Most Nigerian entrepreneurs do not like to do anything with government. They fear the bureaucracy and the epidemic of corruption in the land. Yet, they want to run successful and growing companies. Unfortunately, they are wrong. It is very challenging to build a successful business in Nigeria while being agnostic of government. Government does not need to be your direct customer but you must build something that matters to the government.

Why? Our economy is still dominated by daily decisions of government. Unlike say U.S. where the government was shut down for many days, and things progressed as normal, Nigeria will not survive with government spending. From the herdsman to the banker, everyone is watching budget and subsequent release of government money into the economy, to provide liquidity and stimulate the economy. When government delays the release of many money, the nation goes into stasis – nothing happens.

If you are building a company and you think Abuja does not figure in the success, you need to quickly stop, and get a job – entrepreneurship is not for you. In short, when I see business plans without how government can be a customer, I tell the person to go back to the drawing board. In reality, the government should be the first customer, because that is where the money is. The private sector should come later.

But where you cannot work directly with government, it then means that you must work with anchor companies that deal directly with government. That means your solutions must be such that those companies can make use them, as they serve government. You cannot afford to begin a business in Nigeria without recognizing that our economy begins and ends in Abuja with the private sector simply cheering it. This truism applies to every sector including banking, insurance, oil and gas.

This is not to say our private sector is not making progress. I am saying that the biggest market segment is public sector at different levels – local, state and federal. If you lose that insight, it is very unlikely you can build products that will arrive at the right time when the markets need them. Growing and building a business largely in the private sector is possible, but that is very marginal and challenging. Your growth will take years and you will snail into it because as s startup, the biggest firms must have morphed the best customers.

Most banks  have branches in some government offices whereas we have many local governments in Nigeria without a single bank branch. They do understand that the money is there and floats around government offices and buildings.

Where you cannot work directly with government at any level, and you cannot be a contractor to those dealing directly with government, you still need to study the government policy to understand its priorities. The aim is to see how what you are doing can be relevant to government since government writes the cheques and drives policies which seem to have immediate impacts across sectors in Nigeria.

Agriculture is hot now  and anything on agriculture will find opportunities because the present federal government is doing all it can do to stimulate and grow the sector. If your interest is on building models for space exploration, good luck. Also, if government has decided it wants to import certain types of vaccines as a policy, and you go ahead to be planning to setup a plant in Nigeria, you may wait longer for your lucky day.

Government Service is the Secret

To serve government and grow your business, these are three things to consider:

• Make products and solutions government can be your direct customer
• Make products and solutions governments’ anchor contractors can sub-contract to you
• Follow government policies to make sure that your business priorities align to government interests. Because government has the money, that sector will have more opportunities than the ones it has no interest. Government runs on budgets and I hear people conceive ideas (nice ones indeed) in London and New York, and then working to impose them on Nigeria. They ask you for help on what they are doing. Most times, I remind them that Nigerian government does not have a row for that area in the budget. Simply, you cannot find relevance.

My Experience – A Case Study

During my NYSC, I made money in Jos, Plateau State, whee I served. I sold more than 500 computers and continued that business post-NYSC even when I had moved to Lagos. I had a simple secret, I read newspapers to get ideas when government would pay accumulated arrears to lecturers, across Nigeria. Quickly, with my team, we would visit them to help them buy computers. Every lecturer needed a PC and with the money in the bank, it was easy to close the deal. That was the time most people were getting their first computers and it was not yet a policy that their schools could buy computers for them.

From the Vice Chancellors to teaching assistants, I supplied computers. Within two weeks of the fund release, you will not see me anywhere because by then, they must have spent all the money, and there was no need of wasting time. You need to meet them within two days the money arrived. That model was used as I retained “staff” to pursue such opportunities across universities in Nigeria. The timing was important and understanding government policy that it was going to pay lecturers and following that on news was critical. By the end of my NYSC, I had money to buy a car and fund multiple post-graduate education. In short, I imported my Honda Accord (American edition) from Belgium. (Not really a small move people, to have spent that kind of money, on a car, in retrospect) . The first day I cared to check NYSC allowance was the day I closed the account where the money was going. Till today, reading and understanding governments remain the core of my business strategy.

Another example is the starting of Zenvus, a precision agriculture startup; I will explain in another post. The decision to start that company was finalized on May 28, 2015 because that was the day I read President Buhari’s draft inaugural speech. (I had arrived from U.S. to attend the Inaugural Ceremony).  At the end, I made up my mind that agriculture would be huge, and quickly developed a plan to be in it, at the technology level.

We intend to attack the problem frontally through revival of agriculture, solid minerals mining as well as credits to small and medium size businesses to kick – start these enterprises. We shall quickly examine the best way to revive major industries and accelerate the revival and development of our railways, roads and general infrastructure

Notice that he listed Agriculture first in that speech. That was all I wanted to see. We went immediately to build solutions for Nigerian agriculture. Business is growing and we are doing well, to support excess of 2,700 jobs in Nigeria this year alone.

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Image Credits – (BusinessDay, UN)

Editor’s Note (July 13 2017): Etisalat Nigeria has re-branded to 9Mobile. Read here

Etisalat brand will cease to be operational in Nigeria, within three weeks, reports Premium Times

Etisalat is set to phase out the telecom group’s brand in Nigeria, Hatem Dowidar, the chief executive of Etisalat International, said on Monday.

