For the past ten years, Africa has recorded some of the world’s strongest rates of economic growth. At the same time, many African economies continue to function at well below their full potential. Structural transformation is needed to create more jobs, reduce poverty and accomplish sustainable development objectives.
The African Development Bank’s (www.AfDB.org) High 5 priority areas are intended to support African countries’ achievement of the SDGS. They are: Feed Africa; Light up Africa; Industrialise Africa; Integrate Africa; and Improve the Quality of Life for the people of Africa.
Atta Abdul, Fatima-Zahra, Shuaibu, and Daniel are the faces of a continent that is being transformed. By betting on Africa’s youth, the Bank is banking on the future to make the continent a land of progress, prosperity and hope.
Feed Africa
Since 2015, 74 million Africans have benefited from improved agricultural technologies through the Bank’s efforts to support increased food security on the continent.
In western Mauritania, for example, the Brakna-Ouest irrigation infrastructure improvement project, supported by the Bank in the amount of $12 million, enabled 1 500 farming and livestock-producing families to return to cultivating their fields.
“We come from a farming and livestock-producing family and we grew up in that environment. Our harvest was very poor. We wanted to move somewhere else,” explains Atta Abdul Seck, a project beneficiary in Louboudou in western Mauritania. “As a farmer’s son, what I liked most when I returned was being able to continue farming. Farming is in my blood,” he says proudly.
Light up Africa
Without electricity, agriculture cannot effectively meet the growing challenge of food security in Africa. The Bank has made investment in energy a priority. Since 2016, it has mobilised $12 billion for its “Light Up Africa” strategic priority. Through this investment, 13.4 million people have gained access to electricity.
Morocco has made significant progress in widening access to electricity. In just the past twenty years, the electricity system has expanded to cover almost the entire country. The national rural electrification program, supported by the Bank with 155 million euros, has connected nearly 12.8 million Moroccans to the national power grid.
In Dar El Aïn, a village twenty kilometres from Marrakesh, the arrival of electricity has opened new doors for the women of the “Al Amal” cooperative. They use electricity to process their wheat into couscous or create other barley or wheat-based products. “The cooperative processes local crops into added-value products. Now, with electricity, the women are much more efficient, and their products are of better quality. It creates hope,” says Fatima-Zahra, a thirty-year-old member.
Industrialise Africa
As part of the Bank’s “Industrialise Africa” priority, 9 million people have gained access to private financing. In Nigeria, for instance, where more than 70 percent of the population depends on agriculture, fluctuating harvests have significant repercussions on yields, income and food security.
One solution is fertilizer, particularly if locally produced. The Bank provided $100 million to support construction of a modern fertilizer plant in Port Harcourt.
Shuaibu Yusuf, a farmer in his thirties who live near Port Harcourt, has experienced the impact of this project in his daily life. “When I used this fertilizer, I saw the difference. My harvest increased by more than 40 percent. I can feed myself, pay for my children’s education, and even their medical expenses,” he says. “I’m going to encourage my children, my neighbours and members of my community to increase their farming activities so we can all progress together,” Shuaibu continues.
Integrate Africa
To derive more benefit from industrialisation, Africa must become better integrated in terms of trade and markets. Through integration, African countries can gain access to larger markets and thereby increase incomes for millions of residents through new opportunities.
Since 2015, 69 million people have benefited from the Bank’s support for new transport infrastructure that has advanced integration. Gaps in the primary transport corridors have been filled, links between countries have been strengthened, and intra-African trade has been revitalised.
A good example of this is The Nairobi-Addis-Ababa corridor, which received$670 million in Bank financing and which has enhanced the potential for trade and job growth in Ethiopia and Kenya.
Daniel Yatta, a forty-year-old Kenyan lorry driver, has been transporting goods between Nairobi and Addis-Ababa for 15 years, and has seen the new road’s impact on his business. “Back in the day, it would take more than two weeks to drive between Addis and Nairobi,” he says. The new road has made his life much easier. “With the new road, the trip takes only a few days. With 30 tonnes of freight, it only takes about 24 hours to drive to Addis!” he continues.
Improve the quality of life for the people of Africa
An important part of improving living conditions is providing better access to essential services such as health, water and sanitation. Since 2015, Bank-supported projects have given 43 million people access to water and sanitation.
