but Korea and China respectively.

So, which startup will rule out of Nigeria (Africa) and be the Unicorn….and how?

I wish this could happen soon to fulfill a personal wish, which I revealed at the concluding part of this post. But why are we not having run-away successful Nigerian-founded startups yet?

A short answer: 

A lot have to do with our ecosystem. And we owe it to ourselves to change this or we are doomed.

A longer answer:

1. We are “lazy”. 

Look around. You will notice that we have done little or nothing to articulate solutions to our own local problems. Take for example that VConnect, LostInLagos, Jumia, HelloTractor, OLX, JiJi, PulseNG and the list goes…. are ‘foreign” that have done better to articulate our Nigerian problems and invested better in them than us. This in itself is not bad, but we need to have more African founders solving these problems with the same vigour or more.

Don’t get me wrong, we are trying, just that many of us are barely scratching the ground with our initiatives.

2. Labour is ‘dirt’ cheap and our founders (and their investors) take it all

There is truth in the saying that “he who pays the most for the talent grabs it”, that might explain why our best talents are grabbed and recruited by foreign startups to head their local operations. Take for example, the amiable Lola Masha (OLX) and Ebi Atawodi of UBER.

It is needful to say this because I know labour is cheap and staff salary are super low here so people are eager to take their skills around to the highest bidder because there is a low cost of transfer to them (the employee) but a big risk to employers.

Our local startups should set high standards to attract and retain world-class talents like Microsoft, Facebook and Google who have produced millionaire employees. Some startups seem to be getting the message as articulated by Jason on his blog, where he discussed granting equity to his executives.

I instantly became impressed. J

More startups in Nigeria should do this and be willing to give their employee equity to get long term commitments. It is called employee stock ownership plan (ESOP).

3. We don’t raise enough money to scale.

Recently, Paga completed a round of funding. While this might look an easy feat to accomplish, it is not the norm for most startups.

Largely, the local funding climate in Nigeria is a Sahara desert as the typical Nigerian investor will rather invest in real estate or when he chooses to invest ask for too much in equity. But there is glimmer of hope that platforms like Lagos Angel Network and African Business Angel Network will provide necessary enlightenment to the Investor community about the massive potentials in Startups.

To drive home my point, look at the Funders’ sheet of IrokoTV, Wakanow, Paga and Jobberman (already acquired by OAM), to see who actually invested in their startups to validate them. Many times, the investor with the deep pocket is in The West. 

So if the money is in The West, what matters is not actually kicking out the foreigners but making majority of the money stay in Nigeria through Nigeria founders and executives.

Like;

Having more of Tunde Kehinde (ACE Courier), Iyin Aboyeji (Andella), Simeon Onobi (SimplePay) and others; who through their strategic partnerships are wooing investors to bring their money to play in the Nigeria startups ecosystem. And this is not strange, even the legendary Jack Ma who raised one of the highest IPOs ever that valued Alibaba at $225billion did it in US…..to serve a market in China.

While on the issue:

Founders’ should not mistake investors’ money as free cash. Raising funds is a relationship. As *Tomi Davies puts it: “It is about the chemistry with the investor…..”

*Note: Tomi Davies has developed a useful framework to getting funded that is worth checking out.

 4. Let’s play AFRICA 

Rather than create a clone of a “Silicon Valley” in “Yaba”, we should redefine our game plan by looking inwards to solve Nigerian problems with international expertise.

Wait.

Africa has a population of over 1 billion people and we have challenges that are peculiar to us. So charity should begin at home. Jack Ma, CEO of Alibaba, is famous for his quote about being the crocodile in Yangtze River and fighting to win on his own turf

In Africa, we have a (potentially) billion problems waiting to be solved. For example:

• MallForAfrica is strategically positioned to solve a nagging Nigeria/African problem of buying stuffs from the US and shipping them home. This is an African problem
• JobberMan redefined the Nigerian job market for verifiable jobs and became the biggest jobs site in Africa before being acquired.
• IrokoTV is taking massive advantage of the NollyWood industry globally.
• VoguePay is solving the pain of online payment for SMEs and developers. I know firsthand about their expansive homegrown technology that solves complex developer challenges and makes payment easy at the cost of FREE integration for SMEs

5. Let’s Huddle……Together.

The truth is that no one is going to grow our ecosystem for us, better than we can do by ourselves. Not even Google. We have to maintain concerted efforts to promote entrepreneurship. Kudos to Tony Elumelu’s TEEP, CCHub, Andella, other several incubation hubs and coding academies that are strategic to the overall future development of Nigeria startups.

