As we experience the second wave of digital transformation, a reset is currently taking place as old technologies are giving way for new ones. Individuals and organizations need to find a way to leverage on this new wave to further optimize their business model and drive productivity. At Tekedia Automation Week, we will explore the direction of this new wave and how you can ride on it as an individual or organization.
Good People, I am inviting all to Tekedia Hub Automation Week with Olanrewaju Oyinbooke, MCT, mMBA. Join free for the week-long program at hub.tekedia.com. It is scheduled for 20 minutes daily.
Opera controls OPay, and from Opera’searnings call, “In December OPay processed a gross transaction value of $2 billion on its platform compared to $1.4 billion in October, or a 43% increase in just over two months. Further, OPay’s revenue is increasing quite rapidly while the company is able to achieve profits right around breakeven despite the growth. We expect this growth to continue as OPay continues to scale in Nigeria and expands to an additional country in Africa.” Yes, OPay, the fintech company, which has Nigeria as its main base grossed $2 billion on transaction value in December 2020, hitting 43% growth from October numbers.
Simply, OPay is Nigeria’s biggest mobile payment solutions provider and you can call it the fastest growing customer brand in any sector in Nigeria. The OPay’s Invisible Layer Strategy is working at scale.
People, marginal cost of zero has come to the paytech sub-sector of Nigeria’s fintech sector. Yes, OPay is running what I call the Invisible Layer Strategy. The Invisible Layer Strategy is a strategy where a company builds a product utilizing critical infrastructure of another competing company, in the same product line, but finds a way to under-cut that company on cost of services to end users. Today, OPay offers zero fee to customers who use it to pay for DStv services in Nigeria. It utilizes and relies on Nigeria’s banking infrastructure. But if the same customers use banks, directly, they would be charged fees, by banks. Largely, OPay has invented an invisible layer which makes it possible to handle those payments at zero cost that even the banks themselves cannot do. It is important to note that OPay is not absorbing any cost to acquire customers; there is no cost whatsoever in the value chain, and that means even in the long-run, it can process payments in Nigeria at absolute zero fee.
OPay is now well positioned to even battle telcos if they decide to come into the mobile money domain at scale. This company has provided a textbook case study on how to win consumers in Nigeria: pile losses and keep making losses and keep running losses. One day, everyone will come to your party. Of course, you need reserves, tons of reserves I must note, to run that playbook. Hey, China Unlimited makes everything look easy.
Nigeria is now an OPay nation! By operating at the edges of the smiling curve, they have a promise to capture huge value.
Interestingly, this could become one of the most dominant financial institutions in Nigeria, and Iniabasi Akpan, the Country Manager, explained it clearly. Yet, there is more room to grow: Nigeria’s consumer GTV is estimated at $301 billion and more than 80% of that remains out of digital networks, and that means, there are lots of values to be pursued and captured as digital transformation happens. You may then ask – did Paystack exit very early? But you need to understand that $200 million is a lot of money in Nigeria!
“Due to the visible brand of ORide – including its iconic green helmets – and its frequent everyday use, many customers gradually gained an impression that OPay is a ride-hailing company. We just want to take the time today to clarify and emphasise that OPay was and remains a payment and financial service company – a Payments Fintech. Our businesses are licensed and regulated by Central Bank of Nigeria – like any established financial institutions – and OPay is today one of the leading Fintechs in Nigeria.”
Always remember: focus on the incentives and not the form to deliver them. Yes, banks could be competing among themselves as they work to offer financial services to customers. But you could avoid being a bank, and still offer some of those services. If you do that, you may not experience those competitive forces. Think orthogonal to the current forms in markets, and deliver a new basis of competition. Build and Thrive!
Once you build with that mind, the possibility of becoming a category-king emerges. Here are the features:
Perceptively innovative: you are always innovating. You never rest, always pushing for better products, services and experiences. You outperform competitors with new solutions for unmet needs.
Evidently inspired: you inspire your users. You are modern, trustworthy and inspirational, you have a larger purpose, helping people live out their own values and beliefs.
Ruthlessly pragmatic: your customers depend on you and you have their backs, making life easier by delivering consistent experiences. You make good on your promises.
Customer obsessed: customers cannot imagine living without you. You know what matters to customers, finding new ways to meet their most important. needs.
