I am personally passionate about the tech industry and the opportunities inherent within it, especially for young people. While I have been interested in tech for more than 3 years now, I really only became actively involved from a fintech perspective in the past 6 months, and I have clearly become a huge advocate and evangelist of the wonderful things tech can do for both people individually, and how it can economically uplift even nations. This piece is my attempt at outlining the benefits of tech from a broader economic perspective.

LOCAL CONTENT

Governments, Parliamentarians, Regulators, Politicians are generally not stupid (regardless of what you think), while there are politicians who excel at speaking  to the hearts of the crowds, getting their buy-ins to win elections, convincing people they are right for the job, and when all of these don’t seem to produce the desired results, moving some couple million dollars to a special account to use to PROPERLY INDUCE the electorates to vote for them, a good number of politicians are smarter than you think, and regardless of who is smart or not smart, the language all people understand is money, and as long as there’s money to be made, people have generally found ways to align themselves, if but only temporarily. The Nigerian Oil and Gas Industry Content Development (NOGICD) Act 2010 is a very good example of this.

Prior to the establishment of NOGICD in 2010, most of the value being created in the Oil and Gas industry in the Nigerian ecosystem was largely being imported to foreign climes. So while oil was responsible for 90% of the country’s revenue, it represented less than 38% of the country’s GDP, and according to some data, almost US$380 billion was literally being paid to expatriates, foreign contractors etc. as against Nigerians.

While this design may have favored a select few (The Oil Majors), this was damaging to the local economy. Big companies are good at many things – partnerships, navigating harsh and uncertain regulatory environments, and more importantly lobbying lawmakers – I do not think the oil majors of those times were any different, and I don’t think I would be fantasizing if I assumed a couple of nice crisp Benjamin’s (slang for 100 US dollar bill) had greased the palms or slid into the personal accounts of certain lawmakers to keep things so, however in 2010, lawmakers were able to put selfish interests aside and come to a common consensus to pass the Nigerian Content bill.

The result of this bill was massive access to the booming oil and gas sector by the average Nigerian either by being directly employed and trained by some of these majors, starting businesses in certain verticals (pipe manufacturing, welding etc.) that benefited from the enforcing of this bill, or flat out starting their own Indigenous oil producing companies altogether (Seplat, Aiteo etc.). The result of politicians ignoring 6,7 or even 8 figure dollar account balances to see the good of the general populace has been felt by all, and while the Nigerian Content bill isn’t necessarily at 100 percent Local Content and there is still definitely a lot of room for growth, at 31% Local content implementation we can say that the team working on this has made significant progress and has done a good job altogether.

Why compare Oil and Gas Local Content to Tech? Simple – tech needs no Local content. From day 1 tech has largely been a local player driven industry, and while I am aware that at some point Nigerian firms were literally importing a good proportion of the software (HR, Accounting etc.) used for business purposes, today a good number of local and affordable alternatives exist on the continent, and this has spurred massive local adoption of technology solutions among not just businesses, but individuals alike.

Today the revolutionary technology that powers the TSA (Treasury Single Account) – the one technology that has severely (not completely) paralyzed the ability of corrupt civil servants to move funds indiscriminately into personal pockets and allowed the Federal Government have a much clearer view of its financial positions per time is powered by a fully indigenous Nigerian company – SystemSpecs, the firm that pioneered card switching in Nigeria and made it possible for people to use ATMs as against having to carry cash around was founded by a Nigerian and is called Interswitch, the company that provides Core Banking Applications (CBA) to more than 500 Microfinance Banks in Nigeria who may not be able to afford much more pricier solutions like Temenos T24, Finacle etc. is a Nigerian company called AppZone. These companies do not just create solutions for Nigerians, they create jobs and opportunities for the ecosystem, both directly and indirectly.

DECENTRALIZED OPPORTUNITY

One of the reasons I believe tech may not just be the new oil, but may be better than it is the fact that tech creates a huge opportunity for ordinary basic people without any kind of privilege, who are smart enough and have found favor with God to scale up massively and create wealth that would have been unforeseeable in a previous dispensation.

What do Jim Ovia, Segun Agbaje and Tony Elumelu have in common? They are some of the biggest names in the banking industry today. Another thing they have in common is that these men spiraled into wealth by grasping the opportunities that came from a friction filled banking system, creating new paradigms of business and profiting off the growth that came with it. And while Jim Ovia and Segun Agbaje had some degree of privilege (not enough to warrant owning banks and being billionaires), Tony Elumelu was a pretty unremarkable guy who finished from the university with a second class lower (not that that means anything), that now runs some of the biggest businesses in Africa, funds more than 1,550 African entrepreneurs annually, is playing a pivotal role in shaping the future of African entrepreneurship and what he calls ‘Africapitalism‘ and possibly owns a very nice looking silver Rolls Royce (I just had to add that).

Today, some of the largest tech startups in Africa were founded by pretty normal guys who were driven, smart enough to see opportunities, and favored enough to be able to capitalize on them.