Another key part is organizing events focused around the entire ecosystem like ABAN, LAN (for investor community), Mobile Monday and StartUpGrind (focused on founders and developer community) to fire up the ecosystem.

This is also not a time everyone wants to be the “CEO of something” at all cost when you can wait like the PayPal mafias to be thoroughly incubated to execute future startups.

6. So, in all this, where does the Government come in?

To encourage investments in this sector, we can push for legislation, similar to what is obtainable in Europe where high net worth individuals who invest in local startups (and keep their investments up to three years) can benefit from tax rebate up to 50%. In Turkey, it is reported to be as high as 100%

Other options to experiment with can include:

• Technology concessions programs like Aliko Dangote got for virtually all level of trading and businesses.
• Free Trade Zone-esquemodel for Technology firms i.e. pay ZERO tax and “repatriate” all profit
• Financial grant like the Nollywood industry enjoyed under previous Federal administration

To get any of these, we can start lobbying our Government.

The rest of the world does this too. Facebook, Uber and the rest have executive hires that are political lobbyists whose roles are to buy government to their sides and direct the course of policies. We have great guys in the space like Tolu Ogunlesi, Gbenga Sesan, Jude Chunwo, Japhet Omojuwa who I presume are close to the government of the day with their *involvements* in the last elections.

I hope any of them can lend a hand to this cause.

7. Conclusion: Why Do I care?

In one part I share a similar concern raised in this post about not allowing foreign multinationals to “invade” the opportunities we still have to build a global, proudly Nigerian startup ecosystem; just like we “lost” our oil and gas sector.

And in the other part, I want one of my kids to work in (or start) a Nigeria-owned startup worth $10 to $100 billion….and that is less than 20 years away from now.

I think if this does not happen, Nigeria and Africa could be a deserted Continent.

Wole Ogunlade is a digital marketing expert; he is the editor of SpokenTwice.com, a blog dedicated to teaching marketing topics covering conversion optimization, growth hacking and marketing automation strategies. You can connect with him on linkedin. Or twitter @spokentwice.

Photo Credit: MBK (Marjie) via Compfight cc

Culled by Ike Onwubuya

Oando records N179b loss in 2014

Oando Plc announced a loss after tax of N179 billion for the financial year ended on December 31, 2014.
The News Agency of Nigeria reports that this is against the backdrop of a profit after tax of N4.68 billion posted in 2013.
This was contained in a statement released by the company in Lagos, a copy of which was obtained by NAN.

It said the company recorded a turnover of N424.68 billion compared to N449.87 billion recorded in the corresponding period, 2013.

The statement added the company for the six month ended on June 30 declared revenue of N60.32 billion against N55.67 billion posted in the comparative period in 2014.

According to the statement, the loss after tax stands at N34.68 billion in contrast with the profit after tax of N5.74 billion achieved in 2014.
The statement quoted Wale Tinubu, the Group Chief Executive Officer, as saying that the company would bounce back into profitability in 2016.
It said the company’s profit after tax numbers were impacted by impairments of N76.9 billion in exploration and production, N16.9 billion in under lift and N7.3 billion foreign exchange losses, among others.
The statement said appropriate consolidation of Oando’s subsidiaries’ accounts and painstaking due diligence undertaken as a result of the magnitude of impairments contributed to the delay in the release of its accounts.

It said: “Upstream players have been forced to record significant reductions in the fair value of their asset portfolios.
“Oando is no exception to this global trend, which has led us to recognise about N76.9 billion of impairment charges in our exploration and production business.”
The statement also said the impairment was due to lower oil prices leading to a reduced valuation of certain exploration and appraisal assets.
It said: “The nature of the business makes us extremely vulnerable to foreign exchange risks as we import in dollar denomination and recover our costs in naira.
“The delay of payments of subsidies from the Federal Government has served to increase this vulnerability and led to a realisation of N7.3 billion in foreign exchange losses.”
NAN.

