Professor Steve Ugbah is Nigeria’s Ambassador to Russia and also holds a concurrent accreditation to the Republic of Belarus. In this interview, he speaks on the importance of Russia’s renewed engagement with Africa; Nigeria’s place in East-West geopolitical rivalry and benefit of AfCFTA in deepening trade ties within Africa among other issues. Excerpts:
How would you describe Nigerian-Russian relationship?
Nigeria-Russia relationship has improved in recent times. We are strengthening the relationship because for a long time it grew cold as we had no substantive ambassador to Russia for four years prior to my appointment. We are now trying to rebuild confidence and trust in each other and take the relationship seriously. So, the relationship is cordial and we are strengthening our bilateral ties.
How is Russia responding to this renewed engagement?
The response has been positive and we have held high-level meetings which are intended to signal to Russia the extent to which we value this relationship. It is a gradual process of rebuilding confidence and I am sure that soon, we would have attained 80 percent of our goal of confidence-building and reaping strategic benefits in the process. Russia is a very important country not just for Nigeria but also for Africa. The extent to which Russia and Nigeria and to a larger extent, Africa can strengthen its relationship, it will be mutually beneficial.
So, I am optimistic this rapprochement will mature and be of benefit to Africa in all facet of our relationship whether economic, cultural, or educational. Russia has been generous to Nigerians especially in the areas of cultural exchanges and scholarships for students. So, my hope is that these activities that are mutually beneficial will continue.
Which other opportunities are there for Africans to tap from Russia?
Russia is a superpower and Africa can benefit most certainly from its firepower and its experience in security. Russia has an abundance of minerals just like most African countries and it has been able to exploit its natural resources more efficiently and I believe we can learn from them. It also has the largest landmass on earth and they have been able to manage their diversity very well and this is what Africa can also benefit from. Of course, Russia’s comparative advantage is in hydrocarbons and this is what we can benefit from. So, there is a lot we can benefit from Russia even in the areas of agriculture, space technology, ICT and many others. So, Russia is well endowed and I believe Nigeria and Africa have a lot to benefit from the country.
In this era of intense geopolitical rivalry and great power competition, how do you think Nigeria can juggle its relationships with these powers?
Nigeria is a non-aligned country and I don’t think that will change its political posture as far as international politics is concerned. So we are not aligned to any geopolitical bloc. We are strictly guided by our interests and we go where we see opportunities. Nigeria has done business with the West, it is doing business with China and we are hoping to increase our level of contact with Russia and the former Soviet states, the Commonwealth of Independent States (CIS). So it is not necessarily about aligning with any bloc but it is about pursuing your interests aggressively as you can and going wherever your interest can be protected. So my hope is that both the East and the West will woo Nigeria and that will place us at an advantageous position. So it is about going to where your interests are protected and taking advantage of opportunities.
Given Russia’s renewed engagement with Africa and the African Continental Free Trade Area (AfCFTA) that came into force recently, how can Africa maximize the opportunities to boost trade ties with Russia?
It is a good thing that Russia is now waking up to Africa and is interested in exploring opportunities in the continent. That is why the Afreximbank annual meeting here in Russia and the heads of government meeting between Russia and Africa in Sochi, Russia come October are auspicious moments to deepen trade ties. Given that Russia is a continent-sized country, deepening trade ties will improve two-way trade between Russia and Africa.
In fact, I just returned from Nigeria with a Russian trade delegation of 13 companies that are looking for opportunities. We have partnered with Chambers of commerce in Lagos and Abuja while also taking advantage of the Russia-Nigeria Business Council here in Moscow. So I see a bright future for Russia-Africa relationship especially now that Africa is better placed to reap benefits from trade relationships within and outside the continent given the AfCFTA that will take of soon. This, will no doubt, fast track integration within the continent while boosting intra-African trade. Although protectionism is rising the AfCFTA I believe if well leveraged is a framework that will help solve some perennial problems faced by Africa such as unemployment and poverty.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
Barely 8 years since its life began in 2011, TransferWise, the UK-based money transfer startup launched by Kristo Käärmann and Taavet Hinrikus with headquarters in London and offices in a number of cities including Tallinn, New York, and Singapore, recently reached a $3.5bn valuation, making it Europe’s most valuable startup. Good news for the startup, but for the co-founder and CEO of Europe’s most valuable startup Kristo Käärmann, it takes one thing to start a business but a lot to get it going.
TransferWise, his brainchild has today has gone from bootstrapping to saving users over $1 billion a year when transferring money. The startup did this by tackling a common problem and taking action on it. Käärmann and his co-founder, Taavet Hinrikus, have gone from zero to a multi-billion dollar business in just a few years.
Here are a few insights about how he took the startup from zero to monumental success.
Originally from Estonia, and armed with a college degree in Mathematics and Computer Science and a Masters Degree in Microbiology, and job stunts at PwC and Deloitte, Kaarmann said his experience as a consultant in one of the Big-Fours in London took a new turn when he discovered he was billed so much for sending money back home to the new newly independent country — Estonia.
‘‘I had a great salary in the UK at my new job,’’ he said. ‘‘But my savings account was still back in Estonia. I was regularly moving pounds into that savings account. When I did a larger transaction, I found out that less money arrived my Estonian account — And when I say a lot less, it was like 500 euros less. I started looking into this and found out that each time I made a transfer to my Estonian account, HSBC, my bank in the UK used an exchange rate that was 5% less than what I see on Reuters or Bloomberg. The message out there was that they were saving cost and were only charging 12 pounds transaction fee at the time.
What really happened was that in addition to these 12 pounds, the banks hid some fees into the exchange rate. This way, they made money. So when I was first hit by the loss of 500 euros, I was so angry and sad.’’
Kaarmann said he found a solution when he met his co-founder, Taavet Hinrikus who had similar issues. Taavet was moving money from Estonia to London and was being charged excessively. Although he was still paid in euros from his Estonian bank account, Taavet was literally living on expenses. Meeting Taavet was a bit of luck because it appeared both of them were from Estonia and faced with the same problems.
‘‘We’re both Estonians. Estonia is a nation of about 900,000 people. That means that every year, about 200 dudes are born and about 200 girls. We’re one of the 200. And we both moved to London. It’s almost impossible not to meet. This is to give you an idea of how small a nation we are. So if there are people your age and they end up in London, roughly both interested in the same things, discussions may begin from there,’’ he said.
‘’I think a lot of startups start on a hypothesis’’
Kaarmann said TransferWise took shape from the hypothesis he formed with his co-founder.
‘‘We started on a hypothesis. We thought this transfer problem was not just Estonians in London’s problem. We thought it would probably apply to the Spanish in London, or maybe to the Romanians in London, maybe the Americans in London and then maybe also to Australians in Brazil. So it was really a hypothesis. I think a lot of startups start on a hypothesis. It’s something that is needed,’’ he said.