SOURCE: African Development Bank Group (AfDB)
Bayo Ibrahim is a graduate of Food Technology from the University of Ibadan, Nigeria. He currently co-runs a processed food company in Osogbo, Osun State Southwest Nigeria. He spoke with Rasheed Adebiyi on the impact of the COVID 19 pandemic on startups and other issues affecting entrepreneurship in Nigeria. Here are the excerpts.
Tekedia : Tell us about yourself
Bayo Ibrahim: I am Bayo Ibrahim. I am a food enthusiast. I love to see well processed and packaged food products. I am a co-founder of Plantation Foods and we are the producers of Premier Custard.
Tekedia : As a business owner, how could you describe the government response to COVID 19
Bayo Ibrahim: The Federal Government has shown great responsibility with its attention and responses to Covid-19 especially to businesses with several intervention programs declared to ensure ease of doing business in the country.
Tekedia: At this point that it looks like the CoronaVirus seems to be here to stay with us, what do you propose for the government to do?
Bayo Ibrahim: Yes, it’s appearing as if the effect of the virus will not be subsiding soon and this has really affected businesses so hard. First, it is understandable that a larger number of businesses in the manufacturing sector depend greatly on importation. The federal government should provide and sustain incentives and waivers on the importation of critical and essential manufacturing materials especially in the food and drug sector. This should not be limited to packaging and plastic materials used in manufacturing. The government should as a matter of importance ensure availability of forex and control of exchange rates to minimize the rate of inflation. Finally, on this, the government should also reduce the interest rates, especially from government-initiated business loan facilities. All of these will ensure a stabilized and controlled economy that may be caused by the effect of the Covid-19.
Tekedia: In specific terms, could you describe how government response affects entrepreneurs like you?
Bayo Ibrahim: At first, I will like to talk about the lockdown policy. There is no doubt that it is the best alternative to avoid or reduce the spread of the virus. However, as good as it is, it has really affected businesses especially young start-ups like our own. In the first week of the lockdown, we did not have an idea of what would happen. The pre-existing news about other countries in relation to the virus shaped our responses. We couldn’t go out and business couldn’t run despite the fact that we are a food manufacturer. As a matter of fact, nothing worked during the first week of lockdown. Then, after we realized there are waivers for food manufacturers and a few others, we set into actions. Unfortunately, open markets across the country where we have our distributors and customers especially at the state capitals were all locked up. So, the waiver was absolutely of no value. So, for the first one month of the lockdown, nothing worked and we couldn’t make any substantial business.
More so, when business is supposed to resume with the partial lift on lockdown, the prices of production materials have drastically gone up and inflation has already set in. The average cost of production was about 30-40% on the rise. The implication of this is that more working capital will be required to be able to sustain your regular production capacity. Going further, customers/consumers’ resistance had set in with a sharp rise in production cost which directly affected prices of our products at the consumer level. So, if care is not taken, this is the best time for a start-up to lose business. Many businesses will have to restart or even crash out of the system.
Tekedia : How is it like running a business in Nigeria and in Osun specifically?
Bayo Ibrahim: Nigeria and Osun, in particular, is a good place to do business. People like us have really benefited from the peaceful coexistence of the Nigerian people. Our good population is a great advantage and a good strength of marketing to any serious-minded manufacturer. You will not be surprised that there are some product brands in Lagos today that are multinational standards and have never gone beyond Lagos. The reason for this is that the population in Lagos alone is more than enough to sustain their businesses. As an emerging business owner, if I can capture the southwest market successfully I am in good business. Doing business in Osun especially in Osogbo is one thing I love to propagate any time I have the chance. Because you can have an average of 18 hours of power, a fairly good road network, affordable and ready to go and diligent youth as human resources. Government policies on small businesses here are enduring. The only thing I think the Federal and state government need to work on is encouraging local content for raw materials for the production and manufacturing sector to reduce high cost of importation. For instance, about 95% of our production materials in Plantation Foods are imported. So, everytime there are threats on importation like this, we are always affected and it runs down the value chain.
Tekedia : What would your advice be for young Nigerians who seek to be entrepreneurs?
