Let me congratulate Tekedia Capital portfolio company, TradeGrid, for closing a major partnership with Independent Petroleum Marketers Association of Nigeria (IPMAN). With TradeGrid, 30,000 filing stations nationwide can now skip the long queues at depots, to order products remotely. TradeGrid offers marketplace, financing, logistics, asset verification, forex services, etc.

We are building the digital technology architecture of the downstream sector of the energy sector including the New Energy. We also supply oil & gas parts. This is the new home of downstream energy and new energy .

Download the app here thetradegrid.com

As China continues its regulatory onslaught that is quaking its tech industry and shedding billions of dollars off its economy, the sweeping effect is now catching up with Chinese billionaires.

Alibaba and Ant Group cofounder, Jack Ma, was the first to feel the impact of the crackdown, losing billions of dollars in personal wealth. Now, Tencent’s boss, Pony Ma, has been caught in the financial crossfire. Bloomberg reported that the mild-mannered boss has lost more paper wealth over the past nine months than Jack Ma.

Beijing’s regulatory onslaught has spread across many sectors of China’s tech economy since last year when it halted Ant’s proposed IPO that would have seen the company topple Saudi Aramco record as the company with the largest IPO in the world.

Of many Chinese companies caught in the regulatory web, Alibaba and the Ant Group were the most affected. Alibaba had to pay up to $2.8 billion in fines and penalties, while Tencent received a token fine for not seeking approval during past acquisitions and investments. Though Tencent got into trouble again, and was ordered to give up exclusive streaming rights, it still has a better treatment compared to others.

However, as other companies get hit by China’s crackdown, Tencent’s share of the misfortune increases. On Tuesday, a Xinhua-affiliated newspaper took a dig at Tencent with the claim that its gaming business could be the next on Beijing’s crackdown list. The news sent the company’s shares crashing as Tencent posted its biggest intraday decline in a decade. Tencent’s value dropped to $550.5 billion from nearly $1 trillion it has reached this year.

Following the decline, Pony’s net worth recorded further plunge. Bloomberg Billionaire Index noted that his fortune has dropped by almost $14 billion since the Ant IPO was suspended in November, falling to $45.8 billion on Tuesday. He is now the third richest person in China, behind Jack Ma.

Bloomberg noted that while state media toned down their language on gaming Wednesday, helping fuel a more than 5% rebound in Tencent, the stock is still 17% lower for the year. With Beijing not ready to stand down yet, the outlook of the stocks will be determined by what regulators do next.

Tencent has been compliant with regulators and promised to make amends where necessary, including limiting play time for minors and forbidding in-game purchases for the youngest players. Bloomberg’s report said that the company also broached the possibility of the industry banning games altogether for those under the age of 12.

However, uncertainties still cloud the future of Chinese tech companies and their billionaires as the government prioritizes national security, control, financial stability and equality.

China invaded the edtech sector last week, collapsing the $100 billion industry by ordering edtech companies to go non-profit. This was days after it ordered ride-hailing company Didi to stop registering new customers and removed it from China’s app store. More Chinese billionaires are expected to witness misfortune if the crackdown continues.

The companies on the left struggled and they were largely retailers which left southern Africa for a voyage in Nigeria. They have since returned or about returning home. Mr. Price left last year. Woolworths had departed in 2013, and Shoprite is gone, structurally. But the two on the right – MTN and MultiChoice – are from the same southern Africa, and magically have outperformed in Nigeria. The question is why?

I see three core things:

Product-Market Fit: To a large extent, formal retail in Nigeria remains highly underdeveloped due to infrastructures. While it makes sense to go to a farmer’s market in Cape Town and buy a cow, process it and dump in your deep freezer for months, large-scale shopping when there is no electricity makes no sense in Nigeria.

Economy: South Africa at close to 60 million people budgets an excess of $65 billion than Nigeria which is more than 3.5x its population. At a population of 210 million, Nigeria spends a paltry $35 billion when South Africa hits close to $100 billion. So, to a large extent, the middle class in Nigeria is very small and the purchasing power for organized retail may be limited.

Unlike South Africa, Nigeria falls within this segment which reshapes available opportunities for organized retail: “the most significant opportunity for African B2C startups lies with consumers who earn between $4 — $8 per day”. That spectrum is not a very sweet domain for organized retail. You need at least $15 per day to make it fascinating for the likes of Shoprite. So, there is a clear product-market fit dislocation and that has made organized retail challenging in Nigeria.

Also, checking the economy, South Africa collects excess of $85 billion from taxes. Nigeria’s revenue comes down to about $10 billion. This shows the scale of the disparity of the economies.