Kaarmann said they also raised questions on how they would handle trust especially since they were about to deal with other people’s money. This was 2011 when the term Fintech did not really exist.
They also raised questions on whether people would trust the service that they were providing.
‘‘And lastly,’’ he said, ‘‘are we going to make it work? It may work between a couple of people, but can we make it work for hundreds, thousands, and after that, millions of people?’’
‘‘From the very beginning, it was pretty clear that this challenge is bigger than just the two of us.’’
Kaarmann said on the 24th of January, 2011, TransferWise launched with a simple blog post on a startup website.
‘‘On the same day, I got so many emails from people around the world who reached out to me,’’ Kaarmann said. ‘‘Most of them said they had exactly a similar idea with their friends back in the university. But they never really did anything about it; they never really built it into a product. It was pretty cool to see that it’s not just us. The problem is that there are lots of others out there with similar challenges and a lot of them had actually come to a similar solution informally between themselves.’’
Kaarmann said with that confidence, he searched through his phone contact that first day to find someone they could hire. They immediately followed that up in the same month with a few more people.
‘‘So we started hiring pretty quickly realizing that this is something that people need. We realized that after the launch people are trusting us with their money. The real transactions were happening on the first day,’’ he said
On whom they hired precisely, Kaarmann said their bait caught software engineers who would help them build the startup.
‘‘We hired in the operations department as we are increasingly dealing with large amounts of money. We needed people who would help us run the shop. So, we had someone join us as an operations lead. Then we started out building out a team of payment operators and treasurers. We were also convinced from day one that we needed to support our customers. We were at a time when it was quite common for tech companies to get asked if they do have any support at all. We had a phone number on the front page of our website from the very beginning. We also needed people to handle the queries and help folks get used to this new way of moving money between countries,’’ he said.
‘‘Almost everything is a challenge’’
Kaarman said almost everything is a challenge in running a business such as his startup.
‘‘If you’re at this stage,’ he said, ‘‘imagine how you’d feel when the code or the system you had built hoping it would last for as long as six months because you had 50 times the volume of transactions now, suddenly get overwhelmed with amounts of more volumes coming in. The challenge is mostly from the operational side because the startup was still trying to comprehend what growth meant. On the other side, there is the challenge of people who were looking for a transfer solution, when they suddenly stumbled upon transferWise. Till date, we still have a majority of people, business owners and CFOs who don’t really know about those hidden fees charged by banks.
They believe that banks charge 25 bucks for a wire. The problem is real; I’ve experienced it myself many times,’’ he said.
‘‘Let’s make sure that we have plenty of cash to operate…that’s the approach that we’ve taken.’’
For the 8 years-old startups, staying afloat is the deal. Kaarmann said so much is done tracking the startup’s finance to ensure it doesn’t run aground. To that effect, the startup is constantly raising funds to keep the business afloat.
‘‘Let’s not run out of money. Let’s make sure that we have plenty of cash to operate with and to keep growing so that we don’t run out of money. That kind of worked well for us,’’ he said. ‘‘That’s the approach that we’ve taken. As we started, and as we got going, we realized that actually the size of the problem depended on the size of both international transfers in the first place and on the hidden fees. Those transfers are really enormous.
I think over time, we started to realize how many problems we were really beginning to solve. We have been able to put about a billion pounds a year back into our customers’ pockets because when they use TransferWise, they avoid those bad exchange rates with banks and the wire fees. Roughly, we have been able to save about 1 billion pounds a year for our customers compared to their bank.’’
However, when we look at what banks still make globally from people in businesses making cross border transfers, it’s around 200 billion. If you put that into the context, we’ve really only come about 0.5% success in the way do. We haven’t really gotten anywhere.’’
Today, TransferWise Is So Competitive
Kaarmann said the best way to consider TransferWise’s success is to look at it in multiple different ways.
‘‘The easiest way to look at it is in the number of dollars or pounds that TransferWise got put back into our customer’s pockets,’’ he said. ‘‘That’s competitive. It can also be looked at from our people who are now 1,500 in number, working from different offices around the world, due to the nature of the business. There are now 71 nationalities working in TransferWise. This is so because we have to support everyone who is using passwords. They do that in their own language. There are lots of transfers in currencies to underpin all of that volume.’’
‘‘People Don’t Shut Down Their Business Because They Run Out of Cash.’’
Although already successful, TransferWise did not come to this point without putting up a fight.
‘‘I’m probably quite lucky that we haven’t run aground. The closest we got to was actually before we raised our first funds. That was in late 2011,when we had bootstrapped the company together with Taavet.
Then, we were paying the salaries for our earlier employees from our own salaries and from our own savings. We even got to the point where we could not go any further unless we raised some funds. Raising money in Europe was possible in theory, but not a lot of people were doing that, especially for a new sector that didn’t exist. We wasted more time on this than we had wanted. Eventually, we flew to New York where we raised some funds from small fund ventures in New York. They gave us the seed round and helped us put it together. That was probably the closest we thought would probably be the end of us. We would have had to drastically rethink how we’re going to build the startup if we hadn’t fund-raised around that.’’
Kaarmann said people don’t shut down their business because they run out of cash.
‘‘They do so because they run out of energy. Those moments really take a lot out of out of you,’’ he said.
‘‘Many times we just want to have the perfect product, but at the end of the day, there is nothing like having it on the market’’
Kaarmann said looking at his young self at Deloitte, where he first worked today, he probably would have advised him that there is no shortcut.
‘‘No short cut. Even with what we went through, it’s quite hard to imagine that there would have been a magical shortcut to avoid.
I think in the early days during Deloitte times, we probably spent six months deliberating on the idea whether to launch this thing that we had devised. The time we spent on polishing version one probably was about six months too long.
For someone who has never done this before, I would definitely advise them not to over-think their idea in the beginning. Many times we just want to have the perfect product, but at the end of the day, there is nothing like having it on the market and being able to listen to your customers and optimize as you go.’’
Will Digital Currencies Disrupt TransferWise?
Kaarmann said it is not probable that digital currencies such as cryptocurrencies or libra would drive him out of business
‘‘I don’t know if the governments would be willing to give up anytime [on fiat currency] soon,’’ he said. ‘‘I think the most interesting thing that’s happening with currencies is its actually Eurozone. It is very incredible how a group of countries have decided to give up their national currencies and unite under a common euro. This hasn’t been easy. It has brought problems that European countries and their central bankers have to work through. But it is very incredible. We’ve seen that in recent years as well. I think Latvia and Lithuania joined. I joined quite recently.
I can’t think of any other examples other than eurozone. There are not a lot of other currency unions out there. And it’s very hard to see where that would be going in the short term.’’
