“Third World problems require Third World approaches towards providing a solution”
That statement up there will help you as an entrepreneur to stay away from years of fruitlessness. This piece I’m going to analyze deeply will open your eyes to the skeleton of business and give you key insights on why you should either quit or start your company.
Firstly, this piece is directed at Africans and anyone who wants to do business in Africa. If you’re an aspiring entrepreneur or you’re already running a startup, then we need to take it from the scratch. This will be detailed.
- What is Africa?: Before you go into business, you need to make proper and detailed research because running a business is not the same as writing a final year project. Often times, I meet with acclaimed entrepreneurs and they haven’t understood what and how their ideas relate with Africa. You just have an idea and the next thing, you’re developing a solution for it.
I spent a year on research before creating a MVP (minimum viable product). This is not to boast and it could be way lesser for you, rather it is to cement the fact that you need to do your assignment on research and not build based on assumptions. I would not begin to explain on how you can weigh your idea if it’s reasonable from scratch but this is also another angle to do so.
So what is Africa really, let’s talk. My answer; AFRICA IS A THIRD WORLD CONTINENT.
The earlier you understand this, the better it is for you. Now, let’s move a bit further to more analysis on what is peculiar about Third World countries or a Third World continent. You may not like the fact, but I’m really sorry, I’m trying to save your company right here. The reason I decided to do this piece is because everyone is jumping into tech in the name of; the future is A I, Robotics and all.
While, it is true, it is also true that the future we’re talking about is 3 decades away at the least if we don’t get facts right. If we keep hallucinating about where we are. This is just a little bit of digression before I return to the main point and I’m going on these corners so you’d understand pure business.
Never at any point compare Africa to the western world. We are way behind them and I’m not being pessimistic, I am trying to save your company. I am not trying to make us look inferior, I am presenting the reality of our current state.
Let’s throw the dice and play the game.
What can you say is peculiar about Third World countries?
Poverty!! Lack of development as well!!
What I’m trying to do is to give the breakdown for you. Now, let’s break this down a little bit further. I will take Nigeria as the case study seeing I reside in Nigeria. Nigeria is said to have over 180 million citizens, according to the national bureau of statistics. Let’s hold that to be very true.
We have over 60 percent of this population to be youths and the rest adults and youngsters. Quick digression again, can you remind me what your business idea is about? Oh good. I will use an example.
Going into edtech. We are in what we call the edtech boom. The system of education is so bad that it is one of the major causes of unemployment in Africa. Education in Nigeria has not incorporated technology which means someone else, a private body needs to step into the game seeing the government is pretty slow about this. Good idea right?
So we have a problem. The problem is we have about 80 million youths who are in Nigeria and over 14 million are unemployed. There’s a huge gap between the world of work and the youths so let’s provide a bridge right. Now here’s where the problem comes in. Stay with me. An entrepreneur who has done proper research will come up with accurate statistics.
Let’s analyze it;
- There’s huge unemployment in Nigeria because of the wide gap between the world of work and youths.
- Internet penetration is high in Nigeria with over 20 million active monthly Facebook users in Nigeria, over 14 million on YouTube, over 14 million on Instagram, over 7 million on Twitter. This “means” people are using the internet well.
- Smartphone penetration is pretty high in Africa and by 2020 from statistics, African youths will be able to afford a smartphone and have access to the internet as well.
- There are so many skills to learn in this century that can be learnt online.
- Learning in universities is pretty expensive and cannot be easily affordable by all.
I have presented a problem right here and there’s a solution to these problems. An online platform for learning will be the perfect solution. It offers some concrete solutions
- Ease of access to relevant courses
- Flexibility in learning and easily updatable
From this pitch deck, we have a good business plan and we can start a business hoping we’d have millions of the youths who are online using the platform. Now, that’s where the problem is. You have provided a solution to the problem but it is entirely different from building a business around it. I will give insights to this later.
