Owners of businesses in the Nigerian creative industry now have access to loans as high as ₦500,000,000 (about $1.4 million). This is according to Nigeria’s Central Bank’s recent disclosure.
The Creative Industries That Are Covered:
According to the CBN, which is collaborating with the body of top officers of deposit banks in Nigeria (the Banker’s Committee), the Creative Industry Financing Initiative is targeted at:
Businesses in the fashion (including designing) industry
Businesses in the Information Technology (including e-commerce, online payment solutions, software engineering etc.)
Businesses in the Nigerian movie industry (including movie producers, movie distributors)
Business in the Nigerian music industry (whether as record labels, music artistes, etc.)
Maximum Amounts Each of These Businesses May Get
The businesses may get up to the following amount:
A student of Software Engineering anywhere in Nigeria may get up to ₦3 million ($ 8,294)to boost his education.
Movie Production businesses may get a maximum of ₦30 million ($82,943) to boost their businesses.
Movie distribution businesses may get up to ₦500 million ( $1.4 million)
Businesses in the Nigerian Fashion and Information Technology can also get funds to cover their rental/service fees (the exact amounts were not specified)
Music Businesses may also get funds to cover their training fees, equipment fees, and rental/service fees.(The exact amount is however not specified. It also appears that the funds are not extended to businesses of production of music, and other related music roles)
Interest Rate and Dates of Repayment
The new Initiative pegs on any of the amount borrowed, the interest rate of 9 percent per year, including all charges. This is below the national lending rate of 13.5%, meaning that businesses that accessed loans through the Creative Industry Financing Initiative would be 4.3% more profitable than would be the case if they go through Nigerian commercial banks.
The Repayment Schedule for Each of the Loaned Amounts Include:
Loan under each category would be due for repayment as follows:
For Software Engineering Student Loan, it is a maximum of three years (This could be criticized because Nigerian school system runs for a full four-year academic calendar period, and the time may be too short to begin to reap the benefits of such loans, even if a lesser program is subscribed for).
For Movie Production and Distribution, it is a maximum of ten years.
For Fashion, Information Technology (IT) and Music, it is a maximum of ten year
Normal lending period can be as long as 36 months (three years) or more, depending on the loan agreement.
How To Procure The Loan
The Central Bank of Nigeria’s disclosure hints that any business in any of these categories desiring to procure the loan would need to do the following:
Prepare its business plan or statement on how much is needed for the business. However, it would also be noted that feasibility reports of the intended projects may be required.
Proceed to any commercial bank or the applicable financial institutions to access the fund. Hence, all commercial banks in Nigeria are expected to be part of the program.
In an application to the bank, state how much is needed to fund the business. The application should be made pursuant to the CBN Creative Industry Financing Initiative.
The commercial bank will discuss the request and provide the business owner the money.
What Would Be Needed To Discuss The Request Further?
The circular is however silent about whether collateral is needed for the loan. Banks are however expected to be tough to some degree since they bear the risk of bad loan performance. So, businesses should expect to pass through some tough risk management procedures to be able to access the loans.
Most Nigerian banks require, on minimum, the following documents in order to be able to process the loan application: Application letter; Duly completed Retail Loan Application Form; Proforma Invoice from the banks’ approved vendors; Business Profile; Current utility bill; Latest Audited Account; Six (6) Months Bank Statement; Other KYC requirements for opening a corporate or business account.
It could be noted however that the loans may be targeted at existing and profitable businesses, with good balance sheets, and not new businesses with no financial track records, except in exceptional circumstances.
Why Focus Is On the Creative Industry
The CBN appears to have focused on the creative industry for the following strategic reasons:
The film industry sector contributed 2.3 per cent (N239 billion) of Nigeria’s Gross Domestic Product (GDP) in 2016 alone.
In the same year, Nigeria’s music industry grew by 9 per cent to reach a value of 39 million dollars, and is set to grow by 13.4 per cent CAGR by 2021, with an estimated worth of about 73 million dollars.
Information Technology: The gaming industry in Nigeria, according to a PwC study on gaming, benefited from a broadening customer base, mostly the large and youthful population, with the Nigeria’s video game industry’s value put at $150 million USD as at 2016. It is also estimated that mobile gaming in Nigeria would surpass $147 million USD by 2020
This writer advises that you check out your local banker in Nigeria for more information on how to access the loan.
Charles Rapulu Udoh
Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.
Leaving the security of a daily job for something as uncertain as running your own startup could be one of the hardest experience you could ever have in life. Behind the hard calculations and planning and stiffness, we found some random thoughts from top startup owners, some of whom even started out as losers.
Jason Njoku, Founder of iROKOtv
In 2010, the Nigerian Jason Njoku and the German Bastian Gotter launched irokotv, a web platform that provides paid-for Nigerian films on-demand, which is usually dubbed ‘the Netflix of Africa’ and which is believed to be one of Africa’s first mainstream online movie streaming websites. With its headquaters in Lagos, Nigeria and offices in London and New York. iROKOtv brand was so valuable that Jason said in less than a year old at the time, investors paid $80,000 for 10% of the iROKOtv but sold to other existing investors, for $2.4 million. In some of his posts, he made the following points about starting out.
