As 2024 arrives, I want you to invest in one skill: accounting and the broad understanding of Balance Sheets and Profit & Loss Statements. Yes, everything we do in companies has one destination: financial statements. And some special people (the Board of Directors) are anointed to use those statements to evaluate the health of the business. Those people are powerful, and most times, you may never see them in any building in a company, even though they control and influence the firm.

When they meet, typically quarterly, they evaluate if the coding, marketing, pitching, selling, customer support, etc are going well. Magically, they do not even need to come and ask you the coder how you are coding: they’re extracting and extrapolating based on the financial statements. Those statements are the summaries of how the firm is doing on its mission.

If they conclude that the numbers do not align for the grand vision, they tell the executive management to re-calibrate, and sometimes, due to the instructions pushed, people will lose their jobs, and factories can be closed. In Nigeria, some people reading financial statements out of GSK, P&G, etc headquarters, decided that things were not working, and commanded their lieutenants to close the Nigerian operations.

The question is this: do you understand the financial statements of the company you work for? If you do not, you are a follow-follow person with no bearing, because you are financially blind to the state of the business. When you cannot make sense of these documents, you  will not understand how the business is reporting everything ALL of you have been doing to the “owners” or custodians.

I am an engineer and I am proud that I understand financial statements. As a young banker in Lagos, I did not want to be blind; I enrolled for ICAN (graduate, intermediate), and became aware of the implication of the two most important documents companies create yearly.

In 2024, I challenge you to master how to at least read them. If you do, veils will be lifted, and you will understand that company better.

The Power of Accounting

Computing along with the whole information age is built on 0s and 1s. Those 0s and 1s are like the biological cells which are the fundamental units of life (cells make up tissues, tissues organs, and organs systems). In the world of business and commerce, the language most spoken is the language of accounting, and that language is expressed in credits and debits.

Debit comes from Latin’s “debitum” which means “what is owed” or simply debt; credit also comes from Latin, now “creditum” which means “having been loaned”. Since Luca Pacioli formulated the double-entry system in the 15th century, the core attributes remain. 

As 2024 arrives, plan to understand basic accounting. If you do not, you simply follow others, blindly. And that means you will not rise to the highest level of your call because business is nothing but accounting, chronicled in statements like balance sheets and income statements.

Indeed, your tech skill, your strategy session, your sales, your loans, and everything in that company comes down to debit and credit, souped with ingredients of asset, liability, equity, revenue and cost, with the asset (=liability + equity) and the revenue/cost delta (profit or loss). If you do not understand this, you are following others in the world of business, and opportunities will pass by which your antenna will not pick.

They have passed you twice for a new promotion even though you are the best tech guru. Have you checked? The other guy is a tech guru and also understands the business which gives him/her an edge.

Because I like to provide solutions when I write, I made sure that our Tekedia Mini-MBA (register for next edition starting in Feb 2024) has ICAN and accounting experts who can help you on that journey:

• Accounting – Ndubuisi Umunna (ACA), Head Finance, Grand Treasurers
• Auditing, Forensics, Controls – Yusuf O. Sanni (ACA), Chief Internal Auditor, BUA Cement Plc
• Internal Auditing Strategy for SMEs – Abel Osuji – Director, Internal Audit & Risk Control, African Export-Import Bank (Afreximbank) Egypt
• Managerial Accounting, Business Decision Making and Growth – Idris Ayinde, ACA, CFA, KPMG UK
• Building Your Business Financial Models (templates included) – Michael Olafusi, Financial Analyst Fellow Brightmore Capital

Fintechs are everywhere and it may be challenging to build a new one as category-kings have already emerged. In Nigeria, we already have clear kings like Moniepoint/ OPay/ PalmPay/ Kuda (POS, SME banking), Interswitch (card network), Flutterwave (web payment), PiggyVest (saving), FairMoney (lending),  Bitmama/ Changera (cross-border) and  TAP (micropayments) controlling their domains. Unless you have a clear new basis of competition, it may be tough going after these companies frontally.

