This is a brief from a talk I gave last week to a business club looking for opportunities in Africa. They had asked me to speak on African opportunities and how they could find them. They made the call after one of their members went through some business ideas I noted in my new book.
I divided my presentation into sections: the essence for business, the opportunities and how to unlock them.
Why do we need a business? We need a business because market is not friction-less. If markets have been friction-less, buyers and sellers will not need firms in between them. In other words, if a saver can find a borrower without going through a bank to put that money, and then the bank will go ahead to lend to the borrower from that money, we will not have a need for a bank. In other words, the reason we have a bank is because there is a friction for a saver and a borrower to do business directly. The bank comes in as an intermediary to reduce that level of friction. For doing that, the bank is paid.
This cuts across all industrial sectors. Schools exist because families cannot optimally engage teachers to teach their children, directly. If for any reason we can create a technology that makes that direct engagement possible, removing the friction, we will not have a need for schools.
So to know where the opportunities are, you will need to look for places where people and firms are experiencing frictions in their lives and businesses. Most times, it begins from your own personal experience. What is the friction you are experiencing and how many people do you think are experiencing the same? That can give you an idea of a business opportunity.
You do not have to fix all elements of the friction. You can just reduce the level. For example, instead of Chisco, a luxury bus, driving you from Owerri to Lagos for 10 hours, another company, Peace Airlines, can do same for less than two hours. Peace has reduced the friction of getting you from Owerri to Lagos. Yet, the opportunity could be to reduce the friction that even made it necessarily to travel to Lagos. That is how the thinking behind telepresence technologies is evolving.
If you have gone to a bank to wire money and it is taking three days to send it from Lagos to Gabon, it means that even though it is helping you to manage a friction, it has not done it optimally. A new business idea could be to make a system that cuts the days from three to a day.
Business opportunities exist where there are frictions. You will find them in agriculture, energy and more. As you discover them, you may need to question how the incumbents are fixing the frictions. When you have a really new way of fixing the friction, you can be innovating and potentially disrupting the sector. People used to go to libraries to learn new things. The friction is to accumulate knowledge based on limited time we have. Someone created a library that has no opening and closing times. It is called Wikipedia. Another person now made it possible to aggregate the world of knowledge. That company is called Google. They are essentially fixing a friction on the discovery and acquisition of new knowledge.
In a nutshell, all the business opportunities in Nigeria are in all the areas we are experiencing friction. Right where you are right now, provided something is broken, and you do not like the experience. You have the opportunities in power, transportation, education, security and more. If you can fix the frictions, you will find your moments. Opportunities are not esoteric. They live with and around us, daily.
Some Ideas To Explore
I provide some business opportunities to explore in our country. Please remember that there are many others around you in Nigeria.
- Agro fintech: creating financial solutions geared for the agriculture sector with the use of technology like apps, web apps, AI, blockchain, etc. These will include agro-lending, agro-insurance, agro-trading, etc. FarmDrive, a Kenyan enterprise, connects unbanked and underserved smallholder farmers to credit, while helping financial institutions cost-effectively increase their agricultural loan portfolios
- Farming ecommerce: expanding farmers’ markets by providing digital platforms for trade of farm produce. This will enable farmers, especially farmers involved in non-perishable crops, find markets outside of their immediate locations. Sokopepe uses SMS and web tools to offer market information and farm record management services to farmers.
- Precision agriculture: deployment of IoT and cloud-based solutions to improve farm yield by helping farmers to make better decisions through precision agriculture. These sensors will provide weather data, soil data, animal health data, and crop health data in real-time. An example is Nigeria-based Zenvus (which I own) which provides deep insights on farms via sensors which capture data like temperature, moisture, humidity and other pertinent farm data.
- Pricing aggregation: facilitating trading through provision of produce price data across cities. The goal is to empower farmers with pricing data so that they can bargain better with middlemen and traders. This will improve the value chain for farmers and provide them the opportunities to earn more. An example is Kenya-based mFarm which aggregates pricing data across cities to help farmers bargain more effectively with merchants.
- Storage: African farmers struggle with storage of produce. Building solutions in this area will be catalytic. Opportunities include warehouses equipped with modern storage systems which farmers can rent. Nigeria-based ColdHubs that helps farmers store produce is an example
- Logistics: there is a huge opportunity to facilitate the delivery of produce from rural areas to urban areas across Africa with our poor road networks. Kobo in Nigeria which operates as an aggregator is working in this area.
- Digitization of transactions: from payment to tracing origins of produce, we have a huge need to digitize farming systems in Africa. This will involve making solutions that can help track farm produce. Also, farmers need digital diaries for recording farming activities, mapping solutions to enable farmland registration and titling. Farmerline which operates from Ghana is an example.
- Commodity trading: besides the top-grade exchanges for trading commodities, there is an opportunity to create mini-exchanges that can facilitate commodity trading at local levels even within states. The goal is to make it easier for cooperatives to create more values for their members through scale.
- Blockchain: blockchain can be deployed in agricultural value chain, insurance, pharmaceutical supplies, peer-to-peer trading and lending, cross-border commerce, banking and other sectors in the continent. This underlining technology that supports Bitcoin, the crypto-currency, offers many capabilities to power new forms of business models owing to its consensus-driven decision architecture and trust networks. Blockchain delivers reliable, quality and verifiable data which enables assured digital identity during transactions. Bankymoon, a blockchain-based smart metering solution provider for power and utility grids, and BitPesa, a startup that enables trading on digital currency, are examples of the applications of blockchain to businesses. Another company, EnLedger, uses blockchain to combat fake drugs besides other applications like energy, law and land management..
- IoT: Efficient monitoring and tracking of water resources and quality. Hello Tractor in Nigeria delivers solutions that help farmers improve yield by renting tractors on demand.
- Artificial Intelligence (AI): opportunities for AI include real-time management of energy distribution, loan syndication, customized online education at individual level, personalized banking and insurance services, peer-to-peer lending, and health analytics. UjuziKilimo, a Kenyan startup, uses big data and analytics capabilities to transform farmers into a knowledge-based community
- Solar: decentralized and modular energy systems which deliver better value to homes. This could be designed to be Energy as a Service (EaaS) where users pay for the electricity supplied instead of taking ownership of the equipment. SunCulture which sells drip irrigation kits that use solar energy to pump water from any source has made irrigation affordable. Kenya-based mKOPA provides off-grid solution to households.
- Health monitoring: wearable devices could power the ability to monitor, track and deliver care to patients more effectively. Example: Kaa which uses sensors to monitor patients.
- Drones: drones can be used in mapping construction sites, agricultural data collection, and delivery of drugs during natural disasters or conflicts. It can also help to reach rural communities with medicine and other types of supplies. Zipline which operates in East Africa, delivering drug and medical supplies, is a good example
- 3D Printing: the possibilities that 3D could enable decentralized manufacturing will make it easier to make products at the places where they are needed. This will make it easier to support many African cities not linked with good transportation networks. GE has provided 3D equipment in its GE Garages including the one in Lagos.