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On Monday, Mr. Dowidar said all UAE shareholders of Etisalat Nigeria, including state-owned investment fund Mubadala, had exited the company and left the board and management.

This is the moment for Airtel or Glo to take action. MTN Nigeria cannot do that owing to its pending debts with the Nigerian government and also the fact that it is #1. Looking at  new statements from the company, Etisalat is extremely diluted. This is captured by the statement credited by its parent company.

Mr. Dowidar said parent Etisalat had written down the value of the Nigerian business on its books and that transferring its 45 percent stake to the lenders after loan renegotiation talks collapsed had no impact on the group.

Etisalat Nigeria has a pending $680 million in this loan; it had repaid a big portion of it. Does it mean that its parent wants to abandon it for just $680 million? This does imply that Etisalat Nigeria will have to work harder to find a buyer that will give it much higher value. If the parent writes off 45% of the company for it owing $680 million, it means it thinks the 45% of the company is not worth the trouble saving, by pumping extra $680 million.

Update: Etisalat Reacts – Emerging Markets Telecommunication Services Ltd. EMTS, on Monday said it would consolidate on its Nigerian identity in spite of Etisalat Group’s withdrawal from the Nigerian market.

“Indeed, discussions are ongoing between EMTS and Etisalat Group pertaining to the continued use of the brand, and EMTS will issue a formal statement once discussions are concluded …The final outcome on the use of the brand in no way affects the operations of the business as our full range of services remain available to our customers,” 

The implication is thus: Anyone that brings $680M could in theory take 45%. That is the opportunity cost the parent parted by abandoning the firm. This implies, currently, Etisalat Nigeria, is worth less than $1.5 billion.

Glo, this is your moment.

In the modern computing era, the following products/systems have been recognized as operating systems: Windows, Android and iOS.  These products are operating systems because they largely abstract away the hardware, which power them, making it possible that the focus is on the software, upon which end-user applications, made by outside developers, are built. They also have network effects which means that the more people that use them, the more valuable they become. Besides, they provide a way for users to access applications running on them. This creates a virtuoso circle since as they become popular, more people like to adopt them. (iOS, being a closed system, may not have the hardware abstraction since it is only Apple that makes the hardware. Nevertheless, it is an operating system, as it brings users and application creators together).

But besides these operating systems, we can include companies/products like Google (for search where all websites are users to Google algorithm), Alexa (Amazon voice assistant), and Facebook (where it has its own “continent” with excess of 2 billion people). In each of these entities, the four attributes are met.

Facebook is an operating system which abstracts away the hardware we use to access it. Also, Facebook has the network effect. More applications are built upon it and users have access to those applications. As it expands and integrates more features, Facebook could become so dominant that few will have to venture out of Facebook operating systems (including Instagram or Messenger which has payment, booking etc integration). What Google enjoys through search would be diminished if companies move more information into Facebook Pages and Messenger bots. It is also possible that Facebook can build a search engine for a  section of its site to aggregate outside websites.

In Nigeria, we predict in five years, as it expands its services, it will become the digital operating system for the country. From publishing, payment, booking, etc, Facebook will increasingly gain over Google. Microsoft has since lost the consumer touch and is largely an enterprise facing firm in Nigeria. Facebook understands how to connect young Nigerians and is doing a better job than either Microsoft or Google. Africa is Facebook Nation and Nigeria is the capital. It has the best team that understands how to engage and bring people into its platform. It is becoming that firm through which young Nigerians getting to the web understand first. They do Facebook first before they have to search with Google. Facebook has since reduced the appetite to Youtube with its video product. Microsoft is totally off the radar, as many of them can stay weeks, without touching any of its products.

In this videocast, I explain how Facebook has become Nigeria’s operating system. And why the firm is strategically positioned to lock young Nigerians in its platform, just getting into the web.

A Commenter on a previous videocast noted: “ndubuisi ekekwe, I know that Aliko Dangote is a great businessman, but why was he unable to break into the pasta/noodles sector? If he can really pick any sector and dominate it.” I did promise to explain via a video, besides my comment on LinkedIn. (Note: Dangote is still on pasta business; it exited the noodles’)

In this videocast, I explain how the makers of Indomie noodles used the same strategy Dangote Group had deployed across industrial sectors to defeat Dangote Noodles. The  accumulation of capability which Dangote Group uses to crush competitors did not work because Dufil Prima Foods (makers of Indomie) did the same thing from electricity generation to production, for its noodles business.

With their vertically integrated business, there was no left efficiency which Dangote could exploit to improve quality and reduce price. At the end, an established brand won and Dangote Noodles could not dislodge them. Dangote Group later sold its noodle business to Dufil Prima Foods. This shows a practical model anyone that wants to compete against Dangote Group can deploy. Beware: you need to be very solid!

Please read this brilliant comment on LinkedIn from a Commenter. It strengthens this conversation.

[Dufil] Prima foods mastered cost value and experience value through mainly the discipline of operational excellence to achieve and exploit leadership advantage by

1. leveraging is assets maximally to boost revenue and financial returns. Ndomie was operating more hours a day, producing more output a day, at less cost than Dangote.

2 Finding different markets to penetrate with their existing assets and boosting the utilisation of the existing assets. Hungryman pack, family pack, breakfast pack etc.

3. It shrank the idle time of its production assets and even used up dormant capacities. That is the formula of [Dufil] Prima foods. Mainly the discipline of operational excellence to deliver cost value and experience value. Just an analyst’s opinion.