The conversation on the latest Central Bank of Nigeria (CBN) policy – Naira 4 dollar scheme, i.e.  extra N5 is paid by the apex bank for every remitted $1 into Nigeria –  has generated many opinions in our platforms. While I truly welcome the opinions, let us not be personally attacking elected or appointed officials. Make your point, challenge their policy choices, but do not insult them.  If you check, we are saying the same thing and we know that the mess in Nigeria did not start today. Nigeria used to have tons of dollars that we were looking for countries to pay their bills!

The Central Bank of Nigeria (CBN) needs US dollars desperately to help cushion the nation’s balance of payment, and fight deterioration of the Naira, and is going to Nigeria’s best export: the diaspora community. Yes, the apex bank has unveiled a really ingenious scheme called “Naira 4 Dollar Scheme”. Largely, if you wire US dollars to Nigeria via the approved IMTO (international money transfer operators) like Western Union, the payout bank will pay your recipient N5 per $I besides the recipient receiving the full amount you wired in US dollars. The CBN Governor mentioned in a Diaspora Series organized by Fidelity Bank Plc.

Godwin Emefiele cannot fix this overnight. Obasanjo cannot fix it overnight. Jonathan cannot fix it overnight. Buhari cannot fix it overnight. I cannot fix it overnight. You cannot fix it overnight.  We know one thing: unless we produce things in Nigeria, all the financial engineering will fail. Factories and warehouses hold Nigeria’s future, not CBN HQs working financial model with Naira! Sure, we hope the policies provide the path to have those factories and warehouses; the Policies should be the focus, not the persons.

We must challenge these men and women but we must do so with civility. The number of registered voters for Lagos and Kano States were 6.5 million and 5.4 million respectively for the 2019 presidential election. Out of that, about 1.1 million  voted in Lagos while Kano had 1.9 million. Simply, 5.4 million people in Lagos where many of us live registered but did not vote. This number does not include qualified people who did not even bother to register.

Run the number and you will see the same pattern across the nation. Simply, nothing is unpredictable: that we stay home and allow party faithfuls to run the show, only to complain later, will not change the outcome.  Yes, if there were Candidate M who could  have received all the votes of those who registered but did not vote, from state to federal to presidency, that Candidate M would have WON all positions in Nigeria. So, the power is in our hands but we do not use it.

This is what happens: the extremely motivated party faithfuls go out and vote and elect their members. You who stay home or out of the system, come only to complain after the outcome. We need to be real in Nigeria! Insulting those elected officials or their appointees will not change anything because you gave up your rights to help Naira! Sure – challenge their policies but do not think you are not part of the problem.

After completion of my study with Y-Combinator’s startup school in 2019, I have tried and failed severally to figure out how to launch that next big startup that hopefully, will one day turn into a unicorn. This plunged me into further research and despite my young age in the world of startups, funding, VCs, etc., I stumbled on a concept that hopefully if done right, can actually create that next unicorn.

The concept is called a “Power Law”. According to Wikipedia;

A power law is a functional relationship between two quantities where a relative change in one quantity results in a relative change in the other quantity independent of those quantities. In order words, one quantity varies as a power of another. It is also interchangeably called the scaling law.

An example of this formula is when you double the length of a side from 2 – 4 inches, automatically, the area will quadruple from 4 to 16 inches squared. There are a lot of real mathematical formulas at play here but I am no mathematician. So, I won’t dwell on that angle.

It’s a very simple (yet complex) term. It basically hovers around the possibility of moving from zero to one and subsequently, larger in time. It’s a concept that focuses on how very tiny changes can have disproportionate results for your startup. It is more like compounding interest. Understanding this concept will help you determine if your startup will be successful or not and if you should go ahead to seek funding or not. It’s basically the indirect stuff VCs look at before funding your startup.

Let’s examine the Pareto Principle (it perfectly describes the power law) which stipulates that for many outcomes, roughly 80% of consequences come from 20% of the causes otherwise called the 80/20 rule. E.g., 20% of Nigerians actually own 80% of companies. In order words, the relationship between inputs and outputs is NEVER balanced. How does this align with startups and VC funding? I’ll explain more below.

Now as we all know, every VC or moneybag as often called by Francis Oguaju, a tech advisor, often invests in startups with potential for early growth spurts so that they can profit as quickly as possible. There will be many startups or companies, but a few will achieve exponential growth more than the others. And these few are the targets of VCs. For your startup to get funded, it means your company is actually playing with the power law howbeit, unknowingly to you. Fortunately, most VCs do not also see the power law at play but they see growth or the potential for growth which is all that matters.

Since the power law is almost invisible to notice or see, so how do you position yourself as a startup to align with it? It’s actually very simple. Read on.