Competition: From daily to weekly open markets to shop on the street, to traffic sellers, Nigeria is a market. To win as an organized retailer, you have to beat those alternatives.But beating them when they do not tax becomes challenging. If margins remain low, issues crop up. Nonetheless, a new South African firm is in town: Pick n Pay.

But when you examine MTN and DStv, two things are evident: both enjoyed the first-scaler advantages. Yes, they did not just get to the market first, they were also the ones that scaled first. Nigeria was a blue ocean for both while in organized retail, the brands came into a red ocean.

More so, MTN and DStv pioneered pricing models which are relatively novel in Nigeria, enabling them to capture value. Despite whatever the state of the economy is, as the industry-kings, not just category-kings, they continue to capture value because the market does want the services they offer. So, there is a great alignment of product-market fit and competitive positioning. When that happens, provided there are humans, money would be made, irrespective of the state of the economy. Why? The little value available would be warehoused by the first-scalers.

What Is Pick n Pay Playbook in Nigeria?

Comment on LinkedIn Feed

Comment: I think on the right, owning content distribution rights (exclusivity over sport events alone makes it golden) sets Multichoice apart, whilst MTN rode in on a near monopolised licensed model, backed by its Pan African group presence. Most on the left expanded to Nigeria in the same phase as they did expanding beyond SADC, meaning they had to learn fast or fail across multiple countries & cultures. Some of your observations though are spot-on. Enjoyable as always!

My Response: Sure – we must not forget that MTN executed better than competitors. Its playbook to aggressively reach more cities in Nigeria was not built on monopoly but a sound business strategy that in-network network effects would compound over time. Econet (Zain, Celtel, Airtel) could have done the same since all began at the same time.  I do not think MTN triumphed on monopolistic advantages. I do think it was a better operator with experiences working across Africa. When Glo introduced per second billing, MTN could have ignored Glo, but it responded to protect its castle, reversing itself that per sec was not technically possible. If it did not do that, by now MTN would have been history – in Nigeria.

Like Dangote Cement, when Michel Puchercos grew profit 1284% while cutting salary by 50% (his was down 10%) in Lafarge, Aliko Dangote paid all to bring him to Dangote Cement. Magically, the same man returned more than N40 billion in a quarterly tax, close to all the major banks combined (N42 billion).

There is a huge lesson here: the construct of monopoly in Nigeria is unsupported by data because most sectors are at infancy. The alleged Dangote Cement dominance would have flipped over 5 years, looking at data Lafarge was running under Michel. Sure, Aliko being a legend, brought him home, making sure the party stopped at Dangote Cement.

As Nigeria goes through a challenging season of economic paralysis, I want you to remember that nations rarely kaput. Yes, Nigeria and Nigerians would always be around. And despite whatever, Nigeria will remain an opportunity. I share this video about two men I study – Carlos Slim (Mexican billionaire) and Franklin Templeton (stock picker of the 20th century). As things seem to be falling apart with insecurity, remember that the sun will always rise. Do not kill that idea, because Nigeria will always be.

Carlos Slim saw hope at the lowest point of Mexico; his father had told him that Mexico will always be around. Templeton was buying stocks when the world was frozen at the heat of a world war. When others were frightened, these men sojourned and became legends.

If you cannot believe in the human race, you cannot build. If you cannot believe in the promise of the future, forget the idea of starting. Think about the dragonfly: it goes ahead on the current and defines its course, unlike the lifeless feather which is tossed around.

I study two men – Franklin Templeton and Carlos Slim – for my family investment strategies. Templeton began a firm in 1947, against all odds, at the runs of the World War II. Mr Slim bought anything in his sight at one of the lowest points in Mexican history – the peso was down and markets in ruins. Templeton trusted the human race and bought “useless” stocks. Slim’s father told him that countries do not fail; they always come back. I read about these two

As the weekend arrives, cut off the noise of hopelessness from the newsmakers, and map a playbook that even if there may be paralysis, there will always be a good pasture  for those who can think differently and take action. #believe and #action.

Believe that we can rise as a people – a nation that is open, with abundance and shared prosperity for ALL. Yes, one where ALL will rise, not just a few. That was how I closed my speech at the Platform. Translating into that future is a Call to Duty.

What makes small companies thrive in a world where there are big firms? Tomorrow, during Tekedia Live, I will share how and why small companies WIN, sometimes. Remember to join us:

Sat, Aug 7 | 7pm-8.30pm WAT |  Competition and Your Edge Over Larger Companies – Ndubuisi Ekekwe

Registration for the next edition of Tekedia Mini-MBA which begins Sept 13 continues. Go here and join us; beat early bird registration now.