In addition to other schemes it has created to boost dollar liquidity in Nigeria, the Central Bank of Nigeria (CBN) has announced the launch of “RT200 FX Programme”, targeting $200 billion in FX repatriation.

The CBN governor, Godwin Emefiele revealed the new program during the Bankers’ Committee press briefing on Thursday.

“After careful consideration of the available options and wide consultation with the Banking Community, the CBN is, effective immediately, announcing the Bankers’ Committee “RT200 FX Programme”, which stands for the “Race to US$200 billion in FX Repatriation,” he said.

Emefiele explained that the RT200 programme will be non-oil export-based with focus on the following five key anchors: Value-Adding Exports Facility, Non-Oil Commodities Expansion Facility, Non-Oil FX Rebate Scheme, Dedicated Non-Oil Export Terminal and  Biannual Non-Oil Export Summit.

“The RT200 FX Programme is a set of policies, plans and programmes for non-oil exports that will enable us attain our lofty yet attainable goal of US$200 billion in FX repatriation, exclusively from non-oil exports, over the next 3-5 years,” Emefiele said.

The CBN has been counting on diaspora remittances to boost dollar liquidity, trying its hands on many policies to encourage Nigerians living abroad to send money back home through regulated financial institutions.

The apex bank noted that through these schemes, particularly the Naira4Dollar scheme introduced early last year, there has been significant improvement in foreign currency inflow to Nigeria. Emefiele disclosed that diaspora remittances increased from an average of $6 million weekly in December 2020 to an average of more than $100 million weekly by January 2022.

The CBN governor blamed Naira’s significant depreciation on covid-19 and the plunge in oil prices.

“This is understandable because to the extent that COVID-19 led to significant job losses in many advanced economies, diaspora remittances also suffered commensurate reductions in inflows into Nigeria.

“All these factors jointly explain the heightened pressures on the currencies of major emerging market countries, including Nigeria,” Emefiele said.

Nigeria is oil based economy. The largest economy in Africa derives 90% of its revenue from oil export and thus was severely hit by covid’s headwinds that plummeted oil prices. At the receiving end of oil market’s turmoil is the naira, Nigeria’s currency, which has fallen below N575/$1 in the parallel market and below N440/$1 at the official window, forcing its repeated devaluation.

To stem the tide of insufficient dollar liquidity, the CBN has designed schemes geared at encouraging diaspora remittances. Although oil prices have started rebounding as economic activities reopen globally, the financial industry regulator is building on the programmes to foster a sustainable mechanism for adequate FX liquidity.

Emefiele said that enough lessons have been learnt from its policies on remittances and they can be applied in improving some aspects of the foreign exchange inflow into the country. This means that the CBN is looking to diversify its programmes to include other means of generating forex supply.

The CBN governor said forex inflow into Nigeria will now include four major sources; Proceeds from oil exports, Proceeds from non-oil exports, Diaspora remittances and?Foreign Direct/Portfolio Investments.

To win in markets, you need to have a great product-market fit. It is a spot where the frictions in markets and the “forces” (the products and services) you are creating to overcome them attain equilibrium.

[Bear with me for using big grammar. My grandmother, Lechi, truly liked them because it showed that I was learning in secondary school. How do you come back from school without saying something she could not understand, after all the school fees? ]

So, when Peloton, an experience exercise company, which helped people do exercise at home, was raking it at the peak of the pandemic, I wrote: “before you invest, think beyond Covid-fit to market-fit”. In other words, that product must not just do well during Covid pandemic, but also when normalcy returns.

Normalcy is fairly back and Peloton is crashing. According to CNBC, “the company said in a confidential presentation dated Jan. 10 that demand for its connected fitness equipment has faced a ‘significant reduction’ around the world due to shoppers’ price sensitivity and amplified competitor activity.”

This week, Peloton is replacing its CEO, updating the board and cutting  about 2,800 jobs, and may end up in the museum of also ran. Our prayers with the workers affected.

Is your product-market fit sustainable? Yes, do you have a moat to protect the castle?

Changes are afoot at Peloton. The exercise company announced it is replacing its CEO, cutting around 2,800 jobs and reconfiguring its board. Co-founder John Foley will be replaced as chief executive by Barry McCarthy, Spotify’s former CFO, and will become executive chairman. The layoffs include 20% of Peloton’s corporate positions, but do not affect its roster of instructors.

• The company has been the subject of frenzied acquisition speculation, with Apple, Amazon and Nike all floated as potential buyers. Foley said the company is open to any deal that “could create value for Peloton shareholders.”

• Laid-off employees will receive a complimentary 12-month Peloton subscription as part of their severance, Foley said in a press release about the changes.