The Robert Noyce Building in Santa Clara, California, is the world headquarters for Intel Corporation. This photo is from Jan. 23, 2019. (Credit: Walden Kirsch/Intel Corporation)
Intel has been ordered by a Texas jury to pay $2.18 billion in damages for two patents infringements. The judgment was delivered following a lawsuit filed by VLSI Technology LLC.
Ars reported that the patents in question were previously owned by NXP Semiconductors, a Dutch company that was created from Philips in 2006. NXP acquired the patients in 2015 when it bought Freescale Semiconductor.
The report explains that the two patents focus on methods for minimizing the power consumption of computing chips. One way to do it is by varying the system voltage: setting a higher voltage when performance is needed, then lowering the voltage to conserve power afterward.
One patent claims the concept of storing information about a memory chip’s minimum voltage in nonvolatile memory so the system can ensure that the memory circuit has a high enough voltage. The VLSI’s other patent focuses on altering clock frequencies as a power-saving technique. Once again, raising the clock frequency of an electrical bus can increase system performance but consume more power. NXP’s second patent is based on the clock frequency when it needs faster performance.
Intel Inside
Intel argued at the trial that it hadn’t copied these techniques from NXP or Freescale and that, in fact, it had invented more sophisticated techniques to accomplish these tasks.
The trial judge, Alan Albright found Intel’s defense not convincing and ruled in favor of the plaintiff. But the case is not over; Ars noted that Intel may ask the judge to find that the jury misapplied the law. If that fails, Intel will then have the opportunity to appeal the ruling.
With $2.18 billion, if the ruling is upheld by the Appeal Court, it will be one of the largest patent judgments in US history. It will also compound Intel’s woes.
Intel has seen many troubles since last year. The semiconductor company was dropped last year by Apple after the iPhone maker developed its own chip that was announced in June. Apple said it’s moving its Macs from Intel processors to its own chips, a move the CEO Tim Cook called “the game changer.” Intel was one of Apple’s biggest chip suppliers, making the development a major setback in Intel’s supply chain.
A month later, Nvidia overtook Intel as the US most valuable semiconductor company. The turbulence of COVID-19 also came hard on Intel with the unprecedented changes it brought on the semiconductor industry. Intel competitors developed new designs that fit into the new market emerging from COVID-19 exigencies, putting them ahead of the competition.
In August 2020, Nvidia moved to acquire Arm, an English tech company with a great reputation in chip making. It makes chips for modern devices including smartphones, an area where Nvidia is yet to find foothold. The deal was opposed by Intel and other players in the industry who have demanded assurances that a new owner would continue providing equal access to ARM’s instruction set.
The acquisition would give Nvidia control over a critical supplier that licenses essential chip technology to the likes of Apple Inc., Intel Corp., Samsung Electronics Co., Amazon.com Inc. and China’s Huawei Technologies Co.
It is a wind of misfortune blowing toward Intel’s chances of staying afloat in the semiconductor industry. In January 2021, Intel announced it’s parting ways with its CEO Bob Swan, to bring back its former CTO Pat Gelsinger, effective Feb. 15. The move signals the chipmaker’s intent to return to engineering.
With all these troubles on the list, a $2.18 billion patent judgment is the last thing Intel wishes to start the year with.
First, we must all acknowledge that running a heterogeneous economy like Nigeria is very complicated especially when the playbook is centralized. In a monetary policy paper (PDF) I wrote and presented at the African Union Congress, I did explain the implications, and how heterogeneous economies could suffer welfare losses as a result of currency union under a supranational banking ordinance. My doctoral research in banking & finance focused on currency and economic development, and I have worked with the World Bank and African Union, on this topic.
The economic structure of North Central Nigeria is totally different from South South Nigeria – and most times, there is no variance on our policy playbooks. A balanced, nuanced policy framework which is regionally incubated and delivered by the states would be more pragmatic in the nation. Today, that economic heterogeneity is not well captured within our policy instruments. That explains why we have many challenges.
Historically, Nigeria developed faster under a regional-based model. There is a reason for that: policies were more laser-focused on the needs of the regions, and consequently were more impactful.
