It should not come as a surprise to anyone: selling video streaming products in Africa is a hard business. It is a double whammy for most potential customers: pay subscription fees and then cover the broadband costs. So, it was not entirely unexpected when iROTOtv announced that it was refocusing out of Africa: “Over the next week, IROKO will be defocusing our Africa growth efforts and we will revert to focusing on higher ARPU customers in North America and Western Europe. Even after pushing incredibly hard in Africa for the last 5 years, our international business represents 80% of our revenue today…” This is really a smart move as now the company can focus where it can earn U.S. dollars; I made that case a few days ago when I explained how Nollywood producers are focusing on international markets.

Between the COVID-19 fallout, rapidly devaluing currency and hostile regulatory environment, it’s time to pause the burn. It’s time to hunker down and see what the next 18 months brings. Over the next week, IROKO will be defocusing our Africa growth efforts and we will revert to focusing on higher ARPU customers in North America and Western Europe. Even after pushing incredibly hard in Africa for the last 5 years, our international business represents 80% of our revenue today, so by taking out Africa growth-related costs, we cut our $300k/month burn to <$50k/month. Still high, but once things normalise we should have a clear path to free cash flow + profits in 2021. This will unfortunately lead to a pretty dramatic change in the size of our Africa teams. There will be around 150 job losses. We are still working on the numbers, and in order to soften the blow we are speaking with a number of companies who have taken an interest in our highly trained telesales agents. The ambition in this terrible jobs market is to try and give our departing teams the best odds of success in what is unfortunately one of the worst job markets in decades. We wish them well on their adventures, it is no fault of their own. They definitely tried their best. We all did.

We still believe in Nigeria, We still believe Ghana, We still believe in Africa. It’s a strange thing to realise that even after almost 9 years with IROKOtv, 5 exclusively focused in Africa, we still may be too early for Africa. That in itself says so much about the current Internet opportunity in Africa. Many models have attempted to crack the consumer economy in Africa. Classifieds didn’t work. Lead generation didn’t work. E-commerce didn’t work. Free didn’t work. If we only had the Africa market (like so many before us who failed) then this post would be RIP IROKOtv. Thankfully we have an international business to fall back upon. For Africa, we are currently compelled in the short term to find a more efficient model to growing our paid membership here. We are introducing new products which we hope to move us up the ARPU chain and broaden our services beyond just entertainment. It’s still super early and we are veterans of experimental building of consumer Internet in Africa. For now we can only focus on cash flow. We will be waiting patiently, keenly, for the key signals to jump right back in to growth mode. We are still on ground.

You may decide to read that piece by Jason Njoku, the CEO of IROKO. He dropped some lines, “Many models have attempted to crack the consumer economy in Africa. Classifieds didn’t work. Lead generation didn’t work. E-commerce didn’t work. Free didn’t work. If we only had the Africa market (like so many before us who failed) then this post would be RIP IROKOtv. Thankfully we have an international business to fall back upon.”

Yes, one of the hardest things to do in business is to extract revenue from people that do not have money; Africa does not have purchasing power for broad entertainment. And as I have noted, Nigeria has only about 30 million people that earn income. Just about 5 million  of those earn decent income to get into paid entertainment of any kind.

With this strategic refocusing, the National Broadcasting Commission which just introduced a new broadcasting code will have one less company to worry about on enforcement and compliance!

It is what it is: your playbook must NOT be 100% localized in this age of falling currency, in Africa, if any part of your raw materials is imported. And because all digital startups have foreign raw materials (Amazon AWS, Microsoft Azure, etc), your revenue must extend beyond Africa these days if you want to thrive. 

As the Trump’s administration toughens up on China and its technology industry, the South Asian country is warily preparing to save itself from further Huawei-like situations. The next phase of US attack will likely be on the open source software and China doesn’t want to be caught unprepared.

For years, China has relied on Microsoft-owned GitHub for open source software. GitHub is the largest open source software in the world, powering most of the online activities of different platforms; from Netflix films to Instagram photos.

In China, tech companies and developers have confidently used GitHub until the US shut Huawei out of its technology supply chain. Huawei depended on US chips for its telecom technology, but Trump ordered US semiconductor companies to stop supplying it with chips, and that is consequently threatening to cripple the Chinese tech giant.