‘I remember when I started iroko. Everyone thought I was an idiot. That’s fine, it wasn’t a bad conclusion. I was x10 failure in startup hits. When we started making investments in Nigeria back in 2012, that seemed stupid. We were way too early. Pretty stupid. I agree. Consumer internet in Nigeria is so early; it’s pretty scary today. Breaking rocks and bleeding stones for every Naira of revenue is the least fun thing to do… I don’t believe in game changing strategic moves. I don’t believe that there is one decision you make which fundamentally certifies your success. I believe in iteration, in inch by inch tactical hits and misses……I believe in a thousand small decisions.’’
On why IROKO has remained profitable, Jason wrote thatIROKO has diversified the business where no one unit represents more than 35% of revenue.’’
Alemu owns SoleRebels, an Ethiopian company that makes made-to-order sustainable footwear handcrafted in Addis Ababa by Ethiopian artisans. The company has a distribution network in over thirty countries worldwide; selling to market kings such as Whole Foods, Urban Outfitters and Amazon.
‘‘ Stop looking at consumers and start looking at them as what they are: people! Being a successful entrepreneur is not simply hard work. It is about having good fortune and also a great team beside you! These multiple factors have allowed me to take SoleRebels to the next level.’’
Mostafa Kandil, CEO SWVL, Egypt
Mostafa Kandil, Mahmoud Nouh and Ahmed Sabbah were all below 30 years of age when they founded SWVL, a premium mass transit system in Egypt’s capital city, Cairo. The goal was to make it easier for Egypt’s residents to book bus rides at fixed rate on existing routes. Users schedule trips, pay online or in cash and are given virtual boarding passes. Even with fierce competition from the likes of Buseet and Uber vying into premium public transport service, SWVL’s application has been downloaded for well over 360,000 times on Google play store and Apple iStore. The platform completes 100,000 rides monthly. It was the first company to introduce the service in Egypt in 2017 before Careem and Uber joined the sector late last year. SWVL has expanded to Kenya.
In a recent interview with Start Scene, he shared some of his experience:
“I had graduated in Petroleum engineering, but as I started working I hated it; I felt it was too stiff for me,…I was also part of something called the Growth Team, which directly reports to the CEO [Mudassir Sheikha]. I remember it was my first week and he came to me and said: “when I quit McKinsey [& Company], I knew I could come back. The same goes for you; if you leave Careem now to start something and fail, you can always come back.” That was on my first week. I kept meeting him every day, and something we used to check at the Growth Group was the average trip fare, which in Egypt was about 3–4 dollars. I knew that was a lot for an average Egyptian; so in February I decided I would leave to create something new.
…..Around the world, public transportation is a loss-making machine. If you can take this load off the government and privatise it in a way that is super cheap and create job opportunities, you are revitalising a sector. We now have a huge fleet; we have 40 routes and 300 buses on the road, but we don’t own any assets, so it’s super scalable”
“You need to have the right people around you — you can’t do everything yourself. A lot of entrepreneurs think they need to be good at every aspect of the business but this is not the case.”
Shola Akinlade, Founder Paystack
Paystack is a Lagos-based, e-payment solution founded by Shola Akinlade and Ezra Olubi. The company reported in 2017, barely two years after its founding, that its user base grew from 1,400 merchants to close with over 7,700 live merchants, accepting payments with Paystack. It also reported that in 2017, the startup reached 1 billion Naira ($3 million) in monthly transaction value, closing 2017 with NGN 2.7 billion Naira ($7.5 million) in monthly transaction value. In an interview with Forbes Magazine, Shola Akinlade, noted that:
‘‘ We started Paystack because we knew online payments in Africa were essentially broken and someone definitely had to do the hard work of fixing it… The challenge was to solve the issue of online payments in Africa, somehow connecting the super-fragmented aspects of the sector. What we did was develop multi-channel payment options for merchants across the country, enabling them to accept payments from around the world, via credit card, debit card, and direct bank transfer on web and mobile. It’s taken two years of non-stop hard work to grow it from idea stage, to the product we have today.’’
On what made them grow so fast, Akinlade said:
‘‘ When we tell people that they can start receiving payments within 30 minutes from sign-up, I think many are, initially, a little cynical. So many merchants in Nigeria have faced so many challenges with receiving payments over the years, I think perhaps they thought it sounded a little too good to be true. But they had faith, they tried us out, our product worked for them. Our customers have been our evangelists, and that has really helped us grow quickly.’’
Andrew Watkins-Ball -Founder JUMO
JUMO was founded in 2014 by the South African-born CEO, Andrew Watkins-Ball. JUMO started as a mobile financial services startup company in Ghana, providing payroll loans to government and corporate workers and consumer loans to informal and market traders. Through September 2016, it had delivered more than 10 million loans to customers in 6 countries including Tanzania, Kenya, Zambia, Rwanda and Uganda. The platform leverages an uncommon digital credit model that does not require customers to have prior financial account ownership or a credit history.
‘‘ Building something to solve a big problem is hard… Products that are designed from positive and authentic emotions will be loved by customers…. Your customer must love your product or you don’t get the adoption you need to build a big business against sustainable demand. They must feel that you care and they must feel that the product comes from an authentic objective. A great example is Wikipedia. You can feel the social objective of the product.’’
