Tomorrow, I will be making a presentation to a client, a foreign company that invests in commercial real estate (mainly shopping malls) in continental Africa. My firm serves as an independent advisor, providing insights as the investor deploys capital in our continent.  The firm had hired some companies to prepare market intelligence reports on continental Africa at regional levels. When the reports were sent to my office, we had some exceptions: we concluded that the market intelligence work was not evolutionary. Largely, the reports were mundane, looking at real estate competitors purely within the real estate sector.

This is part of my comment: “We have reviewed the reports. Unfortunately, the reports miss a very critical point: they failed to model the impacts of Konga, Jumia and other e-commerce companies in Africa on real-estate should the ecommerce firms become very successful. We do believe that investing in malls and commercial real estate in the age of ecommerce must capture the latent disruptions on real estate values if commerce in Africa moves online, at scale. Should that happen, we may not have the need for many shopping malls, and the implications will be that real estate value will drop in many African cities”.

My client called me right away, asking why we made that correlation. I explained that I have seen that competitors in real estate companies in U.S. are not necessarily real estate companies but Amazon. As Amazon advances across American cities, shopping malls are closing and remaining ones losing values. So, the competition is not coming from industry players, but a clearly different parallel sector. So, modeling competition in the real estate must include what is happening in the ecommerce sector.

I was quick to note that Africa is not there yet, but investing in shopping malls must take into considerations that we may have massive dislocations in the structure of commerce where shopping malls will not have much value. Yes, we still need shopping malls today. But it is very important we understand potential impacts as decisions are made. Africa does not have a lot of malls to start with, but the continent is modernizing.

This insight applies to any company investing in shopping malls. The fact is this: within the next decade, we will not have shopping malls in most American cities. Africa will have its own moment and we can even leapfrog because we never really shop in malls to start with.

Our perspectives on the potential disruption of shopping malls by African ecommerce should apply to insurance companies who are good at investing premiums in real estate. They need to model how ecommerce is growing in the selected cities and how such growths could affect the commercial values of shopping malls over time.

Tomorrow, I will provide insights on how my client can model some of the challenges by looking at different scenarios on what ecommerce can do on commercial real estate (shopping malls) in Africa. It will be interesting.

Added This Comment on LinkedIn After a Question

The Question: Some weeks back Sir, you explained some of the logistics challenges affecting e-commerce business in Africa and how Africa isn’t there yet, was this also considered, Furthermore, a lot of consideration need to go into how long the company wishes to invest in shopping malls in relation to the empirical assumptions to when the values of shopping malls will start dwindling in Africa.

Ndubuisi: Sure – there are many elements. Yes, some specific cities may get ecommerce faster. If you are going to build a mall in VI or Lekki. I do think you need to worry if Gloo/Konga/Jumia and others will figure out ecommerce within a decade even though no one cares what is happening in Aja or Opopo.

So, broadly Africa may take years, but specific regions or areas in cities may be ready in few years. Lekki is a new city with no typical African open market. If they figure out ecommerce, you may never have to need a Mall. But that does not mean that building malls in Aba will not be a good idea. Broadly, logistics is an issue. But that does not mean that ecommerce cannot reach optimum level in specific cities within 5 years. I think VI and Ikoyi will may there. Focusing therein keeps marginal cost (i.e. distribution cost) low.

Unfortunately, people that want to build malls always target those areas where ecommerce may do well. Why? That is where the money is. So for me, how can we reconcile those factors at city level. That is what I have to help my client sort out. They will invest, but we need to be prepared ahead on scenarios which can come up. This can affect how the mall is designed so that we can easily convert to offices

United States is a brilliant nation. It has the capacity to connect its citizens to a shared vision. From science to technology, literature to military, America has always set the global benchmarks. But in one specific sports, soccer (yes, football in anywhere else), America continues to struggle. This year, a very small country, Trinidad and Tobago, extinguished the U.S.’s plan to play in Russia 2018 World Cup. That is it: U.S. Men Soccer lost to Trinidad and Tobago and will not play in the next World Cup.

The U.S. men’s national soccer team is not going to the World Cup next year. Let that sink in for a moment.

A U.S. squad that had qualified for soccer’s global spectacle every four years since last missing out in 1986 will watch the Russian-hosted tournament from home.

All it needed to do was defeat or tie last-place Trinidad and Tobago on Tuesday night.

Instead, the Americans played a shameful first half and lost, 2-1, before a few thousand observers in a lonely little stadium 25 miles from the capital

What has been happening in the U.S. Men Soccer can teach us some basic things in our developmental journeys in Nigeria. There are three key features I will like to examine:

• Opportunity: The U.S. Soccer has opportunities for sportspeople. But it is not as exciting as American Football and Basketball. The hockey and baseball are also there. In the order of things, for most talented young men in U.S., soccer is not among the top three options. While a football player can sign millions of dollars in contract, some soccer players earn less than $40,000 per year playing for teams. So, the opportunity may be there, but for most players, they are not seeing them at individual levels.  You can relate this scenario with our country: there are opportunities everywhere in Nigeria but people, the citizens, are not experiencing them.

