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Tuesday, September 27, 2022

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    We Must All Not Be Tech Entrepreneurs

    I don’t know if I was the only one who noticed, but last December, Eva water became scarce and unavailable in Lagos.

    I was in Lagos during the festive season as I did not travel for Christmas. It became frustrating at a point, going from super market to super market in my neck of the woods looking for Eva water to buy for personal consumption.

    It was so bad that other premium bottled waters were unavailable too.

    I later spoke to a friend who works with one of the premium bottle brands, and he confessed that they are having a tough time meeting demand for their products. Even though they worked shifts in the night to meet demand, the demand for their water outstripped supply and what they could meet up with.

    Apparently, what happened is that we ran out of Eva water and other premium bottled water brands In Lagos, because the owners of the brands could not meet demand for bottled water that comes with the festive season.

    This leads me to my sermon for today.

    The business of meeting Nigerians’ basic needs is a multi-billion dollar industry and one that will continue to mint new billionaires every month.

    Every young person wants to be the new tech bro. Yes, so! Tech is the new oil, but while the majority of Nigeria’s young people are rushing into the tech industry, the Lebanese, Indians, and Chinese are doing the opposite, starting businesses around meeting Nigeria’s basic needs. That is why those Lebanese businesses are profitable from day 1, while tech businesses in Nigeria are surviving because of the lifeline from investors.

    There is a reason Dangote is the richest man in Africa.

    There is another reason why we have a new wizkid who is currently Nigeria’s second richest man and who runs BUA foods and BUA cement.

    Samed of BUA group and Dangote, who, ironically, are from Kano, understand that Nigerians have to eat first before any other thing.

    On average, nearly 90% of a Nigerian’s income is spent on food and paying rent.

    There is this saying that anything you are selling to the average Nigerian is competing with food.

    Nigerians want to own their personal houses when they blow, so these men started businesses to meet these basic needs of Nigerians.

    These two Kano billionaires understood what the market wanted, and they are winning because they provided the services Nigerians were ready to pay for.

    The outcome is that the two of them are currently Nigeria’s two richest men.

    Nigeria is a poor country by all standards, and the market is very small.

    Because the market for technology businesses in Nigeria is small, the technology ecosystem in Nigeria has failed so far to deliver the number of multi-million dollar exits that we have seen in other emerging markets like India and Brazil.

    Aside from Paystack’s $200 million exit, we have not seen other multi-million dollar exits like it is common in India, Brazil, and the US.

    The reason for this is not hard to understand:

    Over 80% of our population is very poor and can’t afford the tech solutions that these tech companies are selling.

    For instance, Nigeria has fewer than 13,000 dollar millionaires, while Mumbai, a city in India, has 66,000 dollar millionaires living in Mumbai.

    Also in Nigeria, less than 2 million people out of our whole population