Anne Wawira Njiru, Founder Food4Education, Kenya
Wawira Njiru founded in 2012 Food4Education, the social enterprise startup which provides 2000 meals per day across 4 schools around Ruiru, a small town in the Central Part of Kenya. The startup is aimed at improving children’s health, school performance as well as increasing their chances of getting into good high schools in a merit-based high school entrance system.The startup secured US$ 300,000 funding from Draper Richards Kaplan Foundation to expand their reach over the next 3 years, in 2015. This was followed up by Wawira Njiru being awarded the 2018 Global Citizen Prize for Youth Leadership thereafter receiving US$250,000 from the Global Citizen in partnership with Cisco.
‘‘ It’s easy to get side-tracked especially if you’re talented (or think you are) in many things, but there’s a lot of value in mastering one thing and learning how to do it well. There’s also a lot of value in consistency and learning how to do things excellently. It may sound boring but doing the same thing over and over will help you become better and a master in your field.”
Christain Ngan, Founder Adlyn Holdings and Madlyn Cazalis Group, Cameroun
Adlyn Holdings and Madlyn Cazalis Group designs, manufactures, transports natural beauty products and operates in Central Africa and West Africa with more than 200 distributors (supermarkets, pharmacies and beauty institutes). Ngan was listed two consecutive years (2014 and 2015) in Forbes magazine as one of the 30 Most Promising Young Entrepreneurs in Africa.
‘‘ My greatest weakness was not having enough talent around me for a long time. It was difficult to find the right people. Then I decided to train, motivate and coach. Training is important in Africa because we often tend to choose between honesty and competency. It was difficult to find honest, skilled people. But, with time, I managed to empower my employees and they are now good managers.’’
Churchill’s Njorku was named by Forbes as one of the top 20 technology startups in Africa (Forbes Africa Magazine, 2011) and by FastCompany as one of the most innovative companies in Africa (FastCompany February 2017). Over the years Njorku has grown to serve 200,000+ monthly unique users across Africa. Njorku.com is one of Africa’s first job search engines that help thousands of job seekers daily find jobs in locations nearest to them. Mambe Churchill Nanje taught himself software engineering and is based in Buea, Cameroon.
He has this advice for startups in one of his interviews with Whoot Africa:
‘‘ To be successful in business, you must believe in yourself, be patient, extend your comfort zone, expect and be ready for failure, integrity and be very passionate in whatever you do… Business in general has a lot of obstacles but the main ones are finding the right people for the job and raising capital. I was lucky to be self-taught so I get to hire people and train them on the job. I also was opportune to make a lot of friends that trusted me and overtime they gave me loans and financing opportunities to continue with my ventures.’’
Arianna Huffington, Co-Founder Huffington Post
The Greek-American Arianna is co-founder of The Huffington Post and also the author of the New York Times best-seller The Sleep Revolution. She has stepped down as Editor-in-Chief of The Huffington Post to pursue her new wellness startup, Thrive Global. Her business advice for entrepreneurs who want to start a business for the first time is:
“If you’re going to start a business, you need to really love it, because not everybody is going to love it. When The Huffington Post was first launched in 2005, there were so many detractors. I remember a critic who wrote that The Huffington Post was an unsurvivable failure.”
“When you get reviews like that and detractors like that, you have to really believe in your product. When you really believe in your product, you are willing to deal with all the naysayers and persevere.”
The founder of WPBeginner, Optinmonster and several more successful online businesses, who has also learned so much in business in his 25 years as an entrepreneur has this advice for budding startup owners:
“Often new entrepreneurs wait too long to put their product out in the market. With limited resources at hand, its crucial that you get an MVP out ASAP and start getting traction. Take the user’s feedback to iterate and improve your products.”
“Not launching fast enough is a mistake you simply can’t afford to make. If you want to get an edge over others, launch now!”
Sujan is the co-founder of the content marketing agency, Web Profits. Here’s his best business advice for first-time entrepreneurs who want to start a business today:
“The most painful mistake I see inexperienced entrepreneurs make is copying or doing the same things that successful entrepreneurs have done, expecting similar results. What first-time entrepreneurs don’t realize is that the world is not a vacuum and there’s more going on behind the scenes than it appears. There’s much more effort that has gone into creating the success they see on the surface, and there’s no guarantee that a particular tactic or strategy will be successful for everyone.”
Charles Rapulu Udoh
Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.
Previously, mergers, acquisitions and other forms of business combination in Nigeria have always been the exclusive reserve of the Securities and Exchange Commission. In a statement jointly signed by both commissions, the new positions are that:
The Federal Competition and Consumer Protection Act now has the exclusive right to authorize, with or without conditions, prohibit or approve mergers of which notice is received, in compliance with its mandates under the Federal Competition and Consumer Protection Act (FCCPA).
Forms of business combinations contemplated under the Act include the purchase or lease of stocks or interests of another company or business entity; business combination between two companies or entities ; any form of joint venture between two or more business entities.
The FCCPC (old Consumer Protection Council in Nigeria, before it was disbanded by the new law) is to review all mergers and other business combinations or arrangements to ensure that such combinations do not distort or impede the markets or create a monopoly.