‘‘I’d love to see more focus on building the product’’
Kaarmann has some advice for young entrepreneurs.
‘‘When some young entrepreneurs reached out to me, they asked me about fundraising. I found that really awkward. I mean from my perspective, it looks like they really seem to be thinking about the next funding when especially in the early days you should be thinking about how to build a product that customers want and that customers are willing to pay for. Once you have that, I think investors are going to be to running to you.
I still see, perhaps, a little too much focus on fundraising from early founders. I’d love to see more focus on building the product, putting it out there and getting customers 100%. I think there is nothing like product market fit. With that everything will fall into place.’’
What ended up being the business model of transferwise?
Kaarmann described how TransferWise works:
‘‘We help people and now businesses to move money across borders. The traditional way of doing this is by going to your bank and then making an international wire. In Europe we call them international transfers. And in the US, they’re called wires and it usually means typing the destination account number in a different country and then the bank makes the currency conversion. Here is the thing: they usually do two things: they charge you for a wire and that costs 25 bucks, 35 bucks, 50 bucks.
But where they are really making money is through a terrible exchange rate which includes their margin for converting the currency. So whenever you use your bank to convert currency, you usually lose something between 3 to 5% or in some cases even more. We started with the idea that when we send dollars to Europe from US in euros, there are going to be lots of people who also send money from Europe to the US. So rather than sailing with bags of cash across the ocean, we could use the euros that are being sent from the Europe to pay out recipients in US.’’
In the same vein, we use the dollars that we’re collecting in the US to pay out to the recipients those Europeans who are sending money to the US. By doing this, we almost remove the need for moving the money. We just reroute the money locally. So that’s how we really started operating in Europe. We collect money in the eurozone. When we collect such money in the UK, we use the funds that we collect to pay out in the right currency.’’
Charles Rapulu Udoh
Charles Rapulu Udoh is 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 organizations 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.
This year’s Africa Young Hero Award goes to Megane Lorraine Ceday Boho of Cote d’Ivoire for earning the highest accolade a young person can achieve for social action or humanitarian efforts – The Princess Diana Award. Celebrating its 20th anniversary, the Award was established in memory of Diana, Princess of Wales, and is given out by the charity of the same name and has the support of both her sons, The Duke of Cambridge and The Duke of Sussex.
Passionate about putting gender equality at the heart of economic development, Meganne started providing free coaching to people applying for fellowships. With her association SEPHIS, she set up “The SEPHIS National Tour for Women Empowerment”.
In the last two years, they have raised more than $30,000 and trained more than 1,800 young women. She is dedicated to providing young women with the opportunities to further their career, for example, she gave free French classes to English speaking participants at a fellowship gathering 100 young people from West Africa. Through her position of Account Manager at African Media Agency (AMA), she has been able to work on big events like the Africa CEO Forum, The Next Einstein Forum, and Africa 2018 Forum.
Tessy Ojo, CEO of The Diana Award, said: “We congratulate all our new International Diana Award Holders who are changemakers for their generation. We know by receiving this honour they will inspire more young people to get involved in their communities and begin their own journey as active citizens. For over twenty years, The Diana Award has valued and invested in young people encouraging them to continue to make a positive change in their communities and lives of others.”
Commenting on Meganne’s award, Sefora Kodjo Kouassi, President of SEPHIS added “I am very proud of Meganne who constantly impresses us with her positive impact on the Association. This distinction is a testimony that Meganne is a truly inspiring model for her generation”.
“This Award is the recognition of Meganne’s dedicated work to women’s empowerment. We hope she will continue to inspire many young women in Africa to create a better future for generations to come”, commented Eloïne Barry, CEO of Africa Media Agency.
Award Holders have been put forward by adults who know the young people in a professional capacity and recognized their efforts as a positive contribution to society. Through a rigorous nomination process, these nominators had to demonstrate the nominee’s impact in five key areas: Vision, Social Impact, Inspiring Others, Youth Leadership, and Service Journey.
There are 13 Diana Award Judging Panels representing each UK region or nation and a further two panels representing countries outside of the UK. Each panel consists of four judges; Two Diana Award Holders, an education or youth work professional, and a business or government representative.
The panels have an important main purpose: to determine which nominations from each UK region/nation will receive The Diana Award. Nominations are judged using the Criteria Guide and Scoring Guide which have been created to measure the quality of youth social action
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
Standard Chartered announces the launch of social banking solution for Africa in Kenya, Uganda, Ghana, and Tanzania
Standard Chartered has announced yet another multi-market launch of its digital bank in Botswana, Zambia, and Zimbabwe as part of its digital transformation strategy in Africa. The next wave of digital-only banks follows launches in Uganda, Tanzania, Ghana and Kenya in the first quarter of the year and Côte d’Ivoire in 2018.
The expansion in Africa comes at a time when the continent, with a growing economy and population, is demanding wider access to digital services. The digital banking solution provides Standard Chartered customers across the eight markets with affordable, convenient, fast and easily accessible banking services.
The first-of-its-kind digital bank in Botswana and Zambia offers a truly end-to-end digital account opening experience which has been developed following client feedback to offer a convenient platform to service all their banking needs.
Commenting on the launch, Sunil Kaushal, Regional CEO, Africa, and the Middle East said: “This is a significant achievement for the Bank having now launched digital banks in 8 markets in 15 months of our initial launch in Côte d’Ivoire. The growing population of Africa is demanding faster and more convenient banking and it has been very rewarding to witness increased acceptance and growing demand for our digital products across the continent. We have an exciting pipeline of product launches on this platform which will position us as the premier digital bank in our markets of choice.”
By digitalizing the entire banking experience, customers will be able to enjoy simple, secure, and affordable banking anytime, anywhere. Active customers of the digital bank will also be eligible to receive loyalty benefits and promotions.
In just under 15 months, Standard Chartered has launched its digital banks in eight markets across Sub-Saharan Africa with impressive results. In Côte d’Ivoire the digital bank has exceeded initial expectations with 18,000 new account openings, in Uganda the Bank has seen an eight-fold increase in new account openings, whilst in Tanzania, the Bank has signed up more new customers since launching in March this year than in the whole of 2018.
The Bank is expected to continue its digital expansion in African markets with another launch planned in September for Nigeria.
Launch of social banking with SC Keyboard
In its continued efforts to meet the rising demands of Africa’s young and digitally-savvy population, Standard Chartered has also launched SC Keyboard, which allows customers to access a variety of financial services from within any social or messaging platform without having to open the Banking app. Initially launched in Kenya, Uganda, Ghana, and Tanzania, the solution is a first for the Bank in Africa and will be rolled out to Botswana, Zambia, Zimbabwe and Nigeria throughout the rest of the year.
