In 2018 I wrote: “The easiest way to waste money and destroy value in Nigeria is to start an ecommerce business with B2C model. As I have noted many years ago in a seminal piece in Harvard Business Review, making money on ecommerce in Africa would happen but would take a really long time. I do not expect any to work till after 2023 (2022). But before then, it is putting good money in a value-destroying venture that would bleed cash until the owners give up. Ecommerce today in Africa at B2C is simply a loss-making online endeavor only people with deep pockets can do. You can be in it if you do not care for profitability.”

The news now is that MallforAfrica is shutting down: “MallforAfrica is temporarily closed, that is true, but we pray and trust in God to have it back up and running in the very near future, better than ever. No date as of yet to announce. But we will keep everyone posted,” Chris Folayan, CEO of MallforAfrica said to Techpoint.

The company joins Kalahari, Mocality, Efritin, OLX, old Konga, etc as B2C ecomemrce companies which have struggled or collapsed. Please note that I am big on B2B ecommerce since they do not have the marginal cost issues I noted in the B2C ones (watch the video below).

The biggest challenge in ecommerce is the marginal cost paralysis. And unfortunately, no ecommerce company can fix it since none can price without consideration of losing buyers to supermarkets and open markets.  So, any ecommerce operator that wants to keep its products low must discount it and that means absorbing the marginal cost. That is what they do. And they keep doing so until they run out of more money.

As I explained in the HBR, buyers have options, from local open markets to hustlers on traffic lights. Any ecommerce must beat the alternative ecosystems on price to win new customers and keep present ones. To do that, they would need volume, only possible with a nationwide or regional operation. But without logistics like postal systems, that will not happen.  Do not waste your money starting an ecommerce business in Nigeria until 2023 (2022). It is the most unfortunate way of wasting capital in Nigeria. Only the post office can make our ecommerce take off and without that infrastructure, ecommerce is a waste of efforts, in Nigeria.

Comment on LinkedIn Feed

Comment: Hmmnn…What I have always been baffled about this is how Jumia is managing to run their business for these number of years in Africa. But I quickly noted that Jumia has managed to create a business model to diversify into different businesses but fronting the e-commerce side more. Prof Ndubuisi Ekekwe, is there something different about Jumia that we are not seeing yet on the e-commerce business is being run there? Thanks in anticipation of your response!

My Response: Jumia is using the double play strategy on the one oasis of ecommerce. Flipkart/PhonePe for India, Alibaba/Alipay for China, etc. No ecommerce company has been successful on B2C in any part of the developing world. But you use the data from ecommerce and make money via something else. JumiaPay is capturing value for Jumia even though its ecommerce is not doing great, but for that JumiaPay to rise, Jumia ecommerce has to exist!

Do Not Waste Time Starting B2C Ecommerce Business in Nigeria

The Nigerian Communications Commission (NCC) has declared its readiness for the official auctioning of the 3.5 Gigahertz (3.5 GHz) spectrum for the deployment of Fifth Generation (5G) technology in Nigeria on December 13, 2021.

A statement signed by the Director of Public Affairs, Dr. Ikechukwu Adinde, said the Commission is adopting Ascending Clock Auction format, which is software-based, while a mock auction has been slated for December 10, 2021, as a precursor to the actual auction on December 13, 2021.

It said the Information Memorandum (IM) recently presented to the Commission at a stakeholder engagement forum provides information, conditions, obligations, financial implication, timelines and other necessary details on the planned 3.5Ghz spectrum auction.

‘‘The IM also explains the rollout obligations of the would-be eventual winners of the spectrum license auction, whose reserved price has been pegged at $197.4 million (N75 billion).

‘‘The IM also states that only licensees, who make down payment of 10 per cent of the reserved bid price and with 100 per cent regulatory compliance would be allowed to participate in the auction while licensees with outstanding debts that have secured NCC’s approval for a payment plan will be allowed to participate in the auction.’’

According to the IM, the auction comes with a 10-year spectrum license and a minimum requirement of an operational Universal Access Service Licence (UASL). However, new entrants or licensees without a UASL will be required to obtain a UASL operational license to be qualified for the 5G license.

The eventual licensees will have a rollout obligation plan spanning a period of 10 years, beginning from the date of award of the license. Between the first and second year of the license, the operators are expected to rollout service in, at least, one state in each geo-political zone.

From the third to fifth year, they are obligated to cover all the zones. Between six to 10 years, they should cover all the states in the country, according to guidelines set out in the IM.

Speaking on the planned roll out, Minister of Communications and Digital Economy, Prof. Isa Ali Ibrahim Pantami, said the Ministry has been working closely with the Commission to ensure that necessary spectrum resources needed for the deployment of 5G network in Nigeria to accelerate the nation’s digital economy space is made available.

The Minister said the 3.5GHz is the most popular spectrum band used globally by regulators and operators for the deployment of 5G technology, and it seems the only band available in Nigeria for immediate use by operators.

On his part, the Executive Vice Chairman of NCC, Prof. Umar Garba Danbatta, listed the various steps diligently taken by the Commission that culminated in present status of the 5G deployment plan.