Now that the Federal Competition and Consumer Protection Act has come into effect, approval for mergers or other forms of business combination will only be filed with the Securities and Exchange where the mergers and acquisitions involve a public company or where the transactions involve a change of shareholding of capital market operators, even if the transaction is between a private company on the one hand and a public company on the other.
Thus, where the notice of approval of merger is from a public company, Nigerian Securities and Exchange Commission, now, only comes in to determine whether all shareholders are fairly, equitably and similarly treated and given sufficient information regarding the merger. This in fulfillment of its mandate under the Nigerian Securities and Investment Commission.
Backlog of Pending Mergers and Acquisitions Notices in Nigeria
The statement however states that all notifications pending before SEC at the time of enactment of the FCCPA will be subject to the interim process above and FCCPC will convey the decisions accordingly. Consequently, SEC and FCCPC will jointly review such notifications and FCCPC will convey decisions with respect to the notifications.
Subsequent notices would be filed with the FCCPC.
The statement read in part:
In order to ensure continuing and seamless commercial transactions and market operations, SEC and FCCPC have come to a mutual understanding with respect to these transactions within the transition period, which pursuant to this notice commences immediately, and shall remain in force until otherwise discontinued by further Advisory or Guidance. During this transition period, starting today, May 3rd, 2019:
Where and How To File New Notices
According to the statement, notifications of mergers or acquisitions or any form of business combinations would now will be filed at;
Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.
South African is expanding its investment on the continent. Its latest deal is with South Sudan. It would be investing over USD 1 billion investment in South Sudan’s struggling oil industry, through its state-owned oil company, Strategic Fuel Fund (SFF).
The Nature of the Deal
Both Strategic Fuel Fund and South Sudan’s Nile Petroleum Corporation, will explore an area of 31,000 square kilometres (12,000 square miles) known as “Block B2”
Exploration takes immediate effect from today, and will continue for six years.
The $1billion investment will go into building a refinery and pipelines as well as oil exploration and training of workers and engineers in South Sudan.
KEY FACTS:
South Sudan has the third-largest oil reserves in sub-Saharan Africa, according to the ministry.
It also has an estimated 3.5 billion barrels of oil with only 30 per cent of it being, Petroleum Minister Ezekiel Lol Gatkuoth said at the signing ceremony.
South Sudan’s oil sector is currently being dominated by Chinese and Malaysian oil companies, while companies from Russia and Nigeria have also signed deals to explore new oil blocks.
At its peak, oil production in South Sudan was at 350,000 barrels a day, however production has been crippled, with oil fields severely damaged by almost six years of war.
South Sudan achieved independence from Sudan in 2011, but remained heavily dependent on its northern neighbour’s oil infrastructure — refineries and pipelines — for exports.
Charles Rapulu Udoh
Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.
Not all promises to pay actually work. A new survey conducted by the South African Small Business Institute has hinted that as many as 40% of late payments were being written off as bad debt by Small and Medium scale Enterprises.
The business owners reported that they received payments, on average, 101 days after the promise to pay back was made. The business owners had, however, set a 30-day period for repayment, on average. The Institute called late payments the “assassin of small businesses”.
“SMEs should consider claiming interest and debt recovery costs if another business is late paying for goods or a service,”says Bernard Swanepoel, executive director of the Small Business Institute (SBI).
It Is A Case of Big Businesses and Governments Swallowing SMEs Through Unpaid Invoices
The Small Business Institute of South Africa recently sent a letter to each of the top 100 companies on the Johannesburg Stock Exchange, asking whether invoices containing purchases from SMEs are treated on time — that is whether SMEs are paid 30 days from the day the invoices were written in their favour.
Out of the total replies, only 25% reported a specific policy to pay SME suppliers in 30 days or less. A few said they pay SMEs within seven to 15 days.
“We hear stories every day of SMEs having to close their doors because neither big business nor government pay invoices on time; sometimes they do not get paid at all, ”Mr. Swanepoel said.
South African Department of Small Business Development, in its report released in September 2017, has also disclosed that government departments in South Africa do not honour their contracts with suppliers to pay within 30 days. A total of 71 883 invoices to the value of R4.3bn($297 million), according to the report, were unpaid by government departments and were older than 30 days in 2016 alone. Only over 23 000 invoices were paid late by provincial government departments in 2016, totalling more than R2bn.
This trend in South Africa follows reports by South Africa’s Department of Trade and Industry (dti) that some 70% of SMEs fail within the first 2.5 years, which is even made worse by a recent study from the Global Entrepreneurship Index that only 15% of startups are successful in South Africa.
”Small businesses need predictable cash flow to gain traction, pay their employees, market their products and services, and invest in their businesses. One of the surest ways to disrupt it is to delay paying them for their services,” said Mr. Swanepoel.
The SBI therefore recommends that big business, government and state-owned enterprises apply the South African government’s new definitions of what constitutes small, very small and medium enterprises, that is, to pay businesses falling into the first two categories within seven days, and medium-sized enterprises, depending on the invoice amount, in 30 days or fewer.
Charles Rapulu Udoh
Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.
You may ask what happens to the startup pitches that get rejected every round investors go on an investment scouting mission; do they still go on to succeed?