The keyboard-based banking solution allows clients to transfer money in real-time, pay utility bills and instantly check balances from within any social or messaging platform. The unique digital solution can be configured as the default keyboard on any smartphone, making banking quick and seamless for customers who no longer need to log into their SC Mobile app for basic banking services.
The solution is ideal for the African market, which continues to see a rising number of social media users. According to the Hootsuite and We Are Social Global Digital Report 2019(https://bit.ly/2GcsJhM), in 2018 alone the African continent saw a 12 percent increase in active social media users and a 15 percent increase in active mobile social media users. This is not surprising given that 82 percent of the population have mobile connections.
According to Jaydeep Gupta, Regional Head of Retail Banking, Africa and the Middle East, “Following the additional rollouts of our online retail banks across Africa, SC Keyboard is an important milestone in our digital journey. SC Keyboard was designed with our clients in mind, as users can now pay their bills, view their account balances and transfer money to their friends or family through any social or messaging platform. Increased prosperity has made the African population more financially savvy and many users seek new and easy ways to handle their money. We want our interactions to be simple, intuitive and seamless – with, we will remain committed to leveraging the best technology to bridge digital and human channels and enhance customer centricity and service delivery.”
To enjoy the seamless and easy access to banking by SC Keyboard, clients need to:Have an Android or iOS smartphone phone with fingerprint support
Install SC Mobile app and enable SC Keyboard in the device settings
Select SC Keyboard as your default keyboard and start using it
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
Africa’s output grew by 3.4 percent between 2017 and 2018 despite the slowdown in global growth during that period, a new report by the African Export-Import Bank (Afreximbank) has shown.
The African Trade Report 2019: African Trade in a Digital World, launched today in Moscow during the 26th Afreximbank Annual Meetings, states that Africa’s total merchandise trade in 2018 had a value of over $997.9 billion, noting that the continent remained one of the fastest growing regions in the world.
World Trade Organisation estimates show that the volume of global merchandise trade grew by 3 percent in 2018, down from 4.6 percent in 2017.
According to The African Trade Report 2019, the findings highlight the resilience of Africa’s economies to global volatility at a time of rising uncertainty, escalating trade wars and tariffs between the United States, China, and others. The resilience reflects the diversification of Africa’s trading partners in the context of South-South trade, growing fixed investment and public and private consumption, boosted by expanding urban populations and softening inflation. These factors reduce Africa’s exposure to the business cycles associated with individual countries and regions.
The report noted that while the European Union remained Africa’s main continental trading partner in 2018 – accounting for 29.8 percent of total trade – African trade with the South grew significantly over the last decade to account for more than 35 percent of the continent’s total trade in 2018. China and India further consolidated their positions as Africa’s first and second single largest trading partners, accounting for over 21 percent of total African trade in 2018.
Intra-African trade also increased steadily in 2018, growing by 17 percent to reach $159 billion.
The report highlights that Africa has the potential to do more, noting that its contribution to global trade remains marginal at 2.6 percent, up from 2.4 percent in 2017, and that, while intra-African trade rose to 16 percent in 2018 from 5 percent in 1980, it remains low compared to intra-regional trade in Europe and Asia.
The report states that ongoing digitalization is paving the way for a new African economy, with e-commerce platforms and internet penetration expediting transactions, reducing costs and leading to a new generation of transnational digital consumers.
The report urges African governments to further capitalize on the opportunities associated with digitalization, by bolstering regulatory environments and supporting the development of digital ecosystems.
Digitalization, the reports states, can unlock Africa’s potential in driving economic development and the integration of African countries into the world economy. It can also reduce the region’s dependency on raw commodities and natural resources by helping economies diversify into more value-added products that can enhance extra-and intra-African trade.
According to Prof. Benedict Oramah, President of Afreximbank, “It is vital that Africa grasps the economic growth opportunities flowing from the African Continental Free Trade Agreement, growing domestic demand and population, and our ever-closer investment and trading links with emerging partners in the South. We must exert concerted action to ensure that we develop, industrialize and diversify our industries and supporting infrastructure to foster regional integration and participate fully in regional and global value chains.”
In the words of the Chief Economist and author of the report, Dr. Hippolyte Fofack: “Intra-African trade, which grew by 17 percent in 2018, more than three times the rate of growth of extra-African trade, was the major driver of Africa’s total merchandise trade in 2018.”
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.
Nothing lasts forever, goes the saying. For the Baby Boomers and Generation X who existed without the internet, it was a shock that the traditional, physical retail business model could fade away, to be replaced by the business at the click of a button.
Today, Amazon Effect means that traditional, physical retail shops continue to wind down and call it a quit, giving in to the stiff competition from Amazon, eBay, Alibaba, Jumia and online shops. For emerging markets and developing countries, what remains for these physical shops to be completely rendered to ruins is trust.
Chinese billionaire, Jack Ma, understood this early enough. In 2016, Jack Ma started a revolution he called the ‘New Retail’ that would itself redefine what commerce really means for all of us. Jack Ma is the 21st richest man in the world and the number one richest man in the most populous nation on Earth— China.
He is piercing the heart of commerce and extracting what has fueled commerce over the course of thousands of years ago — human beings. Through new retail trade, he is relaunching the whole idea of technology in commerce and trade itself to the people that originally own them — human beings, consumers.
“Commerce as we know it is changing in front of our eyes. E-commerce” is rapidly evolving into “New Retail.” ,” Ma wrote to Alibaba shareholders in a letter sent ahead of the New York-listed company’s annual shareholders in 2016. ”The boundary between offline and online commerce disappears as we focus on fulfilling the personalized needs of each customer. We anticipate the birth of a re-imagined retail industry driven by the integration of online, offline, logistics and data across a single value chain. This is why we are adapting, and it’s why we strive to play a major role in the advancement of this new economic environment.”
This may sound more Utopian than realistic, but in China where the concept was formed, Hema Supermarket, an arm of Alibaba that specializes in new retail, has opened 64 Hema stores in 14 cities, with over 10 million customers shopping at these supermarkets since the beginning of 2016.
On average, for a Hema Supermarket that has been open for at least 1.5 years, daily average sales are upwards of 800,000 yuan (US$116,500) — about 60 percent of which comes from online orders. Based on Alibaba’s data, offering a combination of online and offline shopping options results in an increase in average monthly spending by customers. Consumers who shopped both online and offline at Hema spent an average of 575 yuan monthly, compared to under 300 yuan for purely online, or purely offline shoppers.
Pinduoduo, the $1.5B Chinese startup is also another Chinese e-commerce company, engaged in new retail. The startup is challenging the giant Alibaba in China’s towns and villages. In January, Pinduoduo had 114 million active users, surpassing that of New York-listed Chinese discount retailer Vipshop. Currently, the startup has captured a projected 7.0% of all retail e-commerce sales in China this year, not a bad showing for a firm that launched in 2015. In three short years, Pinduoduo has emerged as one of China’s fastest growing shopping startups, with as many as 55 million users accessing the site per day.
