Based on the strength and potency of their institutions and apparatuses to create the social good which includes security, welfare and happiness of the people, states are often described as functional, failed or fragile. A state is generally considered to have failed when it is no longer able to consistently and legitimately enforce its laws or provide its citizens with basic goods and services.

A fragile state is a state whose central government is so weak or ineffective that it has little practical control over much of its territory, characterized by inadequate or no provision of public services, widespread corruption and criminality; refugees and involuntary movement of populations and sharp economic decline.
The fragile states index provides a quantitative approach to understanding the fragility of a state; it measures the vulnerability of a state in pre-conflict, conflict and post-conflict situations.

The index comprises twelve conflict risk indicators that are used to measure the condition of a state at any given moment which includes; security apparatus, factionalized elites, group grievances, economic decline, uneven economic development, human flight and brain drain, state legitimacy, public service, human rights and rule of law, demographic pressures, refugees and IDPs and external interventions.

Since 2005, the index has included all UN member states and has been published annually by the fund for peace and the magazine foreign policy. Countries are ranked on a score of 120 with the highest rated most fragile and the lowest rated the least fragile.

According to the 2022 report, Yemen tops the fragile index with a score of 111.7 followed by Somalia (110.5), Syria (108.4), South Sudan (108.4) and the Central African Republic (108.1). Finland at 179th position is the least Fragile country in the world with a score of 15.1 followed by Norway (15.6), Iceland (17.1), New Zealand (17.5) and Denmark (18.1). The US is at the 140th position with a score of 46.6, Ukraine 92nd position and Russia is at 75th position.

Nigeria is currently the 16th most fragile state in the world with a score of 97.2 which indicates a slight improvement from 98 scored in 2021. However, since 2007, Nigeria has maintained the top decile position of fragile states in the world, oscillating between the alert zone (90-100) and the high alert zone (100-110). The worst zone is the very high alert zone which is 111-120

Since the FSI is based on global ranking, the unique internal pattern of a State’s fragility and its intensity across different years are often silent and overlooked. For example, in 2022 where Nigeria recorded FSI score of 97.2, the country has experienced worse economic shock compared with many years before. In June 2022, the country recorded an all time highest annual inflation rate at 18.6 percent month-on-month increase which is also predicted to further increase by the end of Q4, whereas in 2013 where the country recorded FSI score of 100.7, inflation rate was put at 8.48 percent. Even in 2016 where the highest FSI score of 103.5 was recorded, inflation rate in the country was 15.68 percent.

Between 2020 and 2022, the country has experienced the highest brain drain and human movement out of the country. The Central Bank of Nigeria reported that more than $US39billion was spent on schooling and accessing health care abroad between 2010 and 2020. More so, $220.86million was reported to have been spent on foreign education between December 2021 and February 2022.

Towards the end of 2021, the concept of Japa, which means to flee the country in search of better living conditions abroad had become a popular mantra in the day-to-day relations of many young Nigerians, showing more Nigerians are ready to leave the country to school or work abroad. Major destinations have been US, Canada, and UK. According to the CBN, the flight from the country and increase in demand for Dollars to settle foreign education bills has led to the free fall of Naira against the Dollar.

You are a merchant and you sell laptops; which scenario favours you?

Option A: You pay a company so that when people search “laptop”, it shows promoted links on top of the search results. Those people may not be looping for laptops to “Buy” but could be doing research on the specifications of laptops or just trying to understand how laptops work. If someone clicks on the space you have bided and won, you have “lost” money since  that person has no interest in actually buying a laptop. 

Option B: You pay a company which sells laptops so that when people come into its ecosystem and search “laptop”, your store comes on top of the search results. More than 90% of visitors are in the “spirit of buying” something when they visit that site. Yes, any click has a potential “Buy” trigger that can follow. 

Option A is  the Google search scenario while Option B goes for Amazon.  Amazon is now a huge ad company for merchants and it is growing every quarter: “Amazon generated $8.76 billion in advertising revenue in its second quarter. That revenue, which included things such as advertisements on the e-commerce website, contributed to an overall beat against Wall Street estimates”.

Amazon Ad could become another play for Amazon’s ecommerce one oasis. Indeed, the biggest threat to Google search (for merchants) is not Bing, but Amazon, because on merchant advertising, Amazon is winning that segment. Google gives you clicks, Amazon delivers sales into the bank accounts for merchants. If you understand that merchants spend a lot on adverts, it becomes easier to process why Amazon market cap rose by more than 10% yesterday. 