To put the records straight,“[Each year] roughly 1,500 startups get funded by venture capitalists (investors) in the US, and 50,000 by angel investors. VCs look at around 400 companies for every one in which they invest; angels look at 40.” This is according to David Rose, founder of New York Angels and Gust. How best to move on from a failed pitch effort can never be over-whipped. Below, we examine the best ways to move on from a failed pitch effort.
Know The Questions And How To Respond To Them
The biggest part of a pitching effort is usually the questions that come after pitch presentations. Pitching your deal is not the big deal, after all; you may have gone through some intensive rehearsals and researches before the pitch event. However, knowing what questions potential investors may ask you after the pitch is usually the big problem. If you aren’t prepared to answer these questions, the investors may quickly lose their interest in the whole deal.
The essence of the questions is to help you discover your weaknesses. It is important you jot down those questions that they asked, so you may find use in them in making your pitch better the next time. Even if you pitch more and fail more, you will be able to continually optimize your pitch. This will prepare you more to make better pitches next time.
To learn more on how to ask the right questions during pitch events, click here.
Keep The Relationship After Your Failed Pitch
Instead of discarding that relationship after your pitch has failed, try and keep them. A “no” today can be a “yes” a year from now. Keep the relationship alive by keeping in touch with investors through e-mail. If possible send a mail thanking them for their time and consideration.
Sometimes, it may be good to ask for feedback from the investors. You may casually do so if you are still keeping the relationship and you get a chance to meet them again. You may even email them and politely ask if they can give you a few hints on how best your pitch can be improved. However, do not expect any replies, since most of them have a lot to contend with already, but a few replies may come which can be extremely helpful when pitching again in the future.
Minimize How Often You Pitch Your Business To The Wrong Investors
Pitching will allow you to study the type of audience you are dealing with. When going into any investor meeting, use the chance to study what type of investors that you are dealing with and know which type of investors to quickly write you off. Doing so would save your time and the bad energy that comes with failed investor pitches.
For instance, you may find that angel investors you speak with are more ready to hear you out than venture capital firms. You may also discover that general investors do not understand the scalability of your high-tech software, while tech investors got along with your pitch more easily. Identifying the best type of investor to approach may increase your potential for funding success and minimize the chances of pitching your startup to the wrong audience.
The best approach is usually to research investors before you make any pitch to them. You can check out other startups they have invested in previously and discover the similarities your startup shares with other businesses. If the qualities of your startup are considerably different, this may be a clear sign that your startup won’t be the best fit for their portfolio. On the other hand, if your startup aligns with the qualities of their previous investments, you have a much greater chance of securing their interest.
See Every Pitch Effort As A Contest
Seeing every pitch effort as a contest would help bring out the best in you.
Another arm of this is to participate in pitch contests. Pitch contests would give you the chance to pitch as much as you want. This would generate more feedback for you, which may help you to better improve on your pitch. Startup funding is usually a game of chance; the more pitches you make, the better your chances of winning a pitch. The best way to keep trying is by participating in pitch competitions. Pitch competitions would offer you the feedback you are looking for, in an open and more confronting way. Most times, if you are lucky, you may even win some prices. The pitch competitions will offer you the chance to test your new strategies so you can have first hand information about what works and what does not.
Don’t Give Up
This doesn’t appear a cliche, at all. Never give up! Try one more time. Even when it appears all hope has been lost on how to meet your funding goals, keep pushing forward. The trick is this: you may never know how many steps you are away from your success. You may just be one more pitch away from that funding you need badly.
The Bottom Line:
Pitching for funding for your dream business can consume much of your energy, but just learn to adjust and keep improving on your strategies.
Most times, according to Peter Coughter, the author of The Art of The Pitch: Persuasion and Presentation Skills that Win Business, “it’s not because we’re afraid to fail. It’s because we’re afraid that we’ll succeed. That is what truly terrifies us…if you block it, it will never exist through any other medium and it will be lost.”
Charles Rapulu Udoh
Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.
When EricRies developed the “Lean Startup” approach for startups in 2008, he was merely trying to package his 8 years of experience growing different tech startups. Today, the idea of lean startup has grown so much that the Silicon Valley veteran and blogger now has one of the bestselling books on startups. Whether the idea of a lean startup has succeeded or failed would depend on how the ideas postulated in the book have played out. Here, we review the lean startup strategy, how it has fared, and how you can use it to grow your business.
Dropbox As A Case Study
Dropbox, the American cloud computing application remains the best model for exploring the effectiveness of lean startup. Quite surprising is how Dropbox grew so tremendously even in a heavily saturated market, with the likes of Microsoft’s OneDrive,Google Drive, pCloud, etc. Dropbox CEO, Drew Houston, has severally said that much of Dropbox’s success derives from its application of Eric Ries’ Lean Startup principles. Houston has also narrated how Dropbox went lean and succeeded. A few of his success stories would be interpreted in the light of the lean startup principles.
Minimum Viable Product (MVP)
At the launch of Dropbox in September of 2008, it was such a big joke.The concept was a raw, coded prototype, supported with an ambitious development calendar for the product and nothing else.
With just those assets at his disposal, and armed with the most basic video demos and a landing web page for collecting email addresses, he went all out in search of potential investors and Dropbox’s first time users.