Pinduoduo’s idea of new retail comes by way of offering group discounts.
Here Is How The Idea of New Retail Works
The idea of new retail lies in thinking beyond the boundaries of the two-party system of retail operations, that is, e-commerce and legacy brick-and-mortar retailing. New retail, instead, focuses on employing an entirely new operating system for reaching and inspiring consumers to shop.
‘‘New Retail trade is trying to solve two particular core challenges in the industry,’’ Emmanuel Elem, an advocate of Sairui, Africa’s new retail startup said. ‘‘The first challenge is the challenge of cold war between offline and online malls. Shoprite is an offline multi-billion dollar shopping mall, for example. On the other hand, Jumia is an online mall. These two different malls are doing things differently and the truth is that they are struggling for the same customers.’’
Now, there are people who have sworn [or who are so internet phobic] that they cannot buy or make payment on the internet because they cannot see the person they are buying from. There are also people that say they don’t have the time to go to Shoprite and begin to buy things [be in the queue and waste their time?] when they have Jumia that can get them what they want in their houses while they wait patiently for delivery to be made. So what new retail is trying to do is to bring a marriage between online malls and offline malls.
By new retail, it will no longer be about online shopping malls. They will also have offline shopping malls or offline distribution centers where people can go, select what they want, pay online and if they don’t want to pay online, they can go to the mall offline and make payment and collect the goods, with the coupon they present to the owner of the shop.’’
He says new retail trade represents a system that blends the best of what both offline and online worlds have to offer. Apart from that, it also offers the best of an entirely new mix of human, digital and physical experience design, giving consumers a new means of inspiration, selection, immediate gratification, physical sensation and convenience, and that ultimately renders the distinction of digital vs. physical irrelevant.
Sairui, The First African New Retail Option Is Gaining Momentum
Although launched this year, March, Sairui is on course to change the idea of internet retail trade. Modeled after Chinese Pindoudou, the startup, which has its Africa headquarters in Accra, Ghana sells everything from clothing to hardware and other commodities and offers large discounts to purchasers. The startup has a strong presence in Nigeria and is also extending to other Africa countries like Cameroon, Uganda, Zambia, Tanzania, and other places.
‘‘We are doing this simultaneously,’’ said Elem. ‘‘Sairui is all about supporting grassroots entrepreneurship. Sairui shows people the possibility of starting to build a business no matter how small they have because with as small as less than 10,000 naira, they can become a business build through Sairui. This is exactly what it’s called pure grassroots entrepreneurship. Sairui also has bigger packages for those that don’t want to start with such small amounts of money.’’
The startup says it has multiple certified safeguard mechanisms, genuine licensed goods at lower prices and more reliable quality.
The Major Changes The Startup Is Bringing To The Table Are In The Logistics And The Customer Experience Areas
The startup offers large discounts to its online shoppers, bringing on-board an entirely new way of buying and selling.
‘‘What Sairui has brought in is the possibility of online and offline shoppers becoming business owners while also shopping. This has nothing to do with network marketing,’’ Elem said. ‘‘Network marketing is a different ball game altogether. Sairui has variety of products.’’
Elem said to handle logistics, the startup has physical shops where the online shoppers can go, present their coupons and redeem their goods or simply make new purchases.
‘‘Sairui is not opening up physical shops on its own. Sairui is opening up these physical shop through partnership or mini-franchising. These shops are called service centers. The centers are there to service our customers who can come and pick up these products. It is either you pay the company online or through these service centers. You can select your products online or you go to the service centers, give them your cash and carry your products. But the simple truth is that the products are going to be very affordable.Right now, we have about three physical malls in Nigeria through what we call Service centers. We service our customers through our customers centers there. We have centers in Cameroun. We have in South Africa. Right now, we have in about seven African countries.’’
For a startup that is just three months old, this appears a great streak of success, but the startup believes its incorporation of Jack Ma’s concept of new retail trade into its business strategy doesn’t just stop at setting up physical locations to enhance internet commerce experience but also that the strategy means consumers on the platform would get a chance to develop business interests from their purchasing or consumption needs.
‘‘Sairui is not a B2B company. Sairui deals directly with end users. We are dealing directly with the end users; people that are consuming these products. We are not dealing with business owners . We are making the end users business owners and also consumers linking them up directly with the manufacturers of these products, removing the middle person involved,’’ Mr. Elem said.
But it does appear that even the B2B middlemen would still have a say after all since the aim is to turn your consumption cost into instant profitability.
‘‘If you do some shopping on a $100 product on Sairui, for instance, we are giving you a discount of 60% on each product, meaning you’re getting a chance to buy two more products. Now, Sairui will help you sell those two discounted products you bought through its wholesale store,online or offline, free of charge. Sairui will sell each of them on your behalf at $100 each, the initial retail price at which you bought them.’’
The startup boasts it would sell off the products on behalf of its customers within a 7 to 10 days period, leaving customers with some unexpected side profit, long hours after they have made their first purchases.
‘‘We are the pioneer of this kind of system,” Elem said. ‘‘It may be strange to African markets, but the simple truth is that over 20,000 e-commerce companies are already using new retail to run their businesses in China. You can trade as many times as you want with one-time principal.’’
Elem said offering discount does not represent any loss for the startup because of a direct partnership with manufacturers of the goods sold by the startup. He said Sairui mall is an open market place just like Amazon, and as such, anything is bound to happen.
‘‘It is just like asking people why they drink water from a clean cup,’’ he said. ‘‘Nobody would see what is good and wouldn’t want to go for it. The general ideology of new retail is encouraging grassroots entrepreneurship. Sairui is a unique opportunity that anyone shouldn’t miss, even though not for the sake of profit, but for the sake of buying things affordable prices and getting free products from its online or offline shops.’’
Getting Started With Sairuimall Africa
To learn more about how to be part of the Sairui value chain, contact the startup’s country director on +2348039421770
Charles Rapulu Udoh
Charles Rapulu Udoh is 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 organizations 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.
Airtel Africa Plc is preparing to list (IPO) on the Nigerian Stock Exchange and on the London Stock Exchange at the same time. This is another chance for investors in stocks or shares of companies to cash out big time.
Here Is The Timeline For The Nigerian Offer
Announcement of the offer price, offer size, the publication of the pricing statement and allocation of ordinary shares — 28 July 2019.
Allotment of new ordinary shares to the shareholders — 29-Jun-19
Crediting of ordinary shares to accounts — 3-Jul-19
Nigerian listing and start of unconditional dealings on the NSE — 4-Jul-19
The Amount Of Offer And Share Price
In a prospectus released by Airtel Africa Plc (“the Company”), the global Initial Public Offer ( IPO ) would put ordinary shares worth $750mn (or N270.0bn) out for public subscription.
