If Katsina has only 4% BVN penetration and Lagos has already recorded more than 50%. If Kano is struggling with 6% and most parts of Northern Nigeria have on average 5.5% BVN penetration, why then do we have all fintechs killing themselves in Lagos and southern Nigeria?
This old video provides the distribution by state when the total BVN number was around 30 million BVN enrollees (numbers as at 2017 Kantar Fintech Summit, Aug 2017). There was also a case study on MMM, the ponzi scheme. Mr. Adebisi Shonubi, the Managing Director of the Nigeria Interbank Settlement System (NIBSS), the organization that makes it possible for Nigerian banks to cross-serve customers (think of using ATM of another bank), provided the numbers including the distribution by states. Kano has about 6% bank penetration rate while Katsina is at 4%. But Lagos has already hit 50%.
You can find growth in Nigeria in a non-disruptive way. Yes, in fintechs, even the banks would not be disrupted because they do not exist in most parts of Northern Nigeria. I know the stereotypes and the security challenges. I am not saying there are no risks. Yet, you have to deal with them –yes, in the midst of the challenges, you can use them to build a separation.
Treasured monopoly comes by becoming a category-king company through pure open market system. My free-range chicken teaches us how to win by finding our paths in uncontested markets (some have called it the Blue Ocean strategy). Study my free-range chicken analogy and see if it is time to move that fintech to Kaduna. Or even better, move that business to Northern Nigeria where many things come easier.
In business, we can be like chickens. That means we can find new markets and opportunities that may not have to compete with the present ones. In other words, we can find virgin areas where we can operate as monopolies because we have pioneered them. When such happens, you are not disrupting anyone even though you are growing revenue. It means that you do not need any disruption to grow your business. All you need is to find a market with needs but yet latent. Just like chickens, you do not have to compete with dogs and cats for the attentions of the owners. You leave the competition and create your own growth model, away from others.
The Northern Nigerian market is largely uncontested across many sectors. A strategy that focuses on it will deliver huge value if sustained. And there is culture – drive from the main gate of Usman Danfodio University Sokoto to the campus, count the number of camels journeying along. Those men and women are possibly classified as extremely poor (by governments) but before me are citizens who though informal are potential great customers. But you have to approach them in ways they understand; that is what you have to innovate on. Go beyond Lagos – Nigeria has other acres of diamond.
The major issue with running this type of business in the north isn’t really about security, but that of understanding the people there. The illiteracy level there is very high, and therefore, anything that appears ‘cumbersome’ or ‘complicated’ is not going to sell. I have spent a considerable time in the north, the people aren’t difficult, as long as a perceived ‘authority’ endorses the products. But you have to speak in the language they understand, wearing suit and tie, and appearing sophisticated won’t get you a buy in.
Mobile money will sell there, but the way the current licencing is structured will continue to make the financial inclusion swan song only a noise. We have to throw the space open and remove many of the bottlenecks that are there. Many people there have mobile phones and listen to radio a lot, any product that is going to scale there must have semblance of those two things.
Again, you need a good capital base, with a good dose of patience; because you gonna practically nurture, groom and educate your potential customers, before the good returns start pouring in.