He also highlighted the potential benefits from investment in 5G deployment to potential operators and investors in the country.

According to him, “Nigeria has an estimated population of 214 million, with an average growth rate of 2.6% annually. Approximately 76.46 per cent of the population is under the age of 35. In line with these demographic changes, internet penetration grew from 3 per cent in 2004 to 73.82 per cent as at September, 2021, and broadband penetration increased from less than 10 per cent in 2015 to 40.01 per cent in September, 2021.”

With the increase in mobile usage brought  about by Fourth Generation (4G) technology and network performance, he said that 5G technology will leverage on this momentum, bringing substantial network improvements, including higher connection speed, mobility and capacity, as well as low-latency capabilities.

But the Association of Licensed Telecoms Operators of Nigeria (ALTON), and GSM Association (GSMA), have disagreed with the reserve price, and thus called for a downward review to enable more operators participate in the 3.5GHz auction process.

Following a meeting held by the operators in Lagos on Friday, they are asking the NCC to extend the period to 20 years, to enable winners of the spectrum to have enough rollout time to utilize the spectrum in offering telecoms services to subscribers.

They also asked the Commission to reconsider the N75 billion reserve price. The operators, which included MTN, Airtel, Huawei, Intelsat, said the current exchange rate in pegging the reserve price should be considered, arguing that it would spook operators who would want to participate in the auction process.

Manchester United needs to understand one thing: Cristiano Ronaldo is an accelerator  who has a great skill on executing and finishing a playbook; but he is never an incubator. He outperforms in teams with great incubators (people who stimulate chances from midfield). He is one of the greatest, if not the GOAT, on accelerating and finishing chances.

But outside the ball, he has relative inaction, now, when he is not with the ball. Also, his pressing coverage is relatively below average, now. What happens is this: if there is no Xabi or Iniesta-like in his team, who incubates as great midfielders, team chemistry breaks because expectations crash. CR can still score goals (he is a genius on that) but in general his team underperforms.

Check Juventus: he can finish well (no argument there) but he can only do that if the opportunity is incubated. He is like Lionel Messi; Messi’s career punted when Iniesta left because the accelerator has no incubator in the midfield.

I watch a lot of football games. Manchester United is falling CR because it seems they do not know how to build around him!

I am never a good footballer but in secondary school, my nickname was Sausa, the football strategist and analyst. I have maintained that CR coming to ManU will not work out because “ManU lacks consistency in structure in the midfield” and CR will not change that. That position has not changed.

Comment on Reference to Messi’s Career Being Punted Post Iniesta

On the Messi reference of Messi’ career being punted. This is a general response. The first full season after Iniesta left Barcelona, Barcelona won nothing. This is very rare in a Messi’s team. Sure, Messi scored 25 goals (down close to 40 he usually does); Iniesta’s absence was statistically significant. So, my point that Messi’s career was punted is statistically supported as his team won nothing and his goals dropped by more than 10.

I extend that by saying that CR’s career punted in Juve in his last season there despite the fact that he scored many goals but if you check, his team finished 4th in Serie A (a team that won the awards many times in a row). CR and Messi are not built for teams that win nothing.

Show me data which shows that Messi improved goal scoring, etc post Iniesta. This is not to say that Messi is CR but I was making a point on the impact of midfielders for ManU.

Besides Number of Goals

Lots of comments on my position that Messi’s career “punted” post Iniesta and that Cristiano Ronaldo will not transform ManU until they improve the midfield. Members are dropping the number of goals scored by these legends to counter my point.

Sure, we see it differently. I make these notes:

– Number of goals scored by ace players is not the only metric. CR scored many goals and his team finished 4th in Juve; he was the highest goal scorer.  He won the battle but lost the war. It is key you look at the whole team performance as most of CR goals were against bottom teams (from individual skill) but he struggled against top 10 teams.

– Post full- Iniesta, Messi goals/season against top 10 dropped and he ended with a season where they won nothing. 

– CR can score many goals this season in ManU but his team could still underperform. Why?More than 80% of his goals will be against poor teams where he uses his individual brilliance to pack goals. But with GREAT teams, his team fades. To win medals, you need to be competitive against those good teams. ManU lost 5-0 to Liverpool, 2-0 to MC but next week or so CR can put 5 behind Norwich City. If that happens, next year, some  will argue that he scored many goals this year without examining the distribution of those goals.As a football analyst, I look at goals scored against top 4 teams; CR has underperformed there for ManU. That is very key to winning medals.

-For CR to do well in ManU, the midfield will improve so that they can compete against good teams and he can score against good teams. 

– Messi has scored many goals post-Iniesta but his numbers dropped. In decent teams, he struggled but he piled goals on yoyo teams. My point was that Iniesta made him GREAT against good teams which typically demolish average teams with GOAT-like players.

-In general, I am not one of those analysts who use goals without considering the positions of teams to assess players. Break the goals into three: against top 3, bottom 10, and the rest; if 60% is against bottom 10 (adjusting for number of games, etc), that is a bad season.  

Cristiano Ronaldo Returns To Manchester United