Airtel Africa says the price for each of the shares is at a range of 80 pence and 100 pence/share or (£0.8-£1.0/share) for the London issue.
The Nigerian offer of the issue is opened at an offer price expected to be between N363 and N454/share (technically a naira conversion of the pounds sterling expected price per share) which will be followed with a secondary market listing on The Nigerian Stock Exchange (NSE).
The price range stated above (between N363 — N454/share) is indicative only and may change in the course of The Offer or be set within, above or below the price range.
The Company is expected to be admitted to the premium listing segment of the main board of the London Stock Exchange (LSE) at the end of the transaction.
Application has been made to the Nigerian SEC for the registration of all of the ordinary shares to be issued in connection with The Offer and to the council of the NSE, to be listed and admitted to the official trading list of the NSE.
Analysis of Airtel’s Intended IPO
The amount Airtel Africa intends to raise is $750mn. This is adding the London and the Nigerian IPO together. This offer is 14.0% and 18.9% of Airtel’s issued ordinary share capital, depending on the offer price.
Airtel, from their prospectus, would be allowing 10% of the issue to be ordinary. This is in accordance with the over-allotment option described in the company’s prospectus.
Airtel is looking at using the proceeds from the issue to reduce the level of their indebtedness on their balance sheet, particularly to achieve a targeted leverage ratio of 2.5x.
Airtel is being strategic about the Nigerian offering. It is planning that the Nigerian IPO (or ‘The Offer’) will be offered through a ‘book-building’ exercise pursuant to Rules 320 to 323 of the Nigerian SEC Rules, to determine the issue price and the level of demand. That is, the price may be readjusted according to the demand and response from the public about the offerings.
All ordinary shares subject to The Offer will be issued or sold at the offer price, which will be determined by the Company, following a book building process and in consultation with the Joint Global Co-ordinators.
From the prospectus, interested individual in the Nigerian offer will be deemed to have represented and agreed that it is either a ‘High Net Worth Investor (HNI)’ or a ‘Qualified Institutional Investor (QII)’ as such terms are defined in Rule 321 of the Nigerian SEC Rules.
Airtel may have to consider a number of factors in determining the Offer price, share size and the basis of allocation. This will include the level and nature of the demand for The Offer during the book-building process and prevailing market conditions. In simple terms, it is most likely the share prices will fluctuate.
From the prospectus, there are no restrictions on the free transferability of the Nigerian Offer Shares, meaning that prospective investors may buy and resell their shares at will. This is expected to lead to fluctuation in share prices. Most times, first to buy always win in this kind of situation.
Caveat
The Nigerian Offer is not underwritten, meaning that the consequences of the customer’s actions on the IPO day are not insured.
From the prospectus, it does appear that if UK Admission does not occur or unsuccessful, all conditional dealings will be of no effect and any such dealings will be at the sole risk of the parties concerned. Temporary documents of title will not be issued. UK Admission shall not be conditional on Nigerian Admission, but the Nigerian Admission shall be conditional upon the UK Admission. There can be no assurance that Nigerian Admission will occur on the date indicated above or at all.
Issuing Houses
In relation to the Nigerian Offer and the listing on the NSE, Barclays Securities Nigeria Limited and Quantum Zenith Capital & Investments Limited have been appointed as Nigerian joint issuing houses. Greenwich Securities Limited and Chapel Hill Denham Advisory Limited have been appointed as Nigerian receiving agents.
Points To Have In Mind When Investing In Stocks of Companies
Own at least 10–30 different stocks, preferably in different industries:Don’t put all your money in one company/mutual fund/industry and invest in a wide variety of them.
Invest in established leaders in the industry, preferably companies in the top 25% or 30%: Choose great and stable companies. Remember: We’re investing in businesses, not gambling on racehorses.
The Company you’re buying should have a Long, Unbroken Record of Dividend Payments: If a company gives good dividends to their stockholders, it means it has actual earnings to pay it.
Choose companies with a 7-year Price-to-Earnings (P/E) Ratio of Less than 25 (and less than 20 in the past 12 months): Choose good companies with a moderately low P/E Ratio (less than 25).
Raghunath Mandava, MD and CEO, Africa, said: “Airtel Africa’s Gross Revenue grew by 11.2 percent on a YoY basis. Data traffic grew by 61 percent, voice minutes increased by 25 percent and Airtel Money throughput grew by 29 percent on a YoY basis.
NB: These points were postulated by Benjamin Graham, author of the classic “The Intelligent Investor
Additionally,
Set a minimum limit of the amount you can invest in companies.
Invest in companies that are making profit or has all the metrics to make profit.
Charles Rapulu Udoh
Charles Rapulu Udoh is 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 organizations 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.
Good news for small-scale farmers in Kenya. This is a huge opportunity to benefit from the newly signed deal between the European Investment Bank and Equity Bank of Kenya. The two banks have signed an Sh5.7 billion (EUR 50 Million) deal to finance agricultural development in the country.
Here Is The Deal
In the deal with EIB, Equity Bank through the program termed Kenya Agriculture Value Chain Facility will provide smallholder farmers and small agriculture-based Small and Medium-sized Enterprises (SMEs) with credit to expand their operations.
Working with Equity Bank across the country, the new Kenya Agriculture Value Chain Facility will help agriculture companies to modernize and harness the full economic, employment and export potential of agriculture as well as expand business with local smallholders.
The European Investment Bank aims to extend the project to other financing partners in the future with a focus on service providers expanding their reach to rural communities and smallholder farmers.
Agriculture is the leading source of economic activity, employment, and exports in Kenya. Agriculture contributes directly and indirectly to 51% of Kenyan GDP and accounts for 60% of jobs in the country.
Who May Get The Loan?
The loan program is strictly for agriculture companies and ventures that intend to modernize their ventures as well as embark on agriculture projects that are capable of creating employment opportunities for Kenyans. Agricultural businesses that are also interested in expanding their venture capacities may also apply. The enterprises targeted include Value Chain SMEs in agribusinesses that are supporting a smallholder farmer base.
“Equity Bank has aligned its strategy with the Big Four agenda, which includes agriculture, and our focus is on growing the agribusiness portfolio through servicing all segments from retail to SME to large enterprises and corporate banking customers,” said Equity Bank Kenya Managing Director Polycarp Igathe.
Is The Loan Attractive Enough For Kenyan Small Scale Farmers?
The sum of £50 Million has been budgeted to make this happen. This is the first ever dedicated support for long-term investment by agriculture companies in Africa backed by the European Investment Bank, the world’s largest international public bank.
When procured, beneficiaries will have up to seven (7) years to pay back. This is expected to take care of the highly risky agricultural sector mostly affected by adverse weather patterns.