My advice is that they should start now. If you have any enterprising idea that can change narratives, please start now. The most difficult part is getting started and you can only start at a time. Let me also say this, I have always believed that the benefits in entrepreneurship are far more than engaging with a monthly paid job. Every Government of the world has programs for young businesses and entrepreneurs. So, start-up capital can’t be an issue, you only need to open your eyes widely to know where the money really is. Young intending entrepreneurs should take that bold step to change the narratives of joblessness and all.
Tekedia : There are a number of government economic stimulus packages for businesses. What specific areas would you want the government to intervene for start-ups in Nigeria?
Bayo Ibrahim: In all fairness, the federal Government is on top of the talk in sustaining the economy especially during this pandemic and they are really taking good actions to ensure economic activities do not enter comatose. For instance, they have provided waivers on importation of medical and food production materials, so they should sustain that for a good number of months or years and should be exclusively extended to packaging materials too. Moreover, governments at the central have extended moratoriums to businesses who benefited from the Bank of Industry manufacturing intervention funds. That’s a very good one and they have also reduced the lending rate on the same platform from 11% to 7%. To be honest, it’s the best any serious minded business owner can have at the moment. They have really put the economy on the acceleration gear. It’s only left for our youth to tap into those initiatives and leverage on them. Government should sustain that initiative until everything works well across the world. Moving further, I think one big deal the government needs to do is ensuring availability of forex for easy importation of manufacturing materials. It is understandable that the cut in crude oil supplies due to the pandemic really hit us hard on the state of our foreign reserves. Notwithstanding, the government must work on controlled exchange rate so as to reduce the level of economic instability and inflation. Finally, Nigerian government should really learn from this scenario and build the nation’s economic strength by encouraging local content and sourcing for manufacturing raw materials locally. We are over relying on importation and this is not just affecting businesses, it is killing us health wise. Government should be determined and sincere on economic policies.
Tekedia: Thanks for your time
Bayo Ibrahim: Thank you.
My model is that only about 30 million Nigerians earn income to buy products and services which are not food items, medicine and other core essential necessities. I have called these 30 million the Precious Nigerians – those with money to buy things for themselves and support others. You can read the analysis here and here.
In most of my analyses when it comes to people that actually have money to spend or pay for (technology) solutions in Nigeria, I use 30 million people. Yes, despite 198 million human population, the effective addressable market in Nigeria is less than 30 million people. In Fasmicro Group model, these are people with decent incomes for anyone to craft solutions to their personal and business-related frictions. The remaining 168 million people are opportunities, nevertheless [they have to eat, shower, etc]. But we see them from the track of the core 30 million people who have the money to pay for tech things. For most technology solutions (think gaming, apps purchase & digital subscriptions and the platforms like smartphones, computers and connectivity required for them) where the buyers are usually the direct beneficiaries, the 30 million is rock solid. (Of course, on largely non-tech areas like food where everyone has to eat, the 198 million people become the addressable market.)
When the Covid-19 lockdown began, I told our community members selling digital products not to retreat because even though the market conditions looked bad, people had limited things to spend money on, and the paralysis could provide opportunities to serve some customers uncontested. Yes, for those earning income, the money had been piling up in the bank accounts with nothing to spend it on. With schools closed, roads blocked, many Nigerians were forced into “unplanned saving”. In other words, people saved money which typically would have been spent. More so, some saved to hedge the risks of circumstances like loss of jobs. But money was saved!
Indeed, while there were job losses, those with jobs were saving. That explains why you should not freeze your marketing thinking markets are on pure cold ice. I do believe that if you provide good value, people have money to spend, right now. Using that insight, we decided to move the promotion of the second edition of Tekedia Mini-MBA by 6 weeks, right at the peak of the pandemic, knowing that the savings had minimal ways to be used: no transportation, no outside dining, no makeup shopping, etc. The lack of ways to spend did not stop some from still receiving income!
This is the summary: if you go back to most bank accounts in Nigeria, the level of saving is possibly more than last year, at the same period. This money would be spent in the next coming weeks. I tell you that if you provide them something that has value, there is a decent war chest across most bank accounts of these 30 millions Nigerians to party with you.
Update: there is data from U.S. showing this trajectory: “The personal savings rate hit a historic 33% in April, the U.S. Bureau of Economic Analysis said Friday…The increase in savings came as spending declined by a record 13.6% for the month.”
The coronavirus crisis has Americans hoarding more money than ever as widespread fear paralyzes consumer spending habits.