Beginning and lower-echelon players in Major League Soccer make a minimum of $35,125 a year, by far the lowest minimum salary of major professional team sports in America. As of the end of the 2013 season, 154 players made less than $50,000 a year. The average salary in the MLS, however, was $160,000, and the median salary was $100,000. About 45 percent of MLS players — that’s 249 — made over $100,000.

• Talent: With the individual lack of clear opportunity in U.S soccer, the U.S. struggles to find talent. With lack of talent, they have nothing to develop, at scale. Why play soccer and earn $40,000 yearly when football can make you a multi-millionaire? Talent moves into areas of opportunities. And it teaches us a major lesson as a nation: you need the right talent to unlock developmental big gains. Yes, unless you have the talent, the nation will struggle. Nigeria needs the talent in emerging technologies, banking, insurance and other areas to compete globally. That talent is expected to be seeded in the universities for the markets and the economy. Where the university is not doing that, markets and our economy cannot necessarily do much. There is a limitation on what can be done without a solid talent pipeline from the universities. U.S. is doing everything it can on soccer, but talented American kids do not want to waste time on sports they will be paid $40,000 per year. The Nigerian case is that markets have limited talent to expand because our schools are not supplying talent. So, in business, small countries are knocking us out of business world cups.
• Outcome: The outcome in U.S. Men Soccer is similar to what we have in Nigeria. Everyone knows that Nigeria has huge opportunities but we are yet to experience the real outcome collectively. The developmental results have not been extremely stellar. American soccer has the same issue, internally and globally: it is not popular at home compared with other sports and the team continues to struggle at global level.

All Together

U.S. will continue to experiment on how to fix its soccer. A possible option will be to entice talented foreigners to join the team. That is an option Nigeria may not have. But for U.S. to follow that model, the soccer teams must also pay well. (From those teams, they can form a national team.) But they cannot pay well without revenue coming from TV rights and ticket sales. With not many people interested in seeing soccer games, that is a challenge. But at the root cause of this issue is that the boys that can make soccer exciting in U.S. are not interested to participate because they prefer other sports. U.S. has a talent problem there. And when that happens, the result is always poor whether it is a nation or a sports commission.

Nigeria should learn that nothing is magical because even America can struggle big time due to its lack of capacity to unlock the talent it requires to develop its soccer game. For Nigeria, the stakes are even higher: it needs to develop its economy and markets. It needs talent for those and it’s high time for the universities to make the talent available. Indeed, there are things which cannot be leapfrogged: you must deal with the basis before you can improve the outcome.

For all the talks of Facebook and Twitter in Nigeria, one solution that will have real impact in the lives of many Nigerians will be Instagram. I see Instagram evolving to become an ecommerce company that can effectively compete with ecommerce companies if they add payment interface. As we check Instagram, we are seeing shoe designers, clothe designers, necklace makers, etc showcasing their works.

Facebook.com, which owns Instagram, does not have the capacity to do that, effectively. Also, Twitter fails the test. The reality is that Instagram could win the ecommerce race when it begins to focus on that. Instagram could be so huge that we may not need the traditional ecommerce sites in some markets where there are functioning postal services that can deliver the goods when bought. Indeed, Instagram will be a competitor to Amazon because Instagram can be used to sell anything that can be captured as a photo. I want you to pay attention to Instagram, if you plan to monetize any physical product you make in Aba, Osogbo and Kano.

Instagram is a mobile, desktop, and Internet-based photo-sharing application and service that allows users to share pictures and videos either publicly or privately. (wikipedia)

Instagram is going to be big in Nigeria for business marketing. In 2011, we ran a very important article. Simply, we told Nigerian developers that Android will win over Blackberry, iOs, Symbian and Windows. It was a bold call because everything happening then was Blackberry. However, we saw real problems with every mobile OS in Nigeria but Android.

For the 2011 piece which was titled “Nigerian Developers – Fasmicro says Focus on Android Platform”, we have the following predictions right:

• We wrote thus: “We understand that Blackberry is popular today in Nigeria, but Android will eclipse it within the next few months”.
  • That turned out to be completely correct. We used that conviction, based on our model, to ask Nigerian developers to move into Android from Blackberry and Windows: “Now, you are a young graduate or a freelance who wants to get into the App business. You want to know what platform to build”
• In our analysis, we focused on affordability of the product: “Another reason has to do with market. Apple and Blackberry are premium…Android gadgets are more affordable simply because you do not have to pay for any software – it is free by default”. We correctly predicted that cost will help Android adoption in Nigeria and that was what happened.
• Then we made a very bold statement:

In the next 6 months, the number of Android devices in Nigeria will eclipse all the Apple and Blackberry combined. Our studies show that customers MTN will make this possible with its advertising power and brand. Etisalat did not make much impact with Galaxy Tab because of the cost. Even myPad from Starcomms is built on Android. Of course, Fasmicro and Microscale new Ovim Plus and Ovim MiE are all Android devices. Encipher Inye and Inye 2 are also Android. They will compete against the high premium Blackberry and will surely win. The notion that iPad can do well in Nigeria is not supported by any data. It is expensive and that brand is not structured for the Nigerian market.