• Peloton employees are taking to LinkedIn to post about the layoffs.

According to ProductPlan, “Product-market fit describes a scenario in which a company’s target customers are buying, using, and telling others about the company’s product in numbers large enough to sustain that product’s growth and profitability. According to entrepreneur and investor Marc Andreesen, who is often credited with developing the concept, product-market fit means finding a good market with a product capable of satisfying that market.”

Questions from a member in Tekedia Mini-MBA:

In Technology-Market matrix diagram, especially, the rough sea quadrant – where both technology and market are moving fast,
1. should an organization ride on both tides?
2. what is your advice for a start-up in this scenario?

A first-mover advantage can be simply defined as “a firm’s ability to be better off than its competitors as a result of being first to market in a new product category”. The first scaler advantage is the advantage which comes to a firm for being  the first to become extremely popular and ubiquitous by scaling its services in a category.

But note this: the greatest companies in the world are known for one thing: great products. Interestingly, all great products are known by customers. That typically comes because they are well scaled. Extrapolate, you’re talking of  first-scaler advantage, a leverageable compounding competitive advantage which comes with economies of scale as a result of being the first company to achieve scale in that category and improve marginal cost, offering products at highest value and best optimized cost.

If you have a first-mover advantage and fail to scale, you will lose the competitive positioning to another company which comes and scales first. So, first-mover advantage is temporary because sustainable and durable monopoly requires enduring scale in product categories. If you cannot deliver that scale, forget your first-mover advantage.

This is my response. Sorry, I made two videos. Initially thought the first did not record.

The Live session of Tekedia Mini-MBA begins this Saturday. I will anchor it. Next week, our Faculty members from Access Bank Plc and SAP Africa will anchor the Tue and Thur respectively.

The upper week, two faculty members from Microsoft USA and Barry Callebaut Group Belgium will drive respectively. All details and Zoom links will be in the Board.  We’re truly honoured for the opportunity to co-learn with you all.

Welcome to the Institute.  We continue to welcome new members for this edition here.

Tekedia Institute offers Tekedia Mini-MBA, an innovation management 12-week program, optimized for business execution and growth, with digital operational overlay. It runs 100% online. The theme is Innovation, Growth & Digital Execution – Techniques for Building Category-King Companies. All contents are self-paced, recorded and archived which means participants do not have to be at any scheduled time to consume contents. Besides, programs are designed for ALL sectors, from fintech to construction, healthcare to manufacturing, agriculture to real estate, etc.

The sector- and firm-agnostic management program comprises videos, flash cases, challenge assignments, labs, written materials, webinars, etc by a global faculty coordinated by Prof Ndubuisi Ekekwe. It will run from Feb 7, 2022 to end May 7, 2022.

“This is not the right time to raise funds. You should be focused on other parts of the business”

A statement like the one above made me ask the question of timing. When is the right time to raise funds? Is there such a thing as a right time or wrong time for fundraising?

Like the line from Chris Burgh’s song says “timing is everything in life”. If the rule of timing applies to every other thing in life, I believe it should apply to business even more. So, if I have to answer the question asked, I would say Yes, there is a right time to raise funds.

When?

I have recently talked about raising funds from day 1, so not much will be said about that here. The funds being raised can be towards the launch of a new product, expansion of operations, scaling your market, marketing, growth, etc. Whether you are raising seed funds, Series A, Series B, and so on, here is one thing that can help you better time your fundraising expedition.

Milestones

What have you just achieved? What do you want to achieve?

Surely, you can’t wake up from sleep with the idea of the ‘next big thing’ and start looking for financiers. You want to ensure that you have achieved a milestone, based on specific metrics before you go looking for people to commit their funds. It could be that you have just launched your Minimum Viable Product (MVP), or you have acquired a certain number of customers or users. There should also be a clear milestone you want to achieve with the funds you are bringing in. Do you need the funds to scale up operations, to fund further research, to launch in a new country, or/and to get your product to the market?

The point here is that the milestone convinces your would-be investor that you have done something worthwhile, and so, require significant capital to take your product or solution to the next stage/milestone.

Valuation

Before you go on to raise funds, you need to have something that can be properly valued. Why? This is because you generally cannot raise more funds than the value of the startup. If, for instance, you are bringing in an equity investor, the amount invested should entitle the investor to a part of the business and you can only determine how much when you have valued the business. I will talk better about proper valuation subsequently but keep in mind that if you are raising $5 million in funding for a business that is valued at $5 million, you will be trading away 100% ownership.

What many startups do is to give a maximum of 20% equity when raising seed funds, and a maximum of another 20% equity for Series A. This is a way to maintain a reasonable ownership percentage especially where you have co-founders.