The maximum amount of loan to be procured by the beneficiaries is 50% of the project cost as long as the beneficiaries are eligible.
Presently, the duration of most loans in Kenya is 12 months. 7 years to pay back the principal sum is a big edge. The new funding would be made available in Kenya Shillings. This will mitigate exposure to foreign exchange risks that currently hinder agriculture investment in Kenya.
“It is good to see the European Union’s bank, the European Investment Bank, partner with Equity Bank. This is the first time the EU funds the private sector in the agricultural sector in Kenya directly. There is a great deal of expectation on this new approach. The EU chose it in Kenya because we recognize that smallholder farmers do not need handouts: they need an enabling environment to be successful market operators. This requires access to finance and reducing the risk of investing in a difficult environment.” said Walter Tretton,Chargé d’affaires of the European Union delegation to Kenya.
Which Bank To Get The Loans From?
Equity Bank is the only Kenyan bank to get the loan from, in the meantime.
Equity Bank is the first Kenyan partner to participate in the Kenya Agriculture Value Chain Facility and other financial institutions are expected to join later. Equity Bank is one of the key financial institutions supporting the agricultural sector in Kenya and is a leading provider of financial services to rural communities and smallholders, the EU bank noted.
The EIB also noted that Equity Bank has identified the potential for growth, by adding medium size and large commercial farmers to the Agriculture portfolio as well as focusing on the financing of the Agri-Food processing companies.
Since 2007, the European Investment Bank has made available one billion euros (Sh114 billion) for private sector investment in East Africa through credit lines in both local and international currency in partnership with more than 25 banks and financial institutions.
Equity Bank Now Has Branch In Addis Ababa Ethiopia
Small scale farmers and businesses in Ethiopia may also now benefit from Equity Bank’s line of credit. This is because the bank has set up a commercial representative Office in Addis Ababa, Ethiopia as it prepares to expand into the hitherto protectionist economy. The bank’s Ethiopia branch is expected to be fully operational next month. The entry into Ethiopia, a country with a population of nearly 100 million people, follows the Government’s appointment of a privatization commission and the ongoing reforms which are aimed at promoting a growing private sector.
Charles Rapulu Udoh
Charles Rapulu Udoh is 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 organizations 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.
Lagos residents will now have one more online ride-sharing option to choose from by July this year. Egypt’s ride-sharing startup SWVL has announced plans to launch in Lagos, Nigeria in July. 5O buses would be on the road from the date of the launch, according to Swvl’s Country General Manager in Nigeria. This is expected to be a huge challenge to existing ride-sharing options, such as Uber, Bolt, and ride-hailing motor-bike alternatives.
SWVL expects the surging population of Nigeria’s most populous city to be on its side. The startup is already in Kenya and Egypt and has plans to expand to Uganda soon. Other target countries include Thailand and Vietnam, and possibly operations in seven world mega-cities by the end of this year.
Barely 2 years in existence, it is the most funded startup in Egypt.
Swvl’s Business Model
SWVL’s goal is to make it easier for Egypt’s residents to book bus rides at a 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 is however different from its competitors because of its series of partnership deals. The startup’s credit facility agreements with Nasser Social Bank and EFG Hermes Bank, and after-sales support and maintenance services with Ford-trained technicians are some of these moves.
What Egyptian SWVL users think about the startup is its priority on affordability, comfort, and safety.
Not Afraid Of Competition
Although Swvl is the first riding app to offer bus services in Egypt, giant transportation startups Careem and Uber have recently offered their own bus services.
Mostafa Kandil, Egyptian CEO and founder of Swvl, has however noted that the joining of Uber and Careem to the industry has not influenced Swvl’s growth asserting that they have witnessed remarkable development since the two competitive players have launched. In 2018, the startup was valued at nearly US$100 million, becoming the second Egyptian company after Fawry to reach these figures.
The startup has recently signed an agreement with Ford motor company to deploy more cars on the road. Ford Transit, which the startup intends to use is already the third best selling van of all times. SWVL is already in possession of about 100 Ford Transits. Hazem Taher, SWVL’s Head Marketing Manager, said the vans were ready to go and they’re excited to push them on SWVL’s route.
Charles Rapulu Udoh
Charles Rapulu Udoh is 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 organizations 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 Mr. Tola Fadugbagbe relocated back to Lagos, Nigeria’s largest city for the second time in his young life, there was nothing yet like cryptocurrency or bitcoins or tokens or Blockchain technology. He could only be fused into one of the over 17.5 million people living in the city. And it appeared he was merely making up the population because it seemed the city looked too overwhelming to fit in. It didn’t take long before several months of homelessness hit him hard in the face.
‘‘For several months, I stayed in an uncompleted building. Life was nothing but hell. I was running around struggling to get funds to complete my education to university level,’’ he tells Afrikan Heroes.
Then a job stint at a highly successful real estate development company. A break-away to start up a local block making factory, and a sudden bankruptcy and closure of the facility because clients who promised to pay took delivery of his blocks but never cared to pay back, Mr. Fadugbagbe says he is still banking on his integrity, determination, cryptocurrency and blockchain technology to take him farther than he has ever thought.
‘‘ One thing I always prove to people about myself wherever I go is integrity. Anywhere I am, people always get to know me as someone with integrity. That was why I stayed longer than expected at the real estate company,’’ he said.
Mr. Tola said he learned his lessons about running his first startup the hard way:
While I was working in the real estate company, I discovered that there was a problem that needed to be solved: the quality of concrete blocks being delivered to this site. You know, the blocks they usually supplied the real estate company were not strong enough. So I thought that if I ventured into this business, I could make some future from it. So after I left the real estate company, I set up a block making factory.
When the factory was up and running, I was so happy that I was progressing. I was generous and selling on credit. But before I knew what was happening, people were withholding my money and they were telling me stories. As I’m talking to you now, these people are still owing me. I was back to square one after that nightmare: I could not even produce even though my equipment was on ground.
‘‘Till Date, It Has Been Marvelous Getting Involved in Cryptocurrency.’’
While reading about cryptocurrency and blockchain technology sometime in 2016 from two of his Facebook friends ‘who were not usually detailed about the terms and the philosophy behind the concept’, Mr. Tola got interested and began extensive studies and inquiries into what cryptocurrencies are, only to discover that cryptocurrencies suited his philosophy. Since then, he says it has been ‘‘marvelous getting involved in cryptocurrency.’’
Today, he is part of a local network in Lagos and Nigeria that hosts conferences, seminars, boot-camps, and workshops training people on what cryptocurrency is and how they can trade in it.