To prevent future occurrence, China is building on Gitee, an open source software company run by Open Source China (OSChina). SCMP reported that the Ministry of Industry and Information Technology (MIIT) chose the 7-year old firm in July, to construct an independent, open-source code hosting platform for China.

The concern that the United States’ government will at a point in the near the future, order American GitHub to halt business with Chinese companies has prompted China to activate a plan B.

“Borderless collaboration is one key characteristic of open source, however the geopolitical friction is forcing China to consider alternatives for sustainable tech-driven innovation,” said Charlie Dai, analyst at research firm Forrester.

In July last year, the Chinese tech industry started to express fear that the US may exercise its export control rules on GitHub and throw off Chinese developers depending on it. The export control rule says that content developed on GitHub needs to comply with US export laws, including the Export Administration Regulations (EAR).

China’s developer community became alarmed on noticing GitHub’s export rules because the EAR regulations were used to restrict export to Huawei.

Liu Chen, director of operations for OSChina said GitHub’s fate depends on how far US export sanctions on China goes.

“Whether China’s GitHub users will be affected depends largely on the strength and scope of US export sanctions against China, which we cannot determine,” he said.

GitHub allows free access to open source projects globally, with 40 million users and 44 million projects. SCMP reported that in a survey among 950 global IT leaders, conducted by enterprise open source software company Red Hat, 95 percent said open source was strategically important to them.

Therefore, cutting off China’s access to GitHub will be devastating to millions of developers. GitHub already restricts Iran and North Korea from accessing its platform, a development China may have seen as an example of what it is afraid of.

But GitHub said last year, in an effort to allay the fears, that “the provision of software services over the internet, such as the code collaboration in repositories on GitHub.com, is not subject to US export control mandates.”

However, the explanation did little to calm the nerves of Chinese developers. Gitee has been serving as an alternative to some five million users, hosting 10 million projects. But while Gitee has recorded a considerable inflow of people, it still faces the challenge of upgrading the quality of its repositories to be in par with GitHub.

GitHub has been a darling to millions of users due to the quality of repositories. Dai said that “most of the leading open source projects, spanning all technology domains, such as cloud-native, AI, IoT and blockchain, are hosted on GitHub.”

Nevertheless, China is not giving up on its quest to develop Gitee to curtail the impact a sudden US export restriction will have on its tech ecosystem. The company is planning to use the help of other 10 Chinese organizations including Huawei as backup to government’s support.

Notwithstanding, GitHub is planning to expand in China as it hosts a large number of its users. The South Asian country is the second largest source of GitHub contributors and users. SCMP said the number of GitHub users increased to 37 percent last year, indicating that most Chinese developers still see it as the best.

There is nothing ant-like in these numbers. Yes, Alibaba’s affiliate fintech company, Ant Group (of Alipay), does generate more payment volume than Visa & Mastercard combined! Ant does $18 trillion while the American giants bring in $16 trillion. Ant operates primarily in China while Visa and Mastercard run around the world!

Started as Alipay in 2004, Ant Group has transformed from a digital payments company for Alibaba to an aggregator of financial services. Today, the group’s lending, wealth management, and insurance offerings count for 63% of its revenue. In the first half of this year, a further shift in revenue generation saw the credit business surpassing payments for the first time ever. […]

Ant’s prospectus, for its dual listing in Shanghai and Hong Kong, states that “we call ourselves Ant because we believe that small is beautiful, small is powerful”, but if the company can keep this pace up, it will be marching on to a valuation more closely resembling an army of unicorns as opposed to anything reminiscent of its name. (source: Fintech Collective newsletter)

Here is how Fintech Collective explained what is happening:

Today, Ant is aiming for a valuation of $200b to $300b in a dual-listing in Hong Kong and Shanghai, although meetings with investors are still ongoing. It still dominates mobile payments in China, but instead of competing with the financial sector, it has become a digital supermarket of others’ offerings, letting users buy on credit, invest in mutual funds, and find insurance through established players. It has even changed its name, from Ant Financial to Ant Group, to emphasize that it is a tech, rather than a financial services, company.

Ant’s evolution into the Alibaba of finance has been fueled by a desire to claw back customers who began using WeChat more as it broadened out from a messaging service to an online platform for services of all sorts — including mobile payments. More than 90% of Alipay’s 1b users now access the app for more than just payments.

Once people were using Alipay to stash their cash and pay for online purchases, Ant could begin offering them other kinds of services through the app, including personal loans and insurance policies. Alipay says it has 900m users in China.