One of the founders of Flutterwave used to work at Access Bank, the Cofounder of Mono (raised a US$15 million Series A in 2021) Abdul Hassan was a product manager at Paystack, TeamApt’s CEO used to write code at Interswitch, Musty Mustapha, CTO of Kuda Bank (US$55 million Series B) was a Software engineer at FirstBank, the list is endless. The idea is that like the Banking sector in the early 1990s, the opportunities in the tech space today are massive, and those who are able to run with them early enough are positioning themselves for huge rewards going forward.

Today, if you want to start a Bank, a Deposit Money Bank, DMB for short, you will need to show the Central Bank of Nigeria that you have a minimum share capital deposit of N25 billion (US$60.8million) to prove to them that you’re serious. In other words, if you plan to start a proper DMB in Nigeria, (not a Microfinance Bank), the ticket to see that movie at the CBN Governor’s Office is N25 billion. No wonder there are only 22 people inside the theater watching it.

However, if you want to start a tech firm today, you majorly need a team to build, market and sell your solution to the market. Most regulatory licenses (in the fintech space) can be circumvented by partnering with banks, and I don’t think NITDA licenses cost billions to acquire. The opportunity for every (serious and committed) Dick and Harry to come onboard is largely there, and this creates new opportunities for new business verticals going forward.

THE INTERNET FRAUD PARADOX

While I do not in any way support Internet fraud (‘Yahoo Yahoo’), and I consider It to be a bane to the image of our country, the truth is that although Internet Fraud is bad for the public image and brand of our country (and I have personally witnessed this up close), it is relatively good for our local economy because these fraudsters move these monies back to Nigeria, and spend them locally. Is it safe for us to assume that Internet Fraud adds an additional US$15-50million or even more to the Nigerian economy annually? Either way, we should be switching this paradox to value what remote tech workers add to our National GDP annually too.

In the past you would need to be based in a foreign nation to earn Forex from that nation as an individual, and even if you made remittances back to family members back home, chances are, you’re only remitting a certain percentage of what you earn, as majority of that money would still be spent and circulated in the economy of the host country you dwell in. Today, a software engineer, UI/UX designer etc can work with a US or European based firm from his workstation in Lagos, earn at the economically accepted remunerable level of that nation (say US$3,000 to maybe even US$12,000 per month) and spend a vast majority of that money within our local economy here in Nigeria. This bolsters the economic strength of the nation and creates other avenues for value creation internally.

Total Remittance into Nigeria in 2020 was US$17.2 billion – if we had 70,000 tech workers working for foreign firms earning at least US$5,000 a month in Nigeria, that could culminate into US$4.2billion in economic value that will be introduced into the local economy. A 2019 report from CNBC claimed there were at least 700,000 open tech jobs in the US alone, according to data from DealRoom, more than 100,000 tech job vacancies were opening up weekly in Europe, more of these companies in a bid to fill these roles are open to hiring remote talent to get the job done, firms like Andela, TalentQL, Propel (formerly Hire Free Hands) are capitalizing on these opportunities to create value; why doesn’t the government make a concerted effort to make Nigeria the home for remote technology talent globally, the same way Portugal has successfully positioned itself to be a global tech hub.

OWNERSHIP FLIGHT

One of the biggest issues in the tech startup space today is that while Nigerian tech startups are raising more money on a YoY basis, and increasingly garnering investor interest, more than 80 to 90 percent of African startups (especially those who have had multiple funding rounds), are really owned by foreign investors, and when the time for exits come, we’ll realize we only ended up creating wealth for the founders, early team members, a couple of employees, but majorly and more significantly foreign investors who commendably had the nerve to believe in our system and businesses when our own governments didn’t. In other words, a Local Content issue is resurfacing itself in the tech industry today, but this isn’t really about hiring foreigners, it’s about the fact that most of the wealth being built in Nigerian tech startups will largely find its way into the hands of foreign investors, because our indigenous investors are more excited about pumping their money into treasury bills and safely earning 9% per annum as against taking the risk to fund the future.

While I believe that Paystack was the Nigerian Startup exit we believed would be the Jesus Christ of exits and open the floodgates for all kinds of exits, that has not happened (yet), and most of the acquisitions we have seen since Paystack’s Oct 2020 announcement (excluding the Baxi Box acquisition by MFS Africa and Equinix reported US$320 million acquisition of MainOne ) have been largely small and insignificant (or at least not significant enough to gauge investor interest into that space).

Sparkle’s October 2021 US$3.1 million seed round was an all-star local investor round, but considering the fact that the founder was an ex-bank CEO and definitely has a good network, his kind of raise may not be accessible to all founders at seed level.

Side thought: I wonder who would be able to convince top Igbo billionaire traders and importers to get involved with Venture capital as a way to diversify their wealth.

