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African MSME Challenges: Barbershops & Car Wash Businesses in Nigeria

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The reason for this post is simple. Society looks up to higher education institutions to their future. Universities in particular, should, as public institutions in most cases (although there are numerous private universities and alternative providers of higher education) and predominantly registered charities in most parts of the developed world, demonstrate local impact to their host communities.

Following two recent conference presentations taking this reality on board (reality/ realism being an operative word here), on barbershops and/ or hairdressers, my explorations have now moved on to other equally important services provided by micro, small and medium enterprises (MSMEs) such as the car wash business.

In the case of the UK for instance, the Carwash business has experienced precarious times despite the unsung role that they play in raising the aesthetics of our four-wheel friends.

Indeed, even car dealerships and car rental companies rely extensively on the services of these MSMEs to enhance their value propositions.

Who would be happy to rent or purchase a dirty looking car? The same goes for car owners.

Would you be comfortable driving a car covered in mud and bird poo?

Talking about cleanliness and its therapeutic effects, the current pandemic has highlighted the need to use a face covering and wash our hands. So why not our cars?

This takes me back to the realism I mentioned previously. This conceptual study takes, as its methodological stance, the concept of critical realism and pragmatism following in the tradition of seminal studies by Roy Bhaskar and Andrew Sayer especially.

“Critical realism first of all makes the ontological assumption that there is a reality but that it is usually difficult to apprehend. It distinguishes between the real world, the actual events that are created by the real world and the empirical events which we can actually capture and record.” (Easton, 2010).

 

In their exploration of ritualistic behaviour, Rook and Levy in a 1983 study discussed the term as a mote of conceptualizing and analysing consumer behaviour. With specific focus on personal grooming rituals, thematic stories were collected from a cross section of young adults, using projective techniques and relying on theories of psychosocial development and ritualization of behaviour, to illustrate variations in grooming product symbolisms at different social class levels.

“A major factor discouraging the symbolic interpretation of products, brands, and companies is the widespread reluctance to teal with the less tangible realms of explanation of human behaviour […] Such inhibition has tended toward narrowly-conceived, static, and ultimately unrealistic portrayals of human behaviour and motivation.”

Reference to the phrase “un(realistic) portrayals” warrants highlighting especially in the framing of any study based on realism – not the least barbershops and independent car wash businesses.

Now to the BIG question – what do barbershops and the Carwash have in common? My contention is not far fetched – they are both rituals in consumer behaviour parlance. In the case of the former, keeping trim and looking crisp is all part of the person branding proposition. As for the latter, a clean ride is first of all judged by its outward look – shiny, polished and devoid of the lingering stale smell.

Moreover, both businesses present a source of income for those engaged in their provision. For example, a 2019 TVC News briefing highlighted, “Car wash business as a legitimate source of income for Nigerians.” Indeed, there seems to be a price for every market segment as a range of price points are available depending on the type of wash required, size of vehicle and perhaps even location and sophistication of the finishing.

However, there are challenges ranging from finding the right location to securing funding to scale up operations for a business that has the potential to create jobs for the country’s teeming youth population. My research in this area is still in its embryonic phase, so more from me at a later stage, as I seek to draw upon other African communities and contexts.

Alibaba’s Ant Group (Alipay) – There Is Nothing Ant-like In These Numbers

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There is nothing ant-like in these numbers. Yes, Alibaba’s affiliate fintech company, Ant Group (of Alipay), does generate more payment volume than Visa & Mastercard combined! Ant does $18 trillion while the American giants bring in $16 trillion. Ant operates primarily in China while Visa and Mastercard run around the world!

Started as Alipay in 2004, Ant Group has transformed from a digital payments company for Alibaba to an aggregator of financial services. Today, the group’s lending, wealth management, and insurance offerings count for 63% of its revenue. In the first half of this year, a further shift in revenue generation saw the credit business surpassing payments for the first time ever. […]

Ant’s prospectus, for its dual listing in Shanghai and Hong Kong, states that “we call ourselves Ant because we believe that small is beautiful, small is powerful”, but if the company can keep this pace up, it will be marching on to a valuation more closely resembling an army of unicorns as opposed to anything reminiscent of its name. (source: Fintech Collective newsletter)

Here is how Fintech Collective explained what is happening:

Today, Ant is aiming for a valuation of $200b to $300b in a dual-listing in Hong Kong and Shanghai, although meetings with investors are still ongoing. It still dominates mobile payments in China, but instead of competing with the financial sector, it has become a digital supermarket of others’ offerings, letting users buy on credit, invest in mutual funds, and find insurance through established players. It has even changed its name, from Ant Financial to Ant Group, to emphasize that it is a tech, rather than a financial services, company.

Ant’s evolution into the Alibaba of finance has been fueled by a desire to claw back customers who began using WeChat more as it broadened out from a messaging service to an online platform for services of all sorts — including mobile payments. More than 90% of Alipay’s 1b users now access the app for more than just payments.

Once people were using Alipay to stash their cash and pay for online purchases, Ant could begin offering them other kinds of services through the app, including personal loans and insurance policies. Alipay says it has 900m users in China.

I visited Detroit today, as a farm boy.

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I visited Detroit today, as a farm boy.

 

 

The Dangote’s Nigerian Project

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“Nigeria will soon become the biggest and only urea exporter in sub-Saharan Africa for the first time,.. And we are not only exporting, we are exporting big time. ” – Aliko Dangote.