His first video presentation was a quick and summarized breakdown of Dropbox’s interface and the explanation of the problems it intended to solve. The video was sent to Hacker News and other industry news outlets, and also to venture capital firms.
Although the video was a hastily organised crap, it proved effective not only in fascinating Y-Combinator, but also became viral.
The second video went viral on Digg.com, which describes itself as the homepage of the internet, featuring the best articles, videos, and original content that the web is talking about right now. The viral video resulted in over 75,000 potential users added to Dropbox’s waiting list in just one day.
With this, Dropbox has not only tested its products, but also has saved itself from the costly failure it would have been faced with in the future.
The Minimum Viable Product strategy allowed Dropbox to go to market, test and learn how its product performed. The performance of the product was noted through the customer feedback loop. The loop allows startups going through the lean startup ways to answer the most important question for every startup: “Is this a product people are willing to pay for?”. This feedback loop helps, later in developing a product that is either discarded, better polished or entirely readjusted.
“Build it and they will come” Almost Never Works
With Dropbox, Houston recognized early on that he and his co-founders were, themselves, early tech adopters. Hence, the best way to go about pushing their products was to push them to consumers they knew well and understood. The result of this disciplined, targeted development of its customer base through the videos and other resources was the rapid adoption and profitable growth of Dropbox. As at 2018, Dropbox had more than 500 million users and was valued at $12 billion.
The crucial point every startup must note here, according to Eric Ries is that they need to approach the development of their customer base or target audience in just as rigorous and disciplined a way as they approach product development, quality control, and marketing.
Creative Thinking Through Product Experimentation
The decade old formula for setting up a business is that you first carry out market research, draw up a business plan, get the project going and then struggle to find investors to pitch deals to. The Lean Startup says you don’t have to follow all those time-consuming, wasteful, and most times unsuccessful approaches. The Lean Startup believes you must constantly experiment, monitor and evaluate your startup.
The idea is to demystify the fact that most traditional marketing and growth strategies startups feel compelled to implement because “that’s just how you do it” just don’t work.
Dropbox followed the same pattern as traditional product developers did. Before its first public launch, it had invested heavily in Search Engine Optimization and Search Engine Marketing, like their competitors were doing. However, upon close study of the marketing model, Dropbox was able to find that the strategies were proving costlier than they had imagined — over $300 is needed to acquire a customer. Selling a $99 product, those figures were unacceptable.
Creative thinking meant that Dropbox recognized that much of its continued growth was due to satisfied users regularly telling friends about the app. Dropbox immediately established its now-iconic referral program — invite a friend to Dropbox and you both get 500 megabytes of bonus cloud storage space. That singular act meant Dropbox grew by 3900% in just 15 months after the launch of the program.
The Bottom Line
The lean startup strategy is all together altering the entrepreneurial landscape. The impact of the lean startup can best be summarised as follows:
Today open source software, like GitHub, and cloud services, such as Amazon Web Services, have cut down the cost of software development from millions of dollars to thousands.
Finally, think about, Roominate, a startup designed to inspire girls’ confidence and interest in science, technology, engineering, and math. Once its founders had completed testing and iterating on the design of their wired dollhouse kit, they sent the specifications off to a contract manufacturer in China. Three weeks later the first products arrived.
Charles Rapulu Udoh
Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.
Ethiopia has signed a deal with two Chinese companies –Tyson Group and Green Diamond– to invest a total of USD 2 billion for the purpose of processing Ethiopia’s bamboo and producing paper products for both local and export market.
How The Deal Is Going To Work
Tyson Group and Green Diamond would be processing bamboo in the Benishangul Gumz Region of Ethiopia, according to Abebe Abebayehu, Investment Commissioner of Ethiopia who helped seal the deal.
Once fully implemented, the investment of Tyson Group and Green Diamond is expected to create many job opportunities for residents of Benishangul Gumz, which has the lowest unemployment rate (of 6.3 percent) in the whole of Ethiopia.
Mr. Abebe, further revealed that the planned annual production capacity of the company will be one million tons of paper products.
Key Analysis of What This Deal Means For Ethiopia
With a GDP of $80.56, this deal is expected to add, at least 1.6% growth to Ethiopia’s economy, which is over 241 times less than that of the largest GDP in the world — US. As at 2017, the share of Ethiopia’s GDP contribution from agriculture was more than 34%.
Despite having estimated one million hectares of natural bamboo forest, (the largest in the African continent, mostly spread out in Ethiopia’s six regional states of Amhara, Benishangul-Gumaz, Gambella, Oromiya, Southern Nations Nationalities and Peoples’, and Tigrayis), only about three known companies are engaged in the development of products made out of bamboo — Bamboo Star Agro-forestry, ADAL Industry and African Bamboo.
Ethiopia spent about US$55.2 million on average, per year between 2005–2013 to import different processed wood products, including bamboo products. Expenses on the importation of this different processed wood products increased by 13% in each of these years.
China Is Strategically Positioning Itself in Africa
Apart from the bamboo processing deal, another Chinese company, CGOC, has agreed to open processing of cattle and sheep meat in Awash Febntale area of Ethiopia in a investment worth $215 million.
Another Chinese medical equipments manufacturing company has also agreed to come to Ethiopia, investing $75 million in a manufacturing plant in Kilinto Industrial Park in Addis Ababa.
