In most of my analyses when it comes to people that actually have money to spend or pay for (technology) solutions in Nigeria, I use 30 million people. Yes, despite 198 million human population, the effective addressable market in Nigeria is less than 30 million people. In Fasmicro Group model, these are people with decent incomes for anyone to craft solutions to their personal and business-related frictions. The remaining 168 million people are opportunities, nevertheless [they have to eat, shower, etc]. But we see them from the track of the core 30 million people who have the money to pay for tech things. For most technology solutions (think gaming, apps purchase & digital subscriptions and the platforms like smartphones, computers and connectivity required for them) where the buyers are usually the direct beneficiaries, the 30 million is rock solid. (Of course, on largely non-tech areas like food where everyone has to eat, the 198 million people become the addressable market.)
If we discuss broadband connectivity and the associated required investment without considering the earning capacities of the users, we would fall into a trap. That trap is similar to parading Nigeria’s 180 million in population (some have 200 million; others 192 million. I like 180 million) when only about 30 million people earn decent income with spending power.
For most analyses, across industries, I like to work with 30 million people since that number is close to the total unique bank account users in Nigeria. Technically, anyone that does not have a bank account in Nigeria at the moment is largely poor. And when I do models for markets, for most products, I rely on this 30 million because those are the full market potential at the moment, unless the product is free or in some sectors like food. Most banks excluding First Bank which has about 14 million customers have lower than 10 million customers. That is not what you expect in a country of 180 million citizens. Yes, everyone is circling around 30 million people
This number has been validated through many external indicators in our Practice. From the number of bank accounts in banks to many things, we have never seen a case where a specific bank exceeds 20 million customers in Nigeria. If you run the UNIQUE account numbers, it would be in that neighborhood, although higher. Of course that you have a bank account does not mean that you have money to spend. It could be that you need one so that people can have an account where they can pay in money for you to support your basic needs [think of many student accounts].
Today, a piece in the Guardian supports our 30 million number: the total number of people that pay taxes in Nigeria is about 19 million.
Of the 14 million taxpayers (pre-2016), 13.5 million are PAYE, meaning there were only about 500,000 voluntary taxpayers in the entire country.
It is gratifying to note that this has been updated and figure show that the taxpayer base is now about 19 million. There cannot be a clearer indicator of the challenge of trust.
Yet, that 19 million would include some state governments that battle to pay their teachers N18,000 per month (about $50). Do real modeling; you can cut that 19 million down to 12 million as the number of people that earn fairly decent wages with extra for most technology solutions. So, we have 12 million from the tax papers for the 30 million number; the remaining 18 million people are businessmen and women across the nation. You may even question if we have 18 million people in the largely informal economy since workers from organized private sectors are already included in the 12 million tax-paying workers [companies collect PAYE from workers and remit to government].
Update: Total Bank Verification Number (BVN)
Nigeria has a total of about 32 million unique BVN numbers, notes Vanguard. This strongly supports our thesis of 30 million people as the addressable core market. At least we know the number of unique bank account holders in Nigeria. As noted above, having a bank account does not mean that you have money to spend.
The Central Bank of Nigeria (CBN) has captured no fewer than 31 million account customers in its Bank Verification Number (BVN) project aimed at ensuring unique identifier in the Nigerian banking industry.
“As at December 2017, the implementation of the BVN Project recorded 31,426,091 registered BVNs and 43,959,282- accounts linked with BVN,’’ he said.
Read more at: https://www.vanguardngr.com/2018/05/cbn-captures-31m-nigerians-bank-verification-number-project/
Update with Extra Insight:
After this piece, I ran this one which noted that Nigeria has 38 million smartphone /mobile device users.
Of those subscribing to the four major operators, just 38 million are smartphone users, with MTN accounting for more than one third of the total. Airtel and Glo have almost equal number of subscribers falling into this segment.
Then someone made a comment on LinkedIn to support the 30 million addressable core market thesis.
The figure of around 38 million smartphone users isn’t still far from the 30 million ‘magic number’ of decent income earners in the land. Just subtract the smartphones with double SIM slots, and those having more than two smartphones in their hands, you still end up around 30 million unique users. This country’s economy really needs to grow and develop aggressively, for a while it has been more or less like recycling, with minimal entrants of those crossing the poverty threshold to the other side.
How about having a national budget in excess of $100 billion, stock market valued in excess of $200 billion, and decent income earners rising to 60 million? Suddenly there would be serious economic activities everywhere, with many businesses remaining alive.
Chasing the same ‘tired’ and ‘exhausted’ 30 million people won’t do this country any good. Somehow we need to find a way to bring more people to the party.