The personal savings rate hit a historic 33% in April, the U.S. Bureau of Economic Analysis said Friday. This rate — how much people save as a percentage of their disposable income — is by far the highest since the department started tracking in the 1960s. April’s mark is up from 12.7% in March.
Nigeria’s Addressable Core Market – The Magic “30 Million People”
Wednesday 27 May was a significant day for children worldwide. It was the day that these gifts of God are celebrated the world over. It was a time to bring to the fore issues affecting children globally. However, the day was significant for some other thing in Nigeria. It marked the third month of Nigeria’s index case of the Coronavirus, the pandemic that has infected over 5 million people across the world and has equally killed 358,000 others. On 27th February, 2020, the virus, which originated from the Chinese city of Wuhan, sneaked into the country through an Italian man and the entire life of Nigeria has been put on hold. Since then, the cases have risen to close to 9,000 with 254 deaths. Schools have been closed. Worship centres were shut. The economy was locked down and is tilting towards a recession. Inter-state travels banned. Government acclaimed palliatives and social protection programmes were activated. All of these happened just within 3 months. A quarter of the year has gone down the drain!
The three states, FCT, Abuja; Lagos and Ogun States, which were hitherto considered the main theatre of the have experienced two phases of lockdown while other states have also been subjected to all sorts of treatment of lockdowns, either as total, partial or eased lockdown. As at today, the story has changed as some states that were not in the cast of the Coronavirus play are now playing lead roles in the Coro theatre of the absurd. At this period, almost all the 36 states of the federation are on the board, the numbers just keep popping up. All within 90 days, the economic and social flags were flying at half mast!
As part of an organization that has been helping people cope with the pandemic by providing relevant, relatable and data-driven information, I shared a graphic image detailing the numbers of confirmed cases, recovered cases and deaths with a senior colleague. This spurred some conversation between the two of us. The nuggets in the exchange gave some insights. The two of us were just looking at the entire response management of the government at all levels and the kind of cooperation they have got from Nigerians.
My Friend: (After receiving the graphics) This is not getting any better and we are moving to total ease of lockdown (He wonders).
Me: (Asking a rhetorical question) Do we have a choice?
My Friend: (Ruminating) No choice. Things have to move on and people have to be disciplined and take responsibility for their safety. I wouldn’t be surprised if most state governments close up their isolation and ICU centres and then private hospitals take over Coronavirus treatment at exorbitant prices (Suggesting an alternative strategy).
Me: (Assessing the situation) We have not shown any discipline so far with the manner we have conducted ourselves in the lockdown. People find their ways around despite movement restriction.
My Friend: (Judging from his experience) Yes, inter-state movement restriction was a total failure. Security officers are terribly compromised. Some state governors didn’t have on ground all the things they claimed to have to combat the pandemic. (Indicting politicians and security personnel)
Me: Yes. It is about if you want to die or live, just ensure you take responsibility for either (herd immunity).
My Friend: Exactly… I don’t see them loving the people they govern. To me, Just El-Rufai and a few others seem to be very passionate in handling the situation. Allah knows best. (Again, the politicians are indicted)
Me: It is a scale. We need to balance it. Governments will do their best. Citizens too must take responsibility as well. Or else, the effect is going to be devastating (preaching shared responsibility).
My Friend: Ooooh.. On citizens, I completely agree. At this point, individuals should at least be responsible for 70% of their own safety (urging people to be responsible). Till today, I talk with my neighbour who shares a fence with me on the phone. A cousin, with about 6 houses away from me, we have not seen for a month. My family house that is just about 9 kilometres away, I have not visited for weeks (highlighting the devastating effect of social distancing). We have to protect ourselves (justifying the need for caution).
Me: Methinks people need to see community transmission, and God forbid, some deaths before they get the damn consequences and severity of the virus (fear appeal).
My Friend: Yes, just as you said in the interview that all those putting up I-don’t- believe-attitude about Coronavirus, if they see an ambulance coming for a Covid19 patient in their neighbourhood, the reality of its existence would be done on them (justifying the reason for fear appeal).
As Nigeria counts down to the fourth month of the incursion of the virus into Nigeria and government is considering returning the national life to normalcy as expected by the people, there is a need to ensure all hands are on deck to ensure that that the need to relate socially is balanced by the need to stay alive.