Many have contacted me for some perspectives after I posted something on the stock market. I had noted that loss of value may happen, and suggested that people may need to leave instructions with their brokers, to pull the triggers, if the mayhem should continue. I am not sure what would happen. And no one is ever sure. Just as in politics, I like the stock market because there are always hard outcomes: elections come with winners and losers, and stock prices rise and fall. So, any statement can be tested and benchmarked with real results, unlike say approval rating and popularity of leaders which provide no definite outcomes to validate them.

Now, are you on alert in case this sell-off continues? If you have equity anywhere, please do not be far from your broker. Have an outstanding instruction to pull the trigger if the mayhem continues. We may be in for market correction, but it is too early to talk that.

I explained to the people that checked that it would be premature to start making decisions because of few isolated bumps. The key is making sure that it is not yet a negative pattern that is sustained. At this point, nothing has happened to trigger that tsunami of fear which can move markets at unprecedented level within a very short time.

Yes, I explained that I had personally gotten out of stocks few days after President Trump passed his tax law in the United States. I was a banker; I continue to work with leading bank clients on strategies. As an entrepreneur, I practice what I teach.

One thing I know is that inflation is always fought vigorously by any government. If Trump Tax Law makes U.S. firms to bring money home, they would pay dividends to shareholders. Also, they would give out a lot of money to their workers. Possibly, they would invest here and there. Those are all great stuff. The economy would horn and people would have great Christmas, and Black Friday would become Spend Friday. The consumer confidence would be huge and general business sentiment would accelerate.

However, as government begins to fight inflation, many things would happen. The Federal Reserve of U.S. would hike interest rates. When it hikes rates to curtail inflation, the cost of capital would go high. Then, immediately, many companies would start watching their shoulders. So, borrowing would become a little more expensive and spending would become more managed. Stock market traditionally does not always perform well in that domain as bond market would become more attractive since high rates would favor it for investors. Besides, if rates are high, savers would have alternatives as they can make money by saving. Right now, there is no value in saving because rates are artificially low. But if rates go high, saving would improve. That means, saving becomes an option besides investing in stock markets.

In Nigeria, specifically, I do not expect a lot of contagion from foreign markets to affect us, since at the moment, most of the funds in the Nigerian Stock Exchange (NSE), are indigenous.  So, anything that happens in countries like U.S. would have marginal impacts in our stock market. Sure, there would be impacts, but only minimal.  It is unlike 2008 when foreign investors were heavily invested in the NSE, and when they pulled money to cover losses in their home countries, they triggered local dominos largely driven from the fall of Lehmann Brothers. This time, it may not be so since the roughly $40 billion market caps of the Nigerian Stock Exchange are mainly local capital.

Good people,

I just received a really nice letter of gratitude from The Tony Elumelu Foundation (TEF). I have served in the selection committee of the Tony Elumelu Foundation Entrepreneurship Programme for three years. TEF is redesigning philanthropy in Africa by pioneering new models which I am confident would be catalytic in inventing the new Africa. From Lagos to Nairobi, Cairo to Yaounde, a new generation of African entrepreneurs is emerging. They would become the pillars to architect our continent into that hopeful and prosperous land where opportunities abound and aspirations are attained.

THANK YOU FOR YOUR SERVICES AS A MEMBER OF THE TEF SELECTION COMMITTEE

Dear Ndubuisi,

Hope this finds you well. Wishing you very Happy 2018!

On behalf of the Tony Elumelu Foundation (TEF), I would like to express my sincere gratitude for your service as a member of the selection committee of the Tony Elumelu Foundation Entrepreneurship Programme over the last three years (2015 – 2017). Through your support, we have been able to empower 3000 entrepreneurs who are deploying their skills, creativity and innovations for the economic development of Africa. The stirring and inspiring testimonials of the Tony Elumelu entrepreneurs are real evidence of the power of private capital to change lives and transform societies. Please find attached a letter of gratitude and TEF 2017 CEO Annual Review.

Thank you so much for your service to the Foundation – it is highly appreciated.

Best regards,
?

Parminder Vir OBE
Chief Executive Officer

The last few days have brought redesigns in our broad ecommerce sector. Konga was swallowed by Zinox, the firm behind Yudala, another ecommerce firm. OLX, a classified ecommerce firm, gave up on its operations in Nigeria. They join Efritin, Ady and other entities that have struggled.

But while these entities are struggling, Facebook (Instagram, WhatsApp) ecommerce operations are emerging. Facebook is now the second largest ecommerce platform, behind Jumia, in Africa. Unfortunately, even those Facebook ones would struggle. People that do them are purely Small Business Owners, and they would never evolve to become Entrepreneurs. They would not have the scalability because they are bounded by the same factors that have crippled the capacities of the mainstream ecommerce businesses to thrive.

They could sell 200 t-shirts but they would never sell 2,000 in a day. The reason is by the time they get to 500 t-shirts, the offline challenges of logistics would affect their growth trajectories. Yes, the offline-based marginal cost will make it harder for them to grow. The implication is that the Instagram vendors would be fine as small business ecommerce operators, but none would be entrepreneurs. They would not employ hundreds as Konga did. They would not pay good taxes as Konga did. They would not even have to rent an office as Konga did. People would not make careers in them. Simply, they would be informal ecommerce operators except they would have bank accounts. This was how I put it in a recent comment on LinkedIn.

Partly as I noted in a recent Tekedia piece that Facebook is now the second largest ecommerce platform behind Jumia in Africa. Yet, even the Facebook vendors will struggle. They would be fine as small businesses but not entrepreneurs with any scalable advantage. Yes, you can sell 20 T-shirts in a day. But you cannot sell thousands. The logistics problem will bound their capacities to grow because that is a marginal cost that is totally offline.

Entrepreneurs build organizations with unbounded elasticity for growth. They run startups which are organic systems that keep growing and expanding. A startup is a company designed to scale very quickly. They pursue growth unconstrained by geography which differentiates startups from small businesses. Selling in Facebook removes the commissions you pay Konga or Jumia in their marketplaces, but that does not remove the very fact that you must sell the items to be price-competitive, to someone who lives near an open market, a supermarket, or a small (gate man) shop in another city.

Simply, even Facebook vendors would not win this market; the experimentation must continue because the future of commerce includes digital (and online).