He is one of the sharpest minds when it comes to ecommerce in Nigeria. Olufemi Samuel Aiki, CEO of Foodlocker and Tekedia Institute Faculty, was on Tekedia Live this morning. He came with new insights and perspectives on the sector. The recorded video is now available.

Sim Shagaya is correct with this tweet but interestingly the Konga of today is totally different from the one he ran.  So, let us not extrapolate that the old Konga could have gotten to this evolving destination.  The Konga which I posited should be sold, then, is totally not what we have now. The current Konga runs on a hybrid model, taking advantage of many physical stores across Nigeria through the Zinox Group. 

Those stores help reduce marginal cost and improve unit economics. So, it is key we do not muddle it up with assumption that ecommerce is suddenly becoming profitable because Konga is. The fact is this: today’s Konga is not a pure play ecommerce company. It is a hybrid physical business with a super-online order placement portal. Yes, it is NOT asset-light, and certainly pays many real estate bills. 

Simply, if the money is in the physical space, why must we build a business that is exclusively online? Unless for pride and fancy, it makes no sense. The new Konga understands this and is working to enter the race where the opportunities abound. With these stores, the new Konga will crash its marginal cost and that would help it to take advantages of the online elements to deepen its competitive capabilities in the physical. As it does this, Konga would become the most respected retail chain in Nigeria.  There is no other company that would come close because what we are witnessing is the birth of a new category and Konga will be the undisputed category-king. For years, Nigeria has failed to create a retail chain: Konga is bringing one with the unbounded and unconstrained capabilities of the internet fused with atoms of stores across Nigeria.

Read this piece I wrote in May 2018; it is playing as most expected when they began to invest in those physical stores. In Tekedia Live today, our Faculty explained better (the video below).

The Brilliance of the New Konga Strategy

When Wema Bank launched ALAT, I was among those who praised the regional bank for the call. But I quickly posited that ALAT would not live its full potential under the Wema brand. Yes, I personally do think that Wema made a mistake by keeping ALAT inside the bank. In 2018, I wrote, “Wema Bank was established in 1945. It has about 1.5 million customers in Nigeria. ALAT was established in 2017 and has brought NEW 180k customers to the bank” within 8 months. But that momentum could not continue at scale as new species of competitors emerged, stopping the alert! Provided Wema Bank has not changed its name to ALAT, by now, as I had postulated, I will say the bank lost a huge opportunity on ALAT, and if they do not change strategy, ALAT will not alert that future. It is nearly hopeless to run “two banks” under one building.

ALAT is not necessarily a bank product because the creators took the bank out of it. That means it is a startup which is not designed to make money immediately for the bank. Just like startups can operate for years at losses provided they are adding customers, ALAT wants to do just that. So, because it was not structured to bring immediate revenue, it is not relevant looking for one. What you look for is the capacity to bring new customers to the bank: 90% of its users are new to the bank. That is significant.

These numbers are significant because the implication is that ALAT is driving growth in Wema Bank. Wema Bank has about 1.5 million customers and hopes to push the number to 3 million through ALAT by 2020. Within 8 months, they have 200,000 on-boarded. My focus is not really the 200,000 customers in ALAT but the fact that Wema is attracting new people into Wema: “with just 10% of our users being existing @wemabank customers”. This is significant for the relatively small bank. Getting 90% of new customers through ALAT is very great. It would have been bad if it was only moving current customers to ALAT. So, ALAT offers growth to the bank

So, there is no issue of helping Wema Bank improve revenue immediately. They did not call it Wema Bank App; they called it ALAT. That strategy is very significant: they want to create a new business possibly from the bank which can appeal to the youth. And they are succeeding: they moved from 16th position to 7th in youth attractiveness within a year.

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See the numbers: Wema Bank was established in 1945. It has about 1.5 million customers in Nigeria. ALAT was established in 2017 and has brought NEW 180k customers to the bank, about 12% of the total bank customer base. Wema Bank is a relative small bank but if ALAT can add 180k NEW customers within 8 months it is a home run. For 72 years, the bank got 1.5 million customers; about 21k per year on average. If it can get something that gives it 180k in 8 months, it can party.

Many banks continue to spin out some fintech ventures. Santander, the Spanish banking giant, has announced that its fintech venture unit is to be spun out and will be managed more autonomously going forward, Techcrunch reports. That is a very good call.

Santander, the Spanish multinational banking giant, is announcing that its fintech venture arm is to be spun out and will be managed more autonomously going forward.

Previously known as Santander InnoVentures and established in 2014, the VC is being re-branded to Mouro Capital. It will continue to be headed up by general partner Manuel Silva Marti?nez, who joined InnoVentures five years ago and has led the fund since 2018, and senior advisor Chris Gottschalk, who joined from Blumberg Capital last year.

The “Missed Opportunity”

I wrote this in the comment section below…but reposting here.

Dare, there is no intention to make ALAT look bad. I think I write in an unbiased neutral way in a professional academic mindset. The missed opportunity here remains that Wema Bank Plc is worth about N20 billion which is roughly $52 million – https://www.bloomberg.com/quote/WEMABANK:NL . The top leading fintechs in Nigeria are all above that. So, if ALAT + Wema give you $52M, it means ALAT is not even worth up to $52M. Possibly, a separate ALAT could be worth $100M if it executed, giving investors better returns. I do not care what KPMG wrote, I am focusing on what matters: returns to investors. ALAT has not changed that for WEMA and that is a missed opportunity.

Wema Bank on ALAT Now

It is a miracle: P&ID which felt it could pocket more than a third of Nigeria’s budget has been asked by an English Court to pay Nigeria “£1.5 million within 21 days to cover legal costs the FRN incurred as part of their successful application for the extension of time to challenge the arbitration award and procedural hearing earlier in the year”. I join my fellow citizens to congratulate Team Nigeria for this partial victory while challenging them NOT to be carried away.

The way the court has ruled for Nigeria, if the same court rules WHEN it matters against it, it would be harder to claim the court is biased against it. So, we need to stay focused and get this done, completely. It is never over until it is over especially when it involves foreign courts and Nigeria. Yes, do not over-celebrate because we have seen surprises in London, Rome, etc when it comes to contracting issues and oil sleaze 

The Federal Republic of Nigeria (FRN) Thursday appeared in the English High Court for a scheduled hearing. The hearing followed the major victory secured by FRN last Friday, allowing it to bring a fraud challenge against a $10 billion arbitration award obtained by vulture-fund-backed P&ID well outside the normal time limits.

The sitting Judge of the High Court, Cranston J ordered P&ID to make an interim payment of more than £1.5 million within 21 days to cover legal costs the FRN incurred as part of their successful application for the extension of time to challenge the arbitration award and procedural hearing earlier in the year. A case management conference to determine the full trial window is scheduled to take place after November 2020.

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“There will be no negotiation or talk of settlement with P&ID or any related party by or on behalf of the Federal Government of Nigeria. The recent judgment of the English Commercial Court confirmed our view that P&ID and its cohorts are fraudsters who have exploited our country. They will not benefit from their corrupt behaviour.

“This is a classic case with overwhelming fraudulent and corrupt undertones. The Federal Government of Nigeria is not considering any possibility of negotiations with P&ID. It has not only fallen within the tall order exception referred to by the Hon Attorney General in his interview with Arise TV yesterday, but lacks any legitimate foundation. We will not and cannot negotiate arbitral awards where the basis and foundation rely on fraud, corruption, breach of processes and procedures.”

Nigeria’s Battle with P&ID