On May 14, 2018, I announced that I would run a workshop in Lagos this September. The promotion and marketing of Innovation for Growth Workshop was expected to take months. Fascinatingly, the 24 seats structured for the event sold out within five days. A Lagos-based multinational bought out the seats.
According to my team, many intending participants had asked for end of May and June to register for the N800k three-day program. With the seats gone, I asked them to explore options that would possibly offer more seats. At the same time, David Alozie who runs Disruptive Africa, an immersive technology and innovation-focused event in Lagos, reached out.
I am happy to note that I will run an Innovation Growth Workshop during this year’s Disruptive Africa Conference & Awards in Lagos. I would also speak in the conference. The early bird registration is N120,000 (covers the workshop, conference & awards pass) and it is planned for two days.
Innovation Growth Workshop under the tutelage of Prof. Ndubuisi Ekekwe (TED Fellow, World Economic Forum Young Global Leader and Harvard Business Review author), to help companies come up with Innovation roadmaps and models for their organisations. Workshop is scheduled Sept 26-27 2018. Learn more on structure, topic, and more here.
To learn more and register, visit Disruptive Africa website. If you have any question, please contact bayo@disruptiveafricaexpo.com or tekedia@fasmicro.com. I do hope to meet many of you.
Sponsorship opportunities are also available to co-sponsor the conference, awards, etc.
Disruptive Africa Expo is an initiative designed to provide interested developers, service providers and enterprises with the needed knowledge support, periodic hands-on trainings, through conferences, hackathons and other events, in order to provide a platform to support people/business in order to maximise the opportunities in disruptive technologies and thereby foster economic growth in Africa.
It seems my post on the currency swap on Chinese Yuan is generating questions. I had noted that US dollar may fall to the Naira if the pressure on US dollar is disintermediated by direct currency swap on Chinese Yuan. In other words, if Nigerians who import things from China do not have to buy US dollar to pay Chinese merchants in China, the demand for US dollar may marginally drop. If that happens, the exchange rate of US dollar to Naira will drop, assuming common demand and supply mechanics plays out.
Disintermediation does not only apply in the technology world where producers cut-off middlemen or intermediaries to reach consumers directly. What is happening in the Chinese currency swap is the disintermediation of the U.S dollars.
I received emails with people asking if I could quantify this drop at a deeper level. I had projected 5-10% gain for the Naira to US dollar in the black market (other things being equal). There is nothing I will add except to note that cyclical boom and bust of crude oil revenue could make any prediction in Nigeria hopeless.
This is a huge shift and could be a turning point for most businesses in Nigeria. I expect this to help the Naira appreciate 5-10% over U.S. dollars in the next 12 months (other things being equal). Yes, this swap will remove about 30% of forex burden on the U.S. dollar in Nigeria.
China tops Nigerian imports, according to data from the Nation Bureau of Statistics compiled by Invest Advocate.
Major import trading partners and % share to Q4, 2017 Import trade
China 22.00%
Belgium 9.04%
S.A. 8.96%
India 6.41%
Netherlands 5.93%
If you move nearly a quarter of the import from being intermediated by the dollar, it is simple to expect the demand for dollar to drop. My estimate of the appreciation of the Naira to US dollar by 10% is overly pessimistic. If not for the upcoming election which is already making companies to hold-off investments, we could see the Naira gaining up to 15% on the US dollar because of this policy. Of course everything depends on good implementation, and allowing market forces to drive this over backdoor shenanigans.
Expect Chinese Yuan to Drive Intra-Trade
As I make this call, I am also predicting that within the next 36 months, major African countries in order to boost intra-trade will begin to have multi-nation currency swaps tied to Yuan. So, if you buy something from a Ghanaian merchant, you would not have to buy US dollar in Lagos to send to him in Accra. Rather, the Central Bank of Nigeria and its Ghanaian counterpart will help you PAY in Ghanaian Cedi with the underlying currencies swapped in Chinese Yuan. No consumer will see the Yuan but it would power that redesign. For the buyer and seller, the product is being paid on Cedi with Naira. But underneath the trade, it is Yuan that is anchoring everything. This is where I expect these bilateral swaps Beijing has been signing with individual African nations to morph: multi-nation currency swaps powered by Yuan.
All Together
In my lead policy paper to the African Union on single currency, I hinted on this possibility to improve intra-trade on Africa. The possible welfare losses as a result of the heterogeneous nature of our markets, arising from currency integration could be mitigated through PRIOR regional integrations. The currency swap could do that magic without a supranational central bank being established, allowing nations the freedom to use currency adjustment to manage forex crises whenever they rise.
I am happy to share a pitchbook of a business (Guardmile) we conceived few years ago. I had planned to build a solution to provide data-driven smart auto insurance, smart driving assistance and auto-care management solution in Africa. But at the end, I decided to focus on agriculture, creating Zenvus. Today, I am making the complete […]
China is scoring great goals across African capitals. I am a big fan – the world needs choices. Imagine a world without China and only Donald Trump. By now, he would have banned Rwanda from trading in the world just because they rejected buying used clothes from America. The Central Bank of Nigeria is in the game: it has flagged the sale of foreign exchange in Chinese Yuan.