Today, if you make shoes, chairs, upholstery, clothes, etc, the best social media site to be in Nigeria is Instagram. That is the place you can actually monetize your wares. It is a product engineered for the ecommerce world. Get there right now and begin to build user base because it will help you share those images that customers will like to see. Then when you add payment button, great things will happen.

For ecommerce companies, your competitors are not just your peers, you need to watch out what Instagram is doing. It could be the disruptive force if it begins to build logistical systems across cities. With its massive user base and solid photo-sharing experience, it can create a new basis of competition that will cause havoc. Pay attention and expand your market scanning beyond the typical ecommerce sites and consider what Instagram has in stock.

We hate discrimination and machines discriminate just as humans do. Discrimination is a phase of racism even when done by machines.   Take a drive across many parts of Lagos. You can easily notice Nivea advertisement sign-posts promising some Nigerians how a cream will make their skins “visibly fairer”. Apparently dark skin is not good enough; it has to be fairer.  That is a data point for the internet. If Nigerians prefer whiter skin, Google has taken note. That means beauty must be “white” in Nigeria.

Indeed, if you ask Google and machines to judge a beauty contest in Nigeria, it may call it for girls with fairer skin since it has datasets that show that many Nigerian women are using creams to turn their dark skins to white ones (very painful on health grounds). AI (artificial intelligence) uses data and that data informs what it thinks is normal. Usually, the largest cohort of the datasets shapes its constructs of normality.

If you make a chatbot and feed it 20,000 messages with 19,000 of those messages racist and crude, the likelihood that the bot will see racism as being normal is there. That is why it is very easy to train any Twitter bot to be anything you want: saint, racist, etc. Just feed the data you want and over time, that bot correlates the most data as the new normal. Unless there are breakers in the design, there is nothing you can do about it, if you really want a near-natural bot.

The Greek philosophers have always maintained that Number is the universe. If the Number is that more people want to be fairer, and will pay for it, it can be deduced by machines that Fairer is more beautiful. You may blame machines which generate and generalize the outcome, but check what you are feeding it with! In this age of AI, empires will be reshaped at scale.

That bots can be stupid does not make it right: developers have to find ways to mitigate that problem. Among many options, one easy way is to find a way to generate “balanced data”. For Africa, if we do not generate contents, allowing Silicon Valley, Paris and London to feed the new species of AI with only data from the Western World, the AIs will see them as the normal data. In other words, if the bot sees out of every 20,000 photos of girls, only 100 are dark-skinned, it may not necessarily capture dark photos as being normal. The system will default to white photos as the normal state. In some extreme cases, it may simply throw away the dark photos as totally non-human. Mitigating that problem will be feeding say 11,000 white and 9,000 dark photos. With that balanced datasets, the AI will have a better equilibrium.

That reminds me of a training I went while in the industry on IP protection. We were told to respond to email conversations via email instead of asking the person to talk things over. For example, if someone writes you capturing a statement like “I saw that Intel used this design and has a patent on it, there is a way I can get around the patent”. You do not tell your subordinate to see you for you to explain. It is better you write “Please if the design is patented, leave it and explore other designs”. The problem with talking it over without documenting is it that if bad things happen and there is litigation, what will make it to court is the written evidence. That is what the AI searching the emails will be fed with.

While that analogy: Africa and the black race will have to generate its own datasets to ensure machines can use same as they build the new data economy. Even if we are complaining of the obvious AI discrimination, without generating data, nothing will change. If you allow one cohort of people to be writing, talking and generating data, Google and the rest will think that the world is simply about those cohorts. That is why Amazon Alexa, a personal assistant AI, struggles with my Nigerian accent: it does not see that version of English a lot, so it is abnormal in its own world. It is not necessarily discriminating against me, it is just using datasets they have fed it to deconstruct my communication. Unfortunately, I am not sure they have any datasets from Nigeria.

Africa needs to create data to balance the game. Complaining on how machines dehumanize us will not fix the problem. It will only get worse unless we are ready to participate as technology creators and not just consumers who merely consume whatever they package for us.

Sure, that does not stop the makers from making sure decency rules in the market with circuit breakers to prevent situations where humans are classified as animals. No excuses on such failures!