So, if you cannot find another financial service niche to pioneer and dominate, a good playbook could be anchoring a business upon some of these companies. One of Nigeria’s finest agtech startups – Winich Farms – is a very big company which taps into the fintech world, but serving farmers and those in the broad agro-sector. Another is Cinderbuild which focuses on construction while also deploying typical fintech services from partners.

Looking at the state of the market, establishing new companies where we have obvious category-kings without having a way to reshape the competitive equilibrium may not be a smart strategy. If you want to enter these areas where we have clear dominant players, and plan to do exactly what they are doing, you must come with a lot of cash as “quantity is also quality”, because with deeper pockets, you can find ways to win some territories (not recommended though). 

But if you ask for my opinion, I will tell you to go from the flank, and that means going into a sector and within that sector, you offer value to customers, even as you work on ways to embed fintech solutions on your products. My fintechnolization postulation remains that all digital platforms will offer a fintech solution. But it does not mean that you have to start a fintech product that collects online payment in Lagos today. 

In December 2020, I introduced the concept of fintechnolization: “a construct that every digital platform must have a maturity state of offering a fintech solution. I had watched all great digital platforms on how they ended up providing fintech solutions even when they began in an unrelated sector.”

Nigeria and indeed Africa are moving to the next phase of fintech evolution as the core operating system has been established. With this OS running, we can unlock opportunities in new sectors like agriculture, retail services, construction, etc across all nexus of financial services. Pursue those latent opportunities and do not waste time building another “fintech” solution.

Comment on Feed

Comment 1: I agree with finding another financial service niche to pioneer and dominate. Makes things a lot easier and indeed there are other promising and untapped opportunities and infrastructures that could be set up.

Just like you said, unless there is a clear new basis for competition. It may be tough to challenge;

The good thing is there are gaps and areas where these category kings have failed to fill in.

Well, I always fancy a David vs Goliath Story! ?

Either ways, it’s key to solve problems in a healthy way and to seek partnerships where necessary, even with the category kings.

Comment 2: Excellent and apt insight Prof. Months back a Nigerian fintech hopeful asked me for advice with their fintech payment idea. Although he was highly technical I pointed out to him the plethora of fintech options already available there, and I asked him to tell me what his value proposition was. His answer was he was planning to use a different protocol for small payments. I pointed out to him the number and success of small payment systems already entrenched in Nigeria and going up against established companies with nothing new other than an underlying system wasn’t enough – end users don’t necessarily care “how” transactions are completed, just as long as they are completed.

So I asked him to think more deeply about his target market, existing competition, the costs and time involved in setup, and what his vision for his product was, from infancy to operationally to accelerating, and to really think about if his product was actually new or if it was just doing the same thing already available.

Barriers to entry may seem low initially, knock out some code and away you go. But reality is the backend systems/servers/security is very costly. Unless you have an excellent product and strategy that adds value think twice:think niche.

My Response: A brilliant template for any new founder: ‘end users don’t necessarily care “how” transactions are completed’

My Response on “opportunities are still there” – check Twitter

All have opportunities. My point is that even in the present categories, you need to approach the problems in new ways. Going to do what Flutterwave is doing may not be smart because they have more resources. But you can pioneer new categories in the fintech space and control them.  MPESA in Nigeria may not work because what Nigeria has is good enough to care. That it worked in Kenya does not mean it can work in London, Cape Town, Lagos, etc since they have different levels of sector maturities.

You might read people writing that in Nairobi, you can do that with MPESA when it is not available in London. That is not the full story: London’s financial services might have abstracted the very reason MPESA was needed. So, if you bring it, no one cares.

You can click to get the full view of my note. Everything remains in infancy , including what Flutterwave is doing since it is not in Ovim, my village. But I am not sure the new fintech with limited resources has a higher chance, doing exactly the same thing.

Fintechs are everywhere and it may be challenging to build a new one as category-kings have already emerged. In Nigeria, we already have clear kings like Moniepoint/ OPay/ PalmPay/ Kuda (POS, SME banking, etc), Interswitch (card network), Flutterwave (web payment), PiggyVest… pic.twitter.com/rHGEKeuMFN

— Ndubuisi Ekekwe (@ndekekwe) December 19, 2023