By far, the most important industrialization project in Nigeria today is the Dangote Refinery project. At least in the short- and mid-term horizons, the impacts could be catalytic and consequential. It is a perfect playbook of playing upstream, driven by accumulated capabilities. The Dangote Refinery is the Nigerian Project because the government has none, and we can all go with it. It is a big call: US$15 billion is massive and could change the destinies of people, at scale.

But this is reshaping, just like most BIG Nigerian projects. After a webinar this week, this refinery project is now coming live in 2021. Recall, it was billed for a 2016 launch, then 2019 and now 2021! Some think 2023 …This project has to work. “Still, the project has been hit by delays with the initial opening date having been projected to be 2016, then 2019. Edwin said in a webinar on Thursday that the start of operations will now be pushed back to late 2021 due to the coronavirus. Citac says the facility is unlikely to start before 2023″, writes Bloomberg. While there are concerns, the Dangote Refinery, at least in the short term, is a promise.

The Dangote Refinery is “entering a very competitive market at a time when refining margins are being squeezed by the collapse in oil prices. In July, profit margins for refineries were at their lowest since 2010 and Patrick Pouyanne, the chairman of Total SA, described them as “absolutely catastrophic. To be successful, the refinery will also need to displace the cartels that have dominated Nigeria’s fuel-import business for more than two decades, a source of wealth for the politically connected and motivation for the continuing dysfunction of domestic refineries,” notes Bloomberg.

While this is a “Nigerian project”, the execution cannot be like Nigerian projects (think Ajaokua steel, Second Nigeria Bridge, etc). Mr. Dangote must make this project work, it cannot be delayed further!

Apple and Facebook Disagreements Are Escalating, One Issue at a Time

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Facebook’s CEO Mark Zuckerberg has been vocally registering his dissatisfaction over the newly introduced changes Apple plans for its iOS 14 mobile operating system. The iOS 14 will prevent apps from tracking users using their unique device identifier without their explicit permission.

The advertising industry assigns a unique code to each device called Identification for Advertisers (IDFA). Advertisers use IDFAs to determine if their ads are effective, especially when the ad has been served in multiple places.

Facebook has been using IDFA to personalize ads in third-party apps, and Zuckerberg said the change in iOS 14 will halve his social media platform’s earnings.

“We expect these changes will disproportionately affect Audience Network given its heavy dependence on app advertising. Like all ad network on iOS 14, advertiser ability to accurately target and measure their campaigns on Audience Network will be impacted, and as a result publishers should expect their ability to effectively monetize on Audience Network to decrease,” Facebook said in a post on Wednesday.

“While it’s difficult to quantify the impact to publishers and developers at this point with so many unknowns, in testing we’ve seen more than a 50% drop in Audience Network publisher revenue when personalization was removed from mobile app ad install campaigns.”

Facebook said the change may even cause more revenue loss than it is anticipating and worry that the change will have crippling effects on small businesses.

“We understand that iOS 14 will hurt many of our developers and publishers at an already difficult time for businesses. We work with more than 19,000 developers and publishers from around the globe and in 2019 we paid out billions of dollars. Many of these are small businesses that depend on ads to support their livelihood,” Facebook said.

At the launch of iOS 14 next month, Facebook will be required to ask for users’ permission before it could be allowed to harvest personal data for targeted ads. Alternative to this procedure will require setting up a completely new advertising account to run campaigns for iOS users.

This development has limited Facebook’s ability to collect users’ data on Apple smartphones, and will have a serious impact on its campaigns. Though it can cope as the change does stop the collection of data from millions on its platform, ad-buying small businesses depending on the IDFA wouldn’t.

Over the last few weeks, Facebook has been in squabbles with Apple on two other issues. Adding this to them, the two tech giants appear to be out for a full blown discord.

Apple has had a gaming app (Instant Games) Facebook launched earlier in August blocked because the game app was offering alternative stores with content that it cannot vet. Facebook launched the app without gameplay functionality, and it can be used to watch streams of other people playing games.

Facebook had teamed up with Microsoft to criticize Apple’s game policies, as it has affected many other game apps launched on the Apple store. Apple kicked video game Fortnite out of its store, when Epic Games, the game’s creator, added a feature that allows players to buy virtual currency using their own credit cards, which denies Apple the opportunity to take its 30% cut.

In another case, Apple refused to waive fees for Facebook on its paid Online Events feature. The Online Event feature is designed to allow small businesses and individuals to organize paid digital events that Facebook users can sign up for and sell tickets.

Mac rumors reported that Facebook had asked Apple to waive the 30 percent fee it charges from the in-app purchases for Online Events or allow Facebook process events payments using Facebook Pay. Apple turned the request down saying that it goes against its policy and App Store guidelines.

Nevertheless, the disagreement escalated when Facebook decided to add a note in the Online Events feature to notify users that “Apple takes 30% of this purchase.” Apple got infuriated and removed the note, saying it violated Apps Store policy that forbids apps from showing irrelevant information.

Following these incidents, Zuckerberg said Apple is becoming monopolistic and anti-competitive, and its practices are becoming harmful to customers.

“Apple has this unique stranglehold as a gatekeeper on what gets on phones. Zuckerberg told more than its 50,000 employees during a Q&A session. He added that California-based company’s app store “Cupertino blocks innovation, blocks competition and allows Apple to charge monopoly rents.”

Earlier in the month, Apple became the most valuable company in the world with a $2 trillion valuation. Interestingly, Apple and Facebook are among the companies indicted in antitrust investigations of US regulators. Their current disagreements and accusations may well help the investigators.