Prof Goodwill Chukwuemeka Ofunne drops some lines on how to operate in Nigeria which has many policy somersaults. Like I noted a few hours ago, on how Nigeria has gone through more than 3 ICT visions/roadmaps in 10 years with each new minister coming up with his/her own, abandoning whatever the predecessor has started. Contrast that with serious countries where government is a continuum. On these somersaults, you can add Okada ban, border closures, etc to those policy changes. When the only constant is policy somersaults in any economy, good money stays out. Here is what Prof Ofunne has to say:
How to overcome Nigeria’s Policy somersault is by making your business plan and implementation strategies elastic with defined boundaries. The rule of the thumb in Nigeria’s business world is to start small and grow the business through a coordinated, but an elastic process that accommodates primary inputs and transformations that are related to unforeseen policy changes. Big investment startups in Nigeria are too inelastic for the economy and as a matter of fact, collapse at the slightest change in primary input to set processes. Our model should be ” Little beginnings with growth”
He is saying this: blitzscaling does not work here as a small perturbation in business variables will lead to failure. This is the key line: “Big investment startups in Nigeria are too inelastic for the economy and as a matter of fact, collapse at the slightest change in primary input to set processes.”
This is my summary in the OPay piece: “I have watched rich people in Nigeria, they have one playbook: go slow, find a path to profitability, and stay the course.” You go slow, watch for stability, and then take the next step. But if you go all in, and they change direction, you can crash.
In Nigeria, I do think everything changes. If you check all the major foreign tech firms in Nigeria, their manpower may not have grown in 10 years. They have the money to come and look for business in my village and possibly yours (I assume it is not in Eti Osa LGA). Simply, they are patient and do not try to use money to force things by throwing money on things that cannot work. As I noted in that piece, only 19 million pay tax in Nigeria (private + public). That is why no bank crosses more than 16m useful customers in a place with about 110 million adults. I did also note that tech in Nigeria has only 30 million max to serve. You need to grow but it is good to have buffers.
Silicon Valley can go for 10 years with no profit as it pursues growth. That is risky in Nigeria as our source to funds is limited. What tripped OPay is nothing in SV which can run reds for years. My “slow”is forget growth, and find ways to make profits so that you stay in business. It does not mean you cannot scale. It simply means you scale profitably. So, slow down and get some profits, and grow. But scaling with no profits is risky here as we do not have investors who can support that yet.
Dangote brought in $15 billion in 2015. I did not say you cannot raise $1billion. My point is that sustained profit-less growth makes no sense in Nigeria. Slow means, have ways to find profit-path. Silicon Valley can go for 10 years with no profit as it pursues growth. That is risky in Nigeria as our source to funds is limited. So, slow down and get some profits.