The Central Bank of Nigeria (CBN) yesterday flagged off its intervention in the sale of foreign exchange in Chinese Yuan (CNY), signaling the consummation of the Bilateral Currency Swap Agreement (BCSA) signed with the People’s Bank of China (PBoC) on April 27.
The import of the foreign exchange currency diversification is aimed at checking the rising pressure on the United State currency- Dollar which high demand for all international transaction before now has had a negative impact on the county’s inflationary trend, leading to the devaluation of the Nigerian currency – the Naira.
Also, by adopting a second direct convertible currency, the additional cost of having to go through a third currency is now being erased and the CBN believes this would ultimately positively affect the bottomline of imported goods and services from China
Disintermediation does not only apply in the technology world where producers cut-off middlemen or intermediaries to reach consumers directly. What is happening in the Chinese currency swap is the disintermediation of the U.S dollars. The $2.5 billion currency swap deal will open opportunities, hopefully, for manufacturers in Nigeria. If you want to buy something from China, you do not need to look for U.S. dollars. If you have your Naira, the government will make it possible for you to pay directly in Yuan.
With the ease this swap deal will bring to Nigerian companies, there is no reason for any company to buy something which can be found in China in any other place. Going forward, dealing with Chinese partners would be as simple as paying a local Nigerian company. This is significant and more Nigerian importers and manufacturers will certainly bias to buy from China. All the troubles of dollars, pounds sterling and euro will fade at least in one area.
This is a huge shift and could be a turning point for most businesses in Nigeria. I expect this to help the Naira appreciate 5-10% over U.S. dollars in the next 12 months (other things being equal). Yes, this swap will remove about 30% of forex burden on the U.S. dollar in Nigeria.
The world of video streaming seems to be gyrating: Walmart is joining the party. Typically, when Walmart joins a club, prices of things drop. It does not live on the notion of premium brand and exclusivity. Walmart makes things affordable for the people. If it takes that model into video streaming, Middle America will believe, and Africa will possibly connect.
Walmart is battling Amazon in online retail, groceries, and urban home delivery. It may now be opening up another front in its war: video streaming.
Walmart, the world’s biggest company by revenue, is considering building its own Netflix-like service to compete directly with Amazon Prime, as well as Netflix, Hulu, AT&T’s Audience, and impending products from Disney and Apple, The Information reported (paywall).
Walmart already owns Vudu, a video-on-demand platform for Hollywood movies and TV, but it’s reportedly contemplating developing its own programming and offering it for less than $8, undercutting Netflix and Amazon.
MultiChoice has been focusing on Netflix as it devises ways to compete and hold its territories. Now, the real competition is coming. While Netflix attacks MultiChoice premium subscribers in Africa, Walmart will go after the customers which have sustained MultiChoice for years. Those are the customers who are signing up in millions across continental Africa on MultiChoice properties. To a large extent, Netflix does not care about them: they are the GOtv users.
Multichoice CEO Calvo Mawela
For MultiChoice and other video streaming companies in Africa, if Netflix and Walmart converge in Africa, it would be a double whammy. Largely, American companies are just good in creating contents that transcend cultures and boundaries more than their local competitors. The implication is that they have better unit economics to win any sustained competition because of larger scale of distribution.
The problem MultiChoice is facing today with the loss of subscribers is not really about Netflix. Simply, MultiChoice knew that the trajectory of entertainment was moving online and will continue to do so. Online is going to become the equilibrium state of “view entertainment”. Yet, MultiChoice did nothing. It is typical; I called it the monopoly hangover when I wrote about Interswitch. These entities are making so much money in the present model to creatively destroy it. Typically, someone else has to do it for them as that is the only way they can wake up.
But MultiChoice may be happy for one thing: Walmart has presence in South Africa, and can indeed be regulated, if necessary, unlike Netflix which pipes videos from U.S. with no way for the South African regulators to extract anything from it. I remain skeptical if any regulator can change the trajectory. The internet is very notorious in taking down anything on its path despite any efforts to regulate it. Yes, if South Africans want to watch Netflix, they would always find ways despite what any regulator can put there. The nation has a strong free speech (and choice); no one will destroy that tradition because it wants to help a monopoly.
Massmart is a South African-based globally competitive regional management group, invested in a portfolio of differentiated, complementary, focused wholesale and retail formats. Walmart acquired a majority stake in Massmart Holdings Ltd. in 2011. Massmart operates more than 400 stores in South Africa and 12 other sub-Saharan countries.
All Together
How can the VOD (video on demand) companies in Africa go further? The competition is now global. Customers are going to win because more choices will be available. But as that happens, many players will certainly be knocked out, in a world of winner-takes-all, as I noted in a recent piece in the Harvard Business Review. I just wish our companies will have the vision to come together, and merge, as that seems to be the best way to remain competitive: size matters.
