OPay Meltdown: How Do You Overcome Policy Somersaults in Nigeria?

OPay Meltdown: How Do You Overcome Policy Somersaults in Nigeria?

This is related to this article on OPay.

How do you overcome policy somersaults in Nigeria that continue to affect startups like OPay?

Learn from the super-rich in Nigeria and forget Harvard core competency and domain focus message. The 1% are parallel entrepreneurs with extremely diversified portfolios. One, who owns a bank in Lagos, has 27 companies in his holding empire. There is no government policy that will not benefit one of those 27 firms even as the policy affects others. At the end, the policy impact is neutralized, internally, and wealth is preserved.

No 1% complains of policy changes because those policies typically have cumulative  minimal material impacts on them; only the Harvard-style purists, following European and American models, cry. I know it is confusing when you see those many companies under one umbrella. There is a reason: hedging against Abuja.

I watched a modern day entrepreneur boosting how he is razor-focused, and how he would never enter into other areas, as is typical with many Nigerian business people. It was painful when a small change in the government policy knocked him out of the way. People built factories in Aba to serve southern Cameroon; then, one afternoon, that market was gone with border closure. People took loans to invest in Okada business in Lagos, you know the outcome.

Go to the ports, and see how many goods people have abandoned. Those products were on the sea when the government changed policies with NO notice. Nigeria is Naija, no be America or Germany if you permit me to go pidgin.

This is the message; if you can, pursue diversification early, through, at least, vertical integration.

OPay Other Businesses Fail

Share this post

5 thoughts on “OPay Meltdown: How Do You Overcome Policy Somersaults in Nigeria?

  1. Where diversification is not possible as result of limited resources or knowhow, you can as well become a terrific firefighter in the business space, just keep putting out fire, it never stops in Nigeria.

    Your extinguisher should never go empty here, you will be buried once it happens.

    Reply
  2. Realising that there are just a little higher than 42 million economically effective people in Nigeria is a hard fact! This is the number with BVN and maybe only 25% of that number (10 million) will make effective demand on the best products. The 10 million people may not be able to sustain your leveraged billions in the face of stiff competition!

    That is the reason you see Dangote, Honeywell, Flour mills and other government-policy-resilent businesses not towing the American model you just spoke about. They understand the power of following demand from the real 200 million people who daily get their products through extensive distribution chains. That is why they have been able to weather policy summersault for years.

    The modern growth hackers would have to know that there is uneven income distribution in Nigeria and that putting 1 million Okada in Nigeria in the name of logistics may not be a strategic business model to follow because of the human and environment risks that are embedded. Those negative externalities would make government to strike! So they would need to be circumspect about the opportunities they pursue!

    The mother of it all is that any business model that inconveniences the rich in Nigeria is a bad business model from day one, especially if you are using Lagos, Abuja and other big cities as your flagship shops. Be sure the policies would not favour such business model in the long run.

    Adaptation through local knowledge, culture, and social dynamics should be incorporated into any business model for sustainability.

    Otherwise, the rest is history!

    Reply
  3. In as much as Diversification mitigates threats, it also limits your potential growth in a particular sector. In fact, what I have seen here is People diversifying too early and too much! Yes, you mentioned vertical integration! I believe it is better to concentrate the bulk of your investment at startup on a particular product especially when you are aiming towards entering or dominating a market product! Diversification is essential but it should not be too early!

    Reply
  4. In as much as Diversification mitigates threats, it also limits your potential growth in a particular sector. In fact, what I have seen here is People diversifying too early and too much! Yes, you mentioned vertical integration! I believe it is better to concentrate the bulk of your investment at startup on a particular product especially when you are aiming towards entering or dominating a market product! Diversification is essential but it should not be too early!

    Reply

Post Comment