Facebook will be a waste of efforts if Amazon carries that item especially if you have a merchant store within Amazon. Both Google and Facebook will give you clicks from adverts; Amazon will deliver sales to the bank accounts. That makes Amazon ad business a superior business. If ads are to take users to commercial sites, Amazon wins because it is the grand-dominion of all digital commerce sites.

Why Merchants Like Amazon Ads – And Why it is Now a $31 billion Business

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Comment: What’s missing in this analysis is that buyers do not always go straight to Amazon. More often than not, they would first search for where buy a laptop. So, there’s plenty of value for the seller outside of an Amazon.

Although it could be argued that they are the single largest forum, when one considers that it is not only Amazon selling laptops, limiting oneself to Amazon automatically cuts the market range for the seller’s product.

My Response: Certainly, I am not saying other channels are not useful. I am focusing on conversion efficiency and value on ads. Coca Cola can throw its money in any channel. But for a merchant with a $1,000 ad budget, that conversion rate matters. That is why Amazon has grown this from $0 to $32 billion in a very short time!

Comment follow: That conversion rate sure matters for a user with such limited ad budget. It will sure impact ad spend choices for maximum impact. Still I won’t ask them to go to Amazon by default. A number of other considerations will come: type of product and target market are critical.

I don’t know that Amazon has grown because of the ads. It is probably adding to it presently and it’s share will grow. Moving from 0 to 32bn has been a combination of innovation, customer obsession, diversification and sheer capital thrown at it. It took Amazon several years to break a profit.

My Response again: The $32b is specifically for the ad business, not other aspects of Amazon. Putting that number is to make a case that it is very viable and useful to small sellers. As I noted in the video, this is one oasis strategy because Amazon is collecting $32 billion to help people showcase things within Amazon and after they have sold, Amazon takes another cut on those sales. It is a massive positive loop!

Following investigation into fraud and money laundering allegations leveled against Nigerian fintech giant, Flutterwave and its counterpart, Chipper Cash, the Central Bank of Kenya (CBK) has ordered all financial institutions in the East African country to stop doing business with the fintechs.

The order follows the announcement on Thursday by CBK governor Patrick Njoroge that both Flutterwave and Chipper Cash are not licensed to operate in Kenya.

“Flutterwave is not licensed to operate as a remittance provider or for that matter as a PSB service provider in Kenya. They are not licensed to operate and therefore they shouldn’t be operating. We can also say the same for Chipper Cash,” he said.

The CBK’s bank supervision deputy director, Matu Mugo, directed all regulated banks, microfinance and mortgage finance institutions to cut all their relationship with the two startups with immediate effect.

“It has come to the attention of the Central Bank of Kenya (CBK) that Flutterwave Payments Technology Limited and Chipper Technologies Kenya (Chipper) have been engaging in money remittance and payments services without licensing and authorization by CBK…You are therefore directed to immediately cease and desist from dealing with Flutterwave and Chipper,” said Mugo in the letter.

Early this month, a Kenyan court had ordered the freezing of the companies’ accounts for money laundering. The court said that both Flutterwave and Chipper Cash were among over 50 companies carrying out illegal activities in Kenya.

Following investigation, Kenya’s Asset Recovery Agency (ARA), told the court that the accounts of seven targeted companies were used as conduits for money laundering in the guise of providing merchant services. The agency said it began investigations after suspicious activities and transactions in the seven companies were flagged on suspicion that they were proceeds of crime. It also said that the fintechs was illegally operating in Kenya, because it has no valid license from the CBK.

The development is a huge blow to the two startups that are occupying prominent positions in African fintech market. Flutterwave is the most valuable African fintech at $3 billion valuation while Chipper Cash is believed to have attained the unicorn status.

It is also seen as a potential setback for the African tech market that has been riding on huge investment funds from investors across the globe. African startups raised $1.2 billion in Q2 2022, indicating a 15% drop from the total funding raised in Q1.

However, Flutterwave and Chipper Cash’s lack of license has been attributed to Kenya’s irregular license schedule. Flutterwave started operation in Kenya in 2016, while Chipper Cash was launched in the country in 2018.