Ethiopian TV also reported that another Chinese company has agreed to invest in printing industry in Ethiopia.
The largest part of the debt was for the construction of the $4bn Ethiopia-Djibouti railway. The Export-Import Bank of China backed the project with $3.3bn in loans.
A Chinese diplomat told the Financial Times in June 2018 that China is “way overextended” in Ethiopia. China’s main project insurer, China Export and Credit Insurance Corporation, known as Sinosure, also said it had lost more than $1bn on the Ethiopian-Djibouti railway.
Chinese firms also built and funded the $475m light railway in Addis Ababa, a $86m ring road and the East African country’s first six-lane highway.
In August 2018, Chinese paper Xinhua reported that Ethiopia had licensed 1,294 Chinese investments in the 2017/8 financial year out of a total of 5,217 investment projects. There are about 400 Chinese investment projects valued at more than $4bn already in full operation in Ethiopia. A good number of this are based within industrial parks and the real estate sector.
Prime Minister Abiy told parliament in February 2019 that his government has successfully renegotiated the repayment period for 60% of its external debt, which currently stands at over $26bn.
Charles Rapulu Udoh
Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.
The day is a regular one, and the sun is burning hard. People are staggering back to city bus terminals in a desperate hope of finding their way home after a long day at work. The place is, of course, Lagos Nigeria, and the usual jarring animosity and aggressiveness still hang on the faces of these people. They are not ready to wait; dragging, pulling and pushing are the next lines of action. With a population of over 17 million and the searing thought of queuing up to face traffic, the earlier they board the buses, the better.
In fact, according to a report by the National Association of City Transportation Officials, a coalition of the Department of Transportation in the U.S, up to a third of the time of cash-based transit buses was spent in “dwell time” delays just because customers have to pay for their fares in cash before movement can begin.
Interswitch, a digital payment solution in Nigeria has studied and understood this story perfectly, and is now on the move to revolutionize the Nigerian transport system for good.
Here Is The Deal:
Interswitch Group has worked out a technology that lessens the time Nigerians spend on long queues waiting for buses.
The company has launched three products — the BeCard, the BeVal, and the BeReader — exclusively for the Nigerian market, which are expected to save Nigerian public transport users the stress of the Nigerian public transport system and increase their life expectancy by a percent.
While the BeCard is your regularly shaped card — like any bank card or the Oyster card in London, the BeVal is the device which is installed on the buses where the passenger can tap on — just like on the London buses. The BeReader is the mother system that makes the BeCard and the BeVal work.
But Interswitch is way smarter here: the company has taken the erratic power and internet availability in Nigeria into consideration. That is why none of the three products would be needing any of the above. The BeReader would be solar-powered and will not require network connection all the time to function.
Innovation and The First Timer Strategies
“Interswitch believes that the transport system in Nigeria, Africa’s largest consumer market, is ready for innovation,’’ said Akeem Lawal, divisional CEO for payment processing at Interswitch. ‘‘This partnership is a key and timely milestone in our industry vertical markets’ focus. It is highly compatible with our vision for Interswitch Transport Solutions (Smartmove) which is essentially to progressively facilitate a multi-modal and multi-operator transportation system underpinned by best-in-class technology.”
Interswitch understands the game perfectly: nobody really cares much about the transport system in Nigeria, apart from the government and a few local players who have got used to the straight-minded approach of deploying as many buses as possible to run through some designated routes. Passengers simply have to queue up and purchase tickets if they are interested in traveling through those routes. Now, Interswitch sees a gap here. A recent Visa’s Cashless Cities study shows that digital payment on buses takes 2.6 seconds (on average) across a cross-section of global cities varying by digital maturity. Using cash takes 4.2 seconds, according to the report, and it would be much higher if it does not involve something similar to Bangkok’s system of hiring conductors to collect cash fares when passengers board — which is pretty much what is practiced in most parts of Africa.
The strategy is also in the numbers: Figures released by Nigeria’s National Bureau of Statistics in 2018 revealed that there are 11,653,871 million vehicles in Nigeria. 6,768,756, representing about 58.08 per cent are commercial vehicles while 4,739,939 (40.67 per cent) are private vehicles. Nigeria’s population has recently been projected by the United Nations to have reached a staggering 200 million. The implication of this is that 6.7 million commercial vehicles cannot serve a population of 200 million or more. Out of the 6.7 million commercial cars in Nigeria, only about 200,000 commercial vehicles are on the roads in Lagos alone, with a population of more than 17 million people. Even playing the devil’s advocate with the 5 million total number of cars in Lagos, whether private or commercial ( with the national average pegged at 11 vehicles per kilometer and the daily average of 227 vehicles per every kilometer of road in Lagos), there is still not a sufficient number of commercial vehicles to match the heaving population of commuters.
Interswitch Group knows this and is not afraid to seal the deal of over USD 73,129,560. Charging a service fee of NGN50 (approx. $0.14) per usage assumedly on 12 million daily transport users in Lagos alone over 300 days (65 days off, for irregularity in the frequency of commute) would be a whopping NGN180 billion annual revenue (approx. $500 million), almost seven times the value of the deal sealed by Interswitch.