Culled by Ike Onwubuya
Source - http://theeagleonline.com.ng/oando-records-n179b-loss-in-2014/

N33.8bn debt: Nigeria reveals Ghana’s payment model

N33.8bn debt: FG reveals Ghana’s payment model

Group Managing Director NNPC, Dr. Ibe Kachikwu

The Federal Government has disclosed how Ghana will settle the outstanding $171.5m (N33.79bn) debt owed by its Volta River Authority for gas supplied for power generation by a Nigerian company, N-Gaz.

The PUNCH had reported on Tuesday that N-Gaz, the main supplier of gas to Ghana’s VRA, had given the firm up to February 2016 to clear the outstanding debt.

This is coming as the Nigerian National Petroleum Corporation has denied involvement in the alleged $25m bid by an Indian company, Oil and Natural Gas Corp-Mittal Energy Limited, to acquire an oil block, and the consequent non-refund of the signature bonus it paid for the deal.

The Group General Manager, Group Public Affairs Division, NNPC, Mr. Ohi Alegbe, said in a statement that the modalities for the settlement of the N33.8bn debt by Ghana were reached on Monday between a team led by the Group Managing Director of the corporation, Dr. Ibe Kachikwu, and the Ghanaian President, John Mahama.

The corporation specifically stated that both governments agreed that the VRA would pay the balance of August and September invoices by October 31 at the latest.

The statement noted that it was also agreed that the total sum of gas supply debt would be cleared by February 2016 at the latest

“It was also agreed that all other supplies as from October will be paid for on or before the due date, while the backlog of arrears from 2012 will be defrayed by February 2016,” the NNPC said.

Nigeria had threatened to cut gas supply to Ghana by 70 per cent over a $181m debt that had accumulated over the years.

The Ghanaian Minister of Power, Dr. Kwabena Donkor, had led a delegation to Abuja last week to hold talks with the Nigerian authorities with a view to resolving the issue.

The N-Gaz is a joint venture company owned by the NNPC, Shell and Chevron that delivers gas through the West African Gas Pipeline Company to Ghana.

On the alleged $25m transaction with India, the NNPC distanced itself from the deal, stressing that it should not be linked with the failed bid by Oil and Natural Gas Corp-Mittal Energy Limited to acquire an oil block.

According to the corporation, reports linking it with the transaction are not correct.

Alegbe said, “Our attention has been drawn to the repeated reports linking the NNPC with the failed attempt by a certain Indian company, Oil and Natural Gas Corp-Mittal Energy Limited, to acquire an oil block during the 2006/2007 oil bid round, and the consequent failure to get a refund of the funds it committed to the deal.

“We wish to clarify that the NNPC is not the statutory body saddled with the responsibility of organising bid rounds and so could not have received the alleged amount of $25m or any payment from OMEL for the transaction.”

Culled by Ike Onwubuya

Copyright PUNCH.

Naira Appreciates at the parallel market

Naira depreciates at the parallel market

POSTED BY SEGUN ADEBOWALE ON OCTOBER 17, 2015 IN BUSINESS, ECONOMY | LEAVE A RESPONSE

The Naira lost N0.5 in the afternoon as it exchanged for N225.5 against the dollar, slightly less than its previous value of N225

1

The Naira on Friday depreciated against the dollar at the parallel market.

The Naira lost N0.5 in the afternoon as it exchanged for N225.5 against the dollar, slightly less than its previous value of N225.

Meanwhile, at the interbank window, the Naira exchanged at N197 to the dollar.

Traders at the market said that the demand for dollar had been on the increase as businessmen and travelers bought it for various reasons.

NAN.

Posted by Ike Onwubuya 

Source http://theeagleonline.com.ng/naira-depreciates-at-the-parallel-market/

Ban importation of rice. Nigerian governors tell Federal Government

State governors yesterday pushed for the ban of rice importation by 2017 when the country would have developed sufficient capacity to produce enough to meet local consumption.

This was the position of some rice-producing states at a meeting with Vice President Yemi Osinbajo on a new policy on agriculture and food sustainability with a view to banning importation of rice into Nigeria in the next two years.

