“Opportunity Knocks”. It was only twenty months ago that an article about Nigeria’s (under this title) growing tech scene was featured in the Economist. The author, reflecting on a fresh infusion of optimism born from the peaceful transition to fresh leadership under Buhari, suggested the promise of Nigeria’s enormous potential might finally be sustained. Rapid economic growth for the better part of a decade had catapulted the country over its main economic and geopolitical rival, South Africa. And while far from rosy, a new governing party, mobile telecommunication industry explosion and a resurgent global appetite for Nigerian bonds pointed to a future that was bright.
Fast forward to today and the promise of a flourishing Nigeria proves, once again, a tease. Social and economic prospects are considered so bad that Former Secretary General of the Commonwealth, Chief Emeka Anyaoku recently said “…as presently structured [Nigeria] would not get anywhere in terms of developing its human and material resources…”
Contending with challenges won’t be easy. But as a venture capitalist intimately involved with and, quite literally, invested in the potential of this country, I am not so bearish.
Friction-filled processes are impetuses for change. I’m an opportunist looking to capitalize on behavioural and structural transitions. So, while Chief Emeka Anyaoku’s comments do resonate, I plan to get ‘somewhere’ even in this environment. And here’s what is grabbing my attention:
B2B Service Providers
There’s a saying that, a black ram made to cross the river can become white. Protecting margins, maintaining liquidity and ensuring cash flow to weather sustained down-markets leads businesses to look for ways to become more efficient. Even those generally comfortable with the status quo are provoked to act on long-overdue cost-cutting initiatives as growth rates decline. Given this, technology enabled business-to-business (B2B) service companies employing automation and technology to drive down corporate operating costs will find a flourishing market.
One such company, mPharma, is addressing a dislocation in pharmaceutical distribution and reimbursements. Their flagship product Mutti is a pharmacy benefits management solution that enables insurance companies to control their drug reimbursement costs. mPharma integrates software that allows clinics to track prescriptions, dispensations and inventory levels in real time and aggregates purchasing power of the third-party payers to save costs, which in turn these companies can pass on to their customers.
Another, Delivery Science, is an enterprise supply chain software-as-a-service solution for companies operating robust logistics and supply chain business processes. The company simplifies the optimization of goods and services delivery, providing audit, tracking and management of shipments, assets and delivery in real-time.
They harness data to drive and deploy analytics. Co-founder, Lanre Oyedotun touts the reduction of, (1) lost revenues because of stock outs, (2) poor cash management with the ability to accurately stock inventory in-line with market demand, and (3) the transparency to eliminate lost inventory due to theft.” The company’s flagship product, FieldInsight, increases sales and reduces overhead costs by removing the friction involved in completing a transaction with the manufacturer.
Meanwhile, B2B shared economy providers such DIY Law and AccountingHub.ng are helping smaller businesses stay afloat by providing shared resources for otherwise costly business services. And distributed energy company, Rensource, offer merchants a pay-as-you go model for solar energy to power their stalls.
Their kits, costing merchants as little $25 per month can immediately reduce operating expenses attributable to the ubiquitous use of small petrol generators in major cities like Lagos. In addition, merchants who otherwise closed theirs shops at sundown are now allowed the possibility of extending their operating hours in an affordable manner, and potentially even generate another revenue source from selling excess energy to neighbouring kiosks.
With dollars as scarce as hen’s teeth, importers have been forced to pass higher costs to consumers. Meanwhile, Boston Consulting Group notes consumer propensity to opt for lower-priced alternatives to usual purchasing patterns, explaining that many will ‘trade down’ to buy private label products or to shop at discount retailers.
The Printivo team
In Nigeria, retailers and suppliers have an opportunity to capitalize on this “import substitution” for local goods. Take Printivo, for example. This on-demand printing and design company caters to the 17 million small businesses in Nigeria. Despite the presence of major international competition – including the two-decade old Vistaprint and its parent company Cimpress’ collection of international brands, Printivo can more cheaply and efficiently serve local businesses and employ local designers than its competition.
Printivo has become a quality replacement for companies formerly accustomed to engaging more expensive, global services that boast deeper name recognition. Coincidently, small businesses across the country now use the service to print branding and marketing collateral, driving 15X growth in revenues since the company’s launch.
Another, Foodstantly, organizes the food shopping experience for Nigerians connecting farmers, agro processors, local wholesalers, suppliers and consumers in a more transparent and effective way. Its order platform will give technological muscle to the domestic-substitute dynamic that plays out as consumers – who are already consuming goods and services digitally – opt to consume basics more locally and affordably.
Products and services from neighbouring countries likewise will become more attractive. Payment companies, Paystack and Flutterwave are reducing friction to access these services from across borders, and for international parties to buy Nigerian.
Less calculable than recession-driven buying changes by consumers, are the behavioural subtleties that shift during periods of economic crisis. Underemployment means consumers have free time, and the troubling economic condition means they are also looking for outlets that will make them feel better about their current and future situation.
Places of religious worship, for example, often experience attendance booms during recessions – the innate want to participate in something ethereal, hope-bringing and community oriented drives the needle on participation. Churches then become administratively burdened by the challenges of shepherding these new souls. Enter: Asoriba. The Ghanaian start-up features a web and mobile platform for churches and religious organizations. Services include general membership data management, regular communications and a secure giving platform.
Nigerians are not people to sit by idly, and look forward to their future prospects. Digital training platforms such as Tuteria and Skillboox will also benefit as underemployed look to re-skill in their own time, making them ready to jump on available jobs as corporate growth returns.
As the daily grind of recession life heightens, escapist longings provide quick salve for the weary. Domestic travel, entertainment and experience-weighted service providers have legitimate opportunity to succeed in Nigeria in 2017.
Consider Zikoko’s rise. Capitalizing on unprecedented levels of connectedness and digital consumption, Zikoko has created a West Africa flavour of Buzzfeed – the popular digital news, reporting and entertainment site. With a focus on vitality, local humour, clicks and share-ability, Zikoko is seeing rapid growth in unique monthly visitors and exploring substantial digital marketing, sponsored content and ad opportunities. While often irreverent and mindless, the content is an easy binge option for the tired masses to lose themselves in.
The launch this month of TrekBuyFly, a social tourism and hospitality app is timely as well. Nigerians and Africans as whole, faced with crimped discretionary income and the growing above-mentioned angst are looking for affordable amusement. The platform helps users get off the beaten track or find the most pocket-friendly trips, with student discount options and last minute sales. In the boon days, Dubai and Disneyworld may have been on the calendar but today’s realities may mean Ikogosi Warm Spring gets a second look. For an app driven by user engagement and community sourced feedback, idle time and a stay-cation mindset will help.
Nigeria’s trouble is significant. But I am not hunkering down waiting for the economic prospects to turn. Technological development and the human ingenuity I see every day in the eyes of hungry entrepreneurs has me excited. Transformative, opportunistic, and well-positioned companies will capitalize on classic behavioural shifts inherent in recessions. I intend to put my money, time and network behind them.
About the author
Lexi Novitske is the Principal Investment Officer at Singularity Investments, where she invests in visionary entrepreneurs in technology-enabled, early-stage companies and oversees the firm’s operations in Africa. She is @anovitske on Twitter.
This article was published first by The Guardian Newspaper on February 8th 2017.