According to Akeem Lawal, Divisional Chief Executive Officer, Interswitch:
“We have taken all of those technology pieces, and we have put it on the infrastructure Interswitch has built over the last 17 years. We combine the payment technology with those unique technologies that we have done in partnership with a UK company, and we create a solution that will work on Danfo buses, blue buses, in ferries and in trains. It will be all across the country. We will start our proof of concept with some of our selected partners in Lagos and Abuja, and we will extend to the rest of the country when we are done.”
Being the sole operator and the first timer here means Interswitch is going to have a field day counting its blessings.
Interswitch Is Also Relying On The Policy Strategies of the Nigerian Government To Give The Project A Pivot
Nigeria, through its Central Bank, has placed so much emphasis on a cashless economy in recent times. Interswitch is relying on this strategy to pivot this project.
It is A Win-Win Deal For Both The Government and Industry Operators
Lessons and Experience From Across Africa
According to the Visa’s Cashless Cities study, cashless transportation, as envisaged by Interwitch, could bring more, more money for cities and governments. The study shows that transit agencies — including government-owned transit companies and privately owned transport companies — spend an average 14.5 cent of every physical dollar collected. A whopping 10.3 cents from that amount is saved when the digital transport payment system as envisaged by Interswitch is used. This is because only 4.2 cents is spent for every digital dollar, taking into account such constraints as fare invasion, police corruption and pilfering among others.
Rwanda Is A Good Case In Point
When Rwanda had not awarded a cashless transit payment system design contract to AC Group, an indigenous tech startup or deplored the Smart Kigali Initiative, made up of three major bus firms — which partnered to transition to the cashless Tap & Go bus fare system designed by the AC Group — Rwanda was losing up to 40 percent in revenue due to the hurdles presented by paying for fares with cash. Since the launch of the cashless system, buyable cards led to a revenue increase of more than 30 percent and a speedup in daily commutes in Kigali. There are currently more than a million users of Tap & Go in Rwanda, and 100,000 in Cameron, where the AC Group has expanded to.
Kenya
The matatu transport system in Kenya meant that transport operators in Kenya would suddenly jack up prices as they liked. In a bid to eliminate this corruption and inefficiency, the Kenyan government adopted the contactless transport system (although it was operated by private individuals) by launching a program in 2013 which mandated all matatus in Nairobi to go cashless. 70 percent of the Nairobi’s 4 million residents subscribed to the deal and got themselves contactless cards.
Bottom Line:
While many others are waiting (and calculating the risk perhaps) or simply comfortable with the status quo, Interswitch is leading the revolution and is going to take jobs away from so many people. It is also going to cut a large, gaping hole in the ways things have always been done in the Nigerian transport sector. The next beneficiaries would be those who are fast enough to understand this deal and how they can be part of its value chain.
Charles Rapulu Udoh
Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.
The US Embassy in Kenya has put on hold a requirement that would have compelled all new US visa applicants to acquire the new e-passport.
The US embassy made the announcement on their Twitter handle saying that Visa applicants may now apply for a US visa with a non-digital Kenyan passport and that they would place a US visa in a non-digital passport until further notice.
Holders of Current US Visas Have Been Advised Not to Take Any Action.
UPDATE: Visa applicants may apply for a US visa with a non-digital Kenyan passport. We will place a US visa in a non-digital passport until further notice. Holders of current US visas do not need to take any action.— U.S. Embassy Nairobi (@USEmbassyKenya) May 1, 2019
The announcement came barely 24 hours after the US embassy issued a notice informing all new visa applicants that they would only be granted the travel permit on the new e-passport.
The US embassy had made the announcement on Twitter handle stating that travellers with a valid US visa may travel with their current visa in the old passport but must also have the new e-passport to be allowed entry.
New Visa Applicants
The embassy had further stated that new US visa applicants must first possess the new passport before being issued with the US visa.
“Travelers with a valid US visa may travel with their current visa in the old passport but must also have a new e-passport for entry. It is not necessary to apply for a new visa,” the embassy had said.
Clarification:
US visas & non-digital Kenyan passports: U.S. visa applicants may make an appointment using old Kenyan passport but must have new e-passport before the US visa can be issued. Passports must be valid for 6 months upon entry & non-digital passports expire Aug 31, 2019.
— U.S. Embassy Nairobi (@USEmbassyKenya) April 30, 2019
Stringent Requirement
“US visa applicants may make an appointment using old Kenyan passport but must have new e-passport before the visa can be issued. Passports must be valid for 6 months upon entry & non-digital passports expire Aug 31, 2019,” the embassy had further said.
These developments have all come with the deadline for acquiring the new e-passport fast approaching.
The Immigration Department has however been under scrutiny from Kenyans over the perceived stringent requirements set out to applicants of the new e-passports.
Passport Application
The requirements for applying for the e-passport include a birth certificate and copies of parents’ Identification Cards.
Holders of the old generation passports must acquire the e-passport before August 31, 2019. All the old generation passports will be deemed invalid thereafter.
Applicants are required to start the application process for their passport on the eCitizen platform.
Thereafter they will be required to visit an immigration office in Nairobi, Mombasa, and Kisumu for collection of fingerprints, digital photo and signature and also to drop required documents.
Charles Rapulu Udoh
Charles Rapulu Udoh a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.