I believe that cryptocurrency is a big deal. Big corporations can’t stop talking about cryptocurrency. They can’t stop implementing cryptocurrency in one way or the other. Look at the CEO of JP. Morgan, Jamie Dimon, who once told his workers that if they ever got involved in bitcoin they would be fired. He called Bitcoin a fraud, a scam and an evil. Few weeks later he bought bitcoins on Poloniex. Right now, J.P Morgan is using fragments of JPM Coin, the native coin of JP Morgan Bank. I mean JP Morgan is a US banking giant that move trillions of dollars across the globe daily. Right now they want to use their own token to scale payment protocols and remittances,’’ he says.
Mr. Fadugbagbe is not far from the truth. Earlier in February 2019, J.P. Morgan became the first major U.S. bank to create its own cryptocurrency with the launch of “JPM Coin.” The digital token was designed to settle transactions between clients of its wholesale payments business, specifically for international payments and securities transactions that migrate to the blockchain.
Mr. Fadugbagbe remembers one incident about how cryptocurrency has been more than a helpful innovation in the payment system.
‘‘Someone in the US sent bitcoins to me today. I sent Naira equivalent to the person’s beneficiary in Nigeria. If they are to rely on Western Union, the fees, the delay and all that would be too much,’’ he said.
‘‘I believe that cryptocurrency has come to stay. You know, there are some people in Diaspora that find it difficult to send money back home. Now, crytopcurrency has made it a lot more easier for them because they could just create crypto accounts over there and using those accounts, they can now send bitcoins to me, and I, in turn pay off their beneficiaries in Nigeria the Naira equivalent of the bitcoins sent to me. These things happen within a space of few minutes.
He says that unlike fiat currency that government can only print more, borrow more and yet remain heavily in debt, cryptocurrency always has an edge.
‘‘You can’t inflate it. Instead you can only reduce it. This means that, with time, crypto can always gain value. The only downside of it that it that it is highly volatile. That is why people should be cautious about the type of crytocurrrency they get involved in. In fact, the crypto market is highly competitive right now. So if you lay your hands on a token doing similar things to other similar tokens in the similar same crypto market, and if the token is not highly innovative, then it would not scale,’’ he says.
‘‘Whether You Like It or Not, Everybody Will Get Involved In Cryptocurrency’’
Mr. Fadugbagbe said the only thing remaining for cryptocurrency to become widely accepted is for governments to give their nod to it. For that, he sees a huge opportunity for early investors.
”So if you look at the future of cryptocurrency, you can’t but be part of it at this early stage. Many people see Bitcoins, ethereum and cryptocurrency as the dark part of the internet because some governments are yet to approve it. Whether we like it or not government plays a major part in controlling the mindset of the citizens. Just take a look at the stories of MTN and DSTV before they became big players in their industries. We all know are they were first rejected by governments,” he says.
Why Africa is Lagging Behind In Cryptocurrency and Blockchain Technology?
Mr. Fadugbagbe says Africa is lagging behind because of the continent’s low rate of adoption of the innovation. He says anything revolutionary will be adopted quickly in any continent or any country when the government welcomes it wholeheartedly. Although he says African governments are usually ‘‘just slow in adopting something as disruptive as cryptocurrencies,’’ he has hope that Africa would get there someday.
”This is one of the reasons why we’ve been hosting seminars, workshop, bootcamps. We still need to engage the government.We just have to keep talking about this. We hope that one day, we would get the attention of the government to approve the necessary framework for cryptocurrency and blockchain technology. Just take, for instance: if you can now travel to all West African countries using Bitcoins. It would really mean that more people would get interested in bitcoins. If the government also says you can now pay your tax with bitcoins, many people would be eager to pay tax,” he says.
Mr. Fadugbagbe also finds a big problem with the way international communities see cryptocurrencies coming out of Africa.
”International communities believe that an average Nigerian or African is a scammer,’’ he says. ‘‘ Once cryptocurrencies are coming out from Africa or Nigeria, the international community doesn’t usually trust them, even when the intention is good,’’he says.
How Startups Can Leverage Crypto To Boost Their Businesses
Mr. Tola says smart startups can leverage cryptocurrencies to boost their business even without any formal partnerships with any blockchain organizations or blockchain platforms. To do this, he says African startups may consider accepting cryptocurrencies such as bitcoins, bitcoin ethereum or any other viable coins. Doing this not only boosts startups’ businesses but also gives their businesses free advert.
”Free advert because cryptocurrencies guys everywhere in the world will begin to refer your business. Take for instance, the impact of having a barbershop somewhere in Nigeria where you can now have hair cut and pay with bitcoins. In trying to convince your folks about the existence of such barbershop, you may begin to refer to such words as ‘‘look at the barbershop here. Look at its office phone number.’ The same way, you may refer to a hotel in Cameroon where you can now check into, pay with bitcoin and get discount. Or somewhere in Zambia where you can vacation to and pay with cryptocurrency. This will give startup owners free adverts. Just imagine a consumer in Nigeria, Cameroon, Senegal, South Africa, Uganda talking about your business.”
”This is why celebrities keep progressing because we keep talking about them. Who knows? But Reginal Daniels has so much been in the news and may be landing brand ambassador deals even. So this will give startups free adverts, thereby generating more leads for their businesses.”
‘’Governments Can Use Blockchain Technology To Keep Records Of The Number Of Books Received By Each Student’’
Mr. Fadugbagbe tells prospective blockchain technology investors in Africa to start submitting proposals to the government because there is a huge opportunity in that regard.
‘‘Africa needs blockchain tech the most. We can use blockchain to curtail the inefficiencies in the system. In most education ministries in Africa, for instance, books are distributed from time to time. Government can use blockchain tech to keep records of the number of these books received by each student. For every book the students receive, they can thrown in a token from their backends, using a smartphone. This is the smartest way to get feedback from Africa’s cluttered data management system. So let’s begin by sending in proposals,’’ he said.
Mr. Fadugbagbe says blockchain technology makes for more accountability and efficiency in the system, and unlike humans, data stored in blockchains cannot be tampered with.
‘‘You look at blockchain as a record that cannot be edited,” he said. ‘‘For instance, a list of items or names, or a football team. When humans are involved, they can add or remove the names at will, but with blockchain technology, the list cannot be padded. So once added, the information cannot be altered.”
For a business model that was worth over $700 billion as of January 2018, the global cryptocurrency market is booming and is not relenting. Mr. Tola Fadugbagbe does not see this ending too. No longer homeless and frustrated by bad debt, at least not in the category he once fitted in at his former startup, he has since moved on.
‘‘Right now,’’ he says, ‘‘I am living in a good and comfortable apartment. I have been reinvesting into large scale agriculture — a cocoa farm and and poultry — from the proceeds of my blockchain business. My aim is to grow them into the biggest phase they could ever be in. I like my life so simple because of what I have experienced in the past. I’m not going back to that nightmare.’’
Charles Rapulu Udoh
Charles Rapulu Udoh is 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 organizations 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.