Brands can last for a very long time especially in tech – if nurtured. This isn’t a secret but I’m sure most founders don’t get it. If you can achieve 100 customers (happy customers), you can achieve 500 customers. Achieving N100,000 ARR can transition to N3million the next year and noticing this exponential growth and leveraging (investing) on it can make your startup grow to become a unicorn. What am I blabbing about? Simply, go long. If you start something and it’s working, keep going. Go longer. Power laws don’t manifest in a short-term plan. You feel the impact when you invest a few more years building on what works.

When you get a happy customer, identify what worked, invest more in it, and you’ll start noticing an exponential growth pattern which again, will reveal itself in the long run. In a nutshell, valuation usually compounds vis-a-vis an impressive impact over time. Look at Hubspot for example which IPO’d at a $750million valuation some few years ago and is now valued at $20 billion. When you present this record of disproportionate growth to VCs, guess what? They’ll give themselves a hi5 because they’ve seen a startup worth investing in. This process might take you a few months to achieve or a few years. In fact, let me still break it down.

When you launch your startup, you are bound to start getting customers. One thing worthy of note is to pay attention to customer segmentation. Do not make the mistake of treating all your customers the same way. Make use of the 80:20 Pareto’s rule to improve on your customer acquisition. The first step is to understand that all customers aren’t equal. Work out who the 20% of your customers are, then use the data to find more like-minded customers. If you understand Facebook advertising (lookalike audience marketing) you will understand this concept. Spend the majority of your time on these 20% customers – the category that is responsible for 80% of your revenue. Focus on EVERYTHING about them and you’d be surprised at how you’ll start acquiring more customers like them. What does this mean? Your ARR (Annual Recurring Revenue) might actually jump from N100,000 this year to N3 million next year.

Congratulations, you have achieved exponential growth – you know, the process that increases quantity (revenue) over time. This means you have begun riding on the Power Law and have now positioned your startup to get funding and hopefully, become a unicorn someday. There are many ways to understand and implement the power law for your startup growth. However, I focused more on the multiplicative process – rapid growth where a result can be multiplied by another which equals exponential growth. There are other concepts like preferential attachment, etc.

The Central Bank of Nigeria (CBN) needs US dollars desperately to help cushion the nation’s balance of payment, and fight deterioration of the Naira, and is going to Nigeria’s best export: the diaspora community. Yes, the apex bank has unveiled a really ingenious scheme called “Naira 4 Dollar Scheme”. Largely, if you wire US dollars to Nigeria via the approved IMTO (international money transfer operators) like Western Union, the payout bank will pay your recipient N5 per $I besides the recipient receiving the full amount you wired in US dollars. The CBN Governor mentioned in a Diaspora Series organized by Fidelity Bank Plc.

It is not Christmas or Salah yet but CBN is already loaded to send goodies. Send $1,000, your recipient will receive the $1,000, and extra N5,000, even if the payout is received in cash or domiciliary account. Two things are evident here:

• CBN wants to use this to change habits, pushing diasporas to use the formal channels to wire money home. You will not get this extra credit if you use the non-approved channels. Here, the channels are you must use the approved IMTOs and the destination would be to deposit money banks (the commercial banks). Those running cryptocurrency accounts will not benefit.
• CBN needs US dollars and is hoping that this will make the diasporas to open their wallets and wire money home. If it succeeds, it could be another way to stabilize the Naira, just as crude oil sales help internationally.

According to PwC, remittance to Nigeria was about $23 billion. Certainly, the central bank will not budget to carry such in perpetuity. This explains why the bank has put a window on this; it would begin on Monday 8th March 2021 and end on Saturday 8th May 2021. This is short term but if it is extended over a long time, you can call it a “quasi-devaluation” for the masses who are lucky to have families abroad.

In an effort to sustain the encouraging increase in inflows of diaspora remittances into the country, the Central Bank of Nigeria (CBN) hereby announces the introduction of the “CBN Naira 4 Dollar Scheme”, an incentive for senders and recipients of international Money Transfers.

Accordingly, all recipients of diaspora remittances through CBN licensed IMTOs shall henceforth be paid N5 for every USD1 received as remittance inflow.

In light of this, the CBN shall, through commercial banks, pay to remittance recipients the incentive of N5 for every USD1 remitted by sender and collected by designated beneficiary. This incentive is to be paid to recipients whether they choose to collect the USD as cash across the counter in a bank or transfer same into their domiciliary account.

In effect, a typical recipient of diaspora remittances will, at the point of collection, receive not only the USD sent from abroad but also the additional N5 per USD received. Please note having discussed with banks and IMTOs, the scheme takes effect from Monday 8 March 2021 and ends on Saturday 08 May 2021.