Nigeria has to really do more for us to build a promising future. In population, the United States has about 120 million more people than Nigeria. That is where any metric breaks down. I was just going through the profits of major US banks and I became intrigued: largely the profit of one American bank in mere 3 months can buy all the banks traded in the Nigerian Stock Exchange.

Bank of America’s profit rose 58% to $7.7 billion;  Wells Fargo’s profit increased 59% to $5.12 billion; Morgan Stanley notched a $3.7 billion profit and Citibank posted a $4.6 billion profit for the three-month period that ended in September, IN News summarized.

Nigeria’s most valued bank, GTBank*, has a market cap of about $1.6 billion. If you combine all of the banks, you will not get up to $6 billion which is well below the market cap of South Africa’s Standard Bank Group.

Sure, you cannot compare a $21 trillion economy with a sub-$500 billion economy. But we need to pay attention to these numbers to be motivated to do the needful. And that “needful” must include a fundamental redesign on how we deploy state resources. For all the entrepreneurial festivals happening in Nigeria, without foreign capital, we will not have these growing startups. If that is the case, do we need to change our tax code to make those who have money to invest in productive things in Nigeria?

Why am I writing this? The news is that Nigeria has $16 billion in domiciliary accounts (about $4.3 billion are retail deposits) in our banking system. That tells you that Nigeria has capacity but we are not deploying productive assets to ramp up growth: “Nigeria has an estimated $16 billion in domiciliary accounts of commercial and merchant banks, data from the Central Bank of Nigeria reveals. We assumed an official exchange rate of N410/$ based on NAFEX rate used at the Investor and Exporter window. According to data contained in the apex bank’s statistical bulletin, Nigeria had a total domiciliary account balance of N6.566 trillion as of March 2021 which when converted to dollars at the official rate of N410/$1, translates to about $16 billion.”

I am very confident that a tax system that rewards productive investment will release capital in the economy and in the process build up the economy. When people prefer to put their money in the bank instead of investing, we can assume that our system is not working optimally.

We invite the general public to attend Tekedia Capital Public Lecture this Saturday. This is an  academic event on how we use patterns and data to determine the next winners in Africa’s startup ecosystems. Tekedia Capital is built on the philosophical construct of Pythagoras which is that the world is numbers, and we use numbers to model sectors and companies that will thrive within our investment thesis. It is a kind of symphonic innovation where we look at many elements before we commit to support extremely young companies. 

Public lecture details as follows:

• Topic: Investing in Africa’s Next Unicorns – A Tekedia Capital Playbook
• Presenter: Prof Ndubuisi Ekekwe, Chairman, Tekedia Capital USA
• Date: Oct 16, 2021
• Time: 6pm – 6.45pm WAT

Venue: Zoom link  on this link

Whenever you have a setback, besides looking at the outcomes, spend more time on the processes that lead to the failures. The biggest failure is NOT fixing things that lead to failures.

Comments from LinkedIn Feed

Comment #1 – If you are not failing, you will not still have a good understanding of what success looks like, you acquire depth from your failings, and not your successes. Nobody thinks at the highest level when everything is fine and rosy, rather it’s when it’s bumpy and uncertain.

Comment #2 –  In the words of Winston Churchill “success consists of going from failure to failure with no loss of enthusiasm”.

I maintain an excel sheet which I use to track many things. In one sheet, I track India and Africa, and specifically the startup ecosystems. India and Africa have about the same population and GDP! What that tells me is this: if Indian startups are becoming double and triple unicorns (a unicorn has a valuation of at least US$1 billion), anyone that can unite African economies can generate the same. More so, when I see a business model, I try to see how that performed in India, to ascertain its viability. Many things are common if you look deeper. 

Yes, if India’s largest fintech, Paytm, is worth close to $30 billion, Africa’s largest fintech companies should be worth at least $10 billion, discounting the inefficiency from the disparate African economies.

So on that basis, the news that Flutterwave is hitting $3 billion makes sense. As I have said many times, this is a cambrian moment, and if that happens, Flutterwave will become the largest financial institution in Africa, overtaking OPay which was last valued at $2 billion. The banks have since made ways for the future.

Flutterwave Inc., a Nigerian payments firm, is seeking fresh funding at a valuation of $3 billion or more, a figure that would roughly triple its last valuation, according to people with knowledge of the matter.

The startup, which has offices in Lagos, Nigeria and San Francisco, recently held discussions with potential investors, the people said. Terms of the funding round haven’t been finalized, and it’s possible they may change.

Led by Chief Executive Officer Olugbenga Agboola, the company in March said it had achieved unicorn status after raising $170 million in a round led by Avenir Growth Capital and Tiger Global Management LLC. Other participating investors in that deal included DST Global, Greycroft, Insight Partners and Salesforce Ventures, the company said at the time.

By 2025, these startups will do to the “new generation banks” what they did to the old banks in Nigeria: displacement. At Tekedia Capital, we are very excited on what we see – the future is full of abundance.