After the meeting which was also attended by other stakeholders and governor of the Central Bank of Nigeria (CBN), the chairman of the Nigeria Governors Forum (NGF), Governor Alhaji Abdulaziz Yari of Zamfara State said with the population of the country, it was regrettable that it still had issues of food security.

it would be recalled that the federal government had recently removed rice from import restriction list.

He told journalists that the meeting discussed with relevant government agencies policies to be put in place to ensure self-sufficiency in rice production so as to make further importation unnecessary.

Yari said, “We discussed how we can boost rice production in Nigeria and start thinking about how we are going to put policy in place on how rice importation will be banned in the country.

“We have the potential, we have the human resources, we have the arable land to grow rice. In the next two years, we will not need to bring rice from outside Nigeria. We are going to ban it.

“It is only in Nigeria, a country of millions of people, that there is no food security. We discussed the policy with the relevant permanent secretaries and CBN governor.

“The policy is going to be in place and we gave our commitment that we are ready to support the government policy in ensuring that Nigeria becomes self-sufficient in food production in the next two years.

“Nigeria is currently a major importer of rice. Now, the political will is in place to stop it. We in about nine states are going to be seriously engaged in massive rice production.

“We are hoping that in the next two years, rice importation into Nigeria will be banned. We are committed and the political will is in place”.

“Entrepreneurship is essential to Nigeria’s wealth creation -Pat Utomi

A professor of political economy and management expert, Pat Utomi, on Thursday said weak institutions had been a drag on the nation’s economic progress, stressing the need to get down to diversifying the base of the economy.

Utomi, who stated this while speaking on ‘Institutions, culture, and inclusive private sector rapid growth’ at The Platform in Lagos, said institutions set boundaries and help to reduce uncertainties. The forum was organised by Lagos-based Covenant Christian Centre.

While noting the imperative of quality policy choices, he said weak institutions could be an impediment to the implementation, a situation that had seen the country move “two steps forward and four steps backwards.”

A founding senior faculty member of the Lagos Business School-Pan Atlantic University, Utomi said, “We keep repeating our past experiences because our institutions are weak. Institution building is part of the critical challenge of nation-building.

“Human capital is critical for economic development. Unless people are well-educated and have the right skills, we will not be able to make progress. Developing human capital is very critical.

“Entrepreneurship is essential to wealth creation, and if we are going to grow out of the challenges that we face today, we will have to create value machines in the ways that our people think. Values shape human progress. Without the right values, you cannot make progress.”

Utomi, who noted that every part of the country had endowments that could be harnessed to make the country a high-growth economy, said, “Just look at the endowments of our country; why have we for 30 years talked repeatedly about diversifying the base of our economy and have done nothing about it.”

On his part, a former Special Adviser on Media and Publicity to the late President Umaru Yar’Adua, Mr. Olusegun Adeniyi, stressed the need to end abject poverty and create employment opportunities for the people by unlocking the huge but untapped potential in e-Commerce, agriculture and other areas.

He said, “In e-Commerce, for instance, there is $10bn investment potential in this sector of the economy. The lack of focus and proper planning has over the years presented us with obstacles instead of gains.

“It should be known that unlocking the potential of logistics and other key issues will be the driver in the quest to fully benefit from e-Commerce.”

Adeniyi added that through the emergence of e-Commerce businesses, the sector had witnessed tremendous growth over the past three years and “it is expected to contribute about 10 per cent, valued at N2.5tn, to the Gross Domestic Product by 2018.”

On agriculture, Adeniyi said, “There are numerous investment opportunities in this sector. The untapped potential in the industry have left us struggling with limited gains when we can even get more from it. In the new Nigeria, this sector must be seen as a growth driver rather than otherwise.”

He noted that in the past, agriculture was the biggest sector of the Nigerian economy, but was currently contributing around 33 per cent to the GDP.

“We urgently need to scale investment in this industry by encouraging small and medium-scale farmers who have access to vast hectares of land. We need to look at how we can boost farm yields, move attention on production from small into larger value crops, and possibly reduce post-harvest and distribution losses with advance mechanism and policies,” he added.

 Culled by Ike Onwubuya

 SourcPunch Nigeria,   Naija247news