Why am I bringing this up? It has to do with the shifts I have noticed since the Central Bank of Nigeria moved the official rate to N410/$. Yes, the delta between the official and black market rates have remained: “The exchange rate between the naira and the US Dollar depreciated to close at N410.25/$1 at the Investors and Exporters (NAFEX) window, where forex is traded officially. This is as the CBN Governor has suggested that the official exchange rate has been devalued. Similarly, at the parallel market where forex is traded unofficially, the naira depreciated closing at N482/$1 on Friday, February 26. This represents 0.42% drop when compared to the N480/$1 that it closed on the previous trading day.”
In other words, immediately the CBN moved from N360 to N410, the black market also moved. This does imply that closing that gap cannot come via announcements as there are fundamental factors – root causes – causing this massive non-alignment.
Nigerian leaders
Very painful indeed: the Central Bank of Nigeria (CBN) has made it official – Naira has lost more grounds to the US dollars. According to the Vanguard, Godwin Emefiele, the apex bank governor, “who spoke at a summit on the economy by Bank CEOs on Friday, said the drop in crude oil earnings and the associated reduction in foreign portfolio inflows significantly affected the supply of foreign exchange into Nigeria”.
His words: “In order to adjust for the decrease in supply of foreign exchange, the naira depreciated at the official window from N305/$ to N360/$ and now hovers around N410/$.”
Going back to region-based policy where policies are closer to the needs of the states would be catalytic for Nigeria. The implication is that states have to band together within their geopolitical zones to pursue development policies. I do believe that pure restructuring at state levels would be great, but having a mechanism for the regions to work closely together would be best (within the restructured states), since our resources, per capita, are relatively very small for individual states to do great things.
For example, South South could decide to operate a big seaport with all the states in the geopolitical zone coming together to fund it since one state may not have the resources. These anchor projects would feed into pockets of smaller projects at state levels which are designed to address specific needs of the states.
Our nation can advance faster if the center can give out more power. We cannot manage a highly heterogeneous economy from the center, and doing that has remained why Nigeria is underperforming. Some have called this necessity economic restructuring, but restructuring at the state level without regions having a coherent region-based strategy will still not be effective.
According togovernment data, Adamawa attracted $20,000 as foreign direct investment in 2020. But Adamawa was amazing, as it made the list of one of the 11 states (with Abuja) which attracted investment; 26 states recorded zero! So, even if you restructure and allow Adamawa to go alone, the playbook would be sub-optimal. Simply, a region-anchored strategy within fully restructured-states would provide the resources Nigeria needs to ramp up development.
“By destination, Lagos emerged as the top destination of capital investment in Nigeria with $8.3 billion, followed by Abuja, which received $1.3 billion. The others on the list are Abia State with relatively lower $56 million, Niger with $16.4 million, and Ogun with $13.4 million. Anambra State recorded $10.2 million, Kaduna State recorded $4.03 million, Sokoto got $2.5 million and Kano got $2.4 million. Akwa Ibom received $1.05 million ahead of Adamawa, which received just $20,000.”
Unless we fix this, the variance we see on Naira between the official and black market rates, whenever the Central Bank of Nigeria devalues it, will continue to remain a moving target. Yes, even debt sales will fail!
Nigeria’s central bank is preparing an end to an era of debt sales that handed foreign investors some of the best carry returns in Africa.
Offerings to non residents of so-called Open Market Operations bills — introduced to help stabilize the naira following the oil-price collapse in 2015 — are to be phased out “once current obligations have been redeemed,” Hassan Mahmud, the bank’s director of monetary policy in Abuja, said in an interview aired during an online conference on Tuesday. He didn’t give a time frame.
Though the sales helped to shore up the currency, the debt has become too burdensome to sustain as foreigners snapped up securities that offered carry traders — who borrow in low interest-rate markets to invest elsewhere — returns of as much as 30% in dollar terms in recent years. The market for OMOs had grown to about $40 billion by the end of last year, according to Cairo-based investment bank EFG Hermes, with foreigners holding about a third.
[…]
Moody’s Investors Service warned as far back as 2019 that the cost of keeping the naira stable using OMOs would be prohibitive and leave the country vulnerable to outflows. Non-residents held $13.2 billion of the securities as of September, according to Omotola Abimbola, a fixed-income analyst at Chapel Hill Denham in Lagos.