POLICY DIRECTIONS

I do not believe in criticizing government policies without formulating some kind of solutions to them; I am fortunately not in the class of people who go around criticizing what others have built when they haven’t built anything themselves.

REMOTE TALENT CITIES

Create a serene environment that makes it convenient for these remote tech workers to do great work without being mistaken for internet fraudsters and harassed by members of the Nigerian Police Force.

Investing more into upskilling the general populace, starting from a Tertiary institution level, to make tech top of mind among young people and empowering them with the right tools (laptops, computers etc.) to create and learn while making this a policy priority is also key.

INCENTIVISING LOCAL CONTENT

While it would be exceptionally ill-informed to create legislation that discourages foreign investment to spur local investments, as the two should go hand in hand, creating legislation that encourages local investing into the tech space and creating meaningful incentives for doing so are key.

CONCLUSION

While people have referred to tech as the new oil, I believe that tech is beyond just the new oil, it is a unique opportunity to position young people to take their own future in their hands, create value, and ultimately create opportunities for themselves – things that oil in its entirety may not be well positioned to do.

Inspired By The Holy Spirit

Brilliant piece by Samuel Nwite here: “Since attaining unicorn status in March, Nigerian fintech startup, Flutterwave, has through partnership and acquisition, onboarded other businesses – expanding its services in unified diversification. Now, the payment company is adding e-commerce to its brand of services.”

The paytech category-king has a chance but this B2C ecommerce business is never really going to move the needle that much until someone can figure out logistics at scale. And that is where I expect the nation to take action for the sake of its digital economy.

If I get Nigeria’s postal service up and lose $100 million yearly but that loss stimulates economic activity of say $50 billion  which brings cumulative VAT and tax of $200 million, it may not be a bad strategy. If I do that, rural Nigeria will get back to action and digital commerce will move faster. The tax is used to capture value at the edges while the NIPOST builds at the center of the smiling curve.

Something for Nigeria’s policy architects to think about.

Flutterwave’s E-commerce, Flutterwave Market, A New Bait for Investors

Since attaining unicorn status in March, Nigerian fintech startup, Flutterwave, has through partnership and acquisition, onboarded other businesses – expanding its services in unified diversification. Now, the payment company is adding e-commerce to its brand of services.

The company, which has in a short period, distinguished itself as a leader in the African fintech market, announced the launch of its new e-commerce service, Flutterwave Market – an extension of its Flutterwave Store service – that will bring together a collection of merchant stores in one place.

The aim of the Flutterwave Market is to bring e-commerce a step closer to the brand’s merchants and their customers, helping merchants reach new customers and ultimately increase sales and revenue.

The company said the Market will make it easier for customers to shop from a range of Store merchants as well as enable customers to seamlessly shop across a variety of products from different businesses at their convenience.

The Flutterwave Market will display Flutterwave stores across various product categories and countries. It will include features such as product search, category display, and country filter to help enhance the shopping experience. The solution will display product categories such as men’s and women’s fashion, beauty, and food—in line with the preferences of most shoppers on Flutterwave Store. Shoppers will be able to order products and have the products delivered to their preferred locations.

Though some companies have struggled to run profitably in Nigeria’s e-commerce space, the market remains widely open for growth. With Nigeria’s booming population and the increase in digital inclusion, online shopping is set to become a multi-billion naira market in the near future.

Recent data from Statista shows that as of 2020, the number of digital buyers in Africa experienced an increase to 281 million. The number of e-commerce users in the continent is also estimated to grow significantly, reaching over 334 million in 2021. By 2025, they could be roughly 520 million, almost doubling the number in 2019.

Flutterwave has been leveraging its dominance in the African market to sell its other services, and will count on it to push its e-commerce services.

Olugbenga ‘GB’ Agboola, Founder and Chief Executive Officer of Flutterwave, said the aim is to take the Marketplace global.

“This is an exciting next chapter for the brand, and we’re excited to introduce this new marketplace experience to our merchants worldwide. Flutterwave Market is a fully functional e-commerce service that serves as a megastore where buyers can purchase a variety of goods from multiple sellers under one roof.

“Since the successful launch of Flutterwave Store, we have listened to our customers and acted on what they need to scale their businesses. Launching the new marketplace will transform their business, taking it to the next stage of growth. Flutterwave Market is for us a way to create endless possibilities for our Flutterwave Store users. We’re not merely aggregating existing stores, we’re positioning them to make more sales,” he said.

Flutterwave Store was launched in April 2020 with the aim of keeping the lights on for small businesses following lockdown due to the Covid-19 pandemic across various countries. The ecommerce solution has grown to over 30,000 businesses to date while adding features like discount codes and multiple product uploads. The Market provides an additional opportunity for shoppers to discover and shop from these businesses as opposed to only following their store link.

Bloomberg reported in October that Flutterwave will hit $3 billion valuation after fresh funding, making it the biggest payment company out of Africa. The new service additions, especially the e-commerce, is a bait that is likely going to attract more investors to the fast-growing startup.