From this pitch deck, we can say the market size is about “10 million users”. However, it is not true if you look at your business plan from the angle of What is Africa? The real market size is less than 1 million people. Way less!!
The real problem is that while we say that the market is ripe, the people are not.
Understanding this as well will help you put your company in proper perspectives. Remember I am still explaining what Africa is, I have not begun analysing how to build a real business from a problem you’re solving. Solving a problem doesn’t make you a successful entrepreneur. Building a business around the problem you’re solving does and only a few know this.
Let’s quickly talk about E-commerce in Nigeria once again. We have seen major companies close down in the E-commerce line. The reason is not far-fetched, while we can bellow all around that the market is ripe, are the people itself ripe?
We are not. How many people trust online transactions? Our parents? Me? Don’t just talk about me because I have been disappointed three years ago and it was due to late delivery of a product I ordered for my bestie on her birthday which was delivered two weeks after the set date. Well, that was three years ago and I’ve never trusted the platform to the point of ordering from it. Forget about the company’s name. Let’s talk business, I’m not done.
Who do we blame? The company? Well, yes, true. However, I believe you’ve not forgotten that we have not forgotten that we are talking from the angle of Who is Africa. Africa is a Third World continent and go check, poverty ravages these countries that their road networks are really bad. Now that they have built an e-commerce platform as a solution, the real problem still lies in the fact that the customer base will reduce because of logistics issues due to the fact that this is Nigeria.
Did you look at it from this angle? You have solved the problem but we need to keep this solution running as a business, you need to reach 10 million customers monthly to meet your target so as to please investors but based on these setbacks because it is Nigeria, you can only reach 2 million customers, how do you get to 10 million customers?
If you cannot get to 10 million customers, how do you make the revenue of 10 million customers even while it’s just 2 million customers you have access to? Now, this is business but do you know?
I have so many issues to address which is why I need you to watch out for this space and you can reach out to me if you want to talk real business and need help (business deals only, not mentorship or free advice please).
I am not laying all these points to discourage you from starting a company, it is to open your eyes that there is more to running a business than solving a problem or using high tech. I’d still address why some tech start-ups are wasting their time running in Africa or how they can navigate with patience and still scale but let’s go to the next point.
What Characterizes Third World Countries?
If you’ve not accepted that we’re a Third World continent, then please stop reading. Go start your company anyways. For those who are still with me, let’s talk about what characterizes Third World countries and which businesses thrive.
Back to Nigeria as a case study, we have a huge population of the poor and middle class than the wealthy. I have no statistics for the numbers, forgive me but there’s a wide gap. If we have the middle class so much, what products or services do you think will sell?
Needs!! That’s all
- Children stuff
For these points mentioned, there’s the place it applies to the middle class and another for the high class.
When it comes to food, Nigerians will firstly go for need. Fine, let me say the majority of Nigerians which happens to be the larger number. We get food because we want to stay alive. This means that garri sales, rice sales, beans, yam, etc will never stop as long as Nigerians remain Nigerians.
We (the majority) do not care about pizza or cold stone. We care but we cannot afford it so it becomes a want. The need market is the largest market in Nigeria, and Africa. Go check.
If you open a store that you have Gelato for sale, you’d have customers but I bet you, you can never build a billion dollar company from it in Africa. I have not taken Gelato before and I hope one of you buy me one, but I feel it will be pretty expensive. The middle class can still afford pizza, cold stone. I think they make up the majority of the consumers.
What characterizes the African market? Have you made your research in line with your company? Don’t just build out of optimism, build out of data and facts. It’s good to build for the future, but if you don’t understand business, you might not be able to lead your “potential customers” from the past to the future. They’d forever remain in the past. You need to either bring the future to them or lead them to the future.
So when building a business, the safest businesses to build are Third World businesses. Businesses based on “Now Problems” and not future problems. You cannot be Elon Musk and survive in Africa.
I have been able to explain why you need to understand who Africa is and what characterizes Africa. I’d write another piece on how we can integrate tech appropriately into businesses in Africa.