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Africa's Greatest Investment: $34M to $170B

Finance creates empires and business is a contact sports because it is a game played with money. Decisions have consequences unlike when you are playing games on blackboards. In business, your strategies are tested by market forces.

So when South Africa's Naspers invested in China-based Tencent $34 million, it was making a huge call, in 2001. Today, that $34m berth is now worth $170 billion (with b), based on Tencent's current market capitalization. Magically, Naspers is the 65th most valuable company in the world. That berth is perhaps the greatest investment in Africa.

That takes to my thesis in Nigeria: we can reform our investment climate, starting with venture capital sector. To create such enablers in Nigeria, I propose the following specifically for the VC sector:

  • Government should offer new VC (venture capital) firms in Nigeria a ten year tax incentive on profits if they have asset base of at least $50 million and will deploy the capital in Nigerian startups within 10 years.
  • Offer new VC firms in Nigeria the opportunity to repatriate 100% of profit within ten years. That will help the country to attract foreign investors to make Nigeria home.

If we have this type of incentive, we will see many VC funds making Nigeria home to explore opportunities in Nigeria and continental Africa. That influx of capital will have many multiples of benefits to our economy, our people and the Nigerian technology space.

Nigeria needs to have investment houses that can run the type of berth that Naspers did.

The issue is not capital, the problem with Nigerian startups or businesses is poor technical know how, risk tolerance and unrealistic projection. Global business landscape is fast changing and requires certain skill to pinpoint companies like Tencent. Just like Masayoshi Son did with Alibaba when he invested $20 million that was valued as much as $70 billion on the day Alibaba went public, same with Warren Buffet Cocal-cola 1987 investment. I don't Nigeria businesses are even tracking these unique start ups or even have Naspers tool.

 

"The issue is not capital, the problem with Nigerian startups or businesses is poor technical know how, .."

The question is: how do we develop this talent base?

How will those who always see foreign investors as 'vultures' see this? Asking them to give such a tax incentive is to them 'corruption' and also constitute 'wasting our resources'. We seem to like foreign investment, but we don't to care about learning how these things work.

Great insight! This brings me back to your earlier post about DSTV and TSTV.

Those who doubted your patriotism based on the facts you succinctly penned in that write up must have missed the point. Great businesses are built on facts and figures,not sentiments. I implore who ever is at the helm of affairs in TSTV to read that article.

Naspers are the owners of multi choice.  They have operated for more two and a half decades.  you can not ignore the capacity and experience they have built over the years, you need a certain level of financial muscle and strategy to compete with DSTV, if not, you may flow with the HITV tide.

Some people have this erroneous understanding that the sports channels are what gives Dstv the advantage, I doubt if that is true, because the sports channel only attracts viewers few days of the week, i think Africa magic and Telemondo are the most watched channels.

Multi Choice have built huge following over the years with projects like TINSEL,the JOHNSONS Hotel Majestic DoGood, just to mention a few, these are all exclusive contents.

Between 2014 and 2016 Africa magic produced more than two hundred original movies (AMOV) in Nigeria alone. As we speak exclusive content are still been created all over Africa aside moping up content by independent producers.

My advice to TSTV is to invest heavily in content, I mean exclusive content. Up until now your decoders are still not available for purchase. And instead of employing actors to head channels get people who understand the business of content buying and creation to head the channels,if possible from your competition, they will bring with them thier network and know-how.

I sincerely wish TSTV all the best.

 

"Great businesses are built on facts and figures,not sentiments". Beautifully written, Guest. 

In Nigeria we do not like facts and that is why the boss gets the type of data that will make him/her happy. At the end, the institution goes under, because they did not build on facts. We wish businesses well, but if we have to write, we need to write facts, respectfully, knowing that we are not attacking people but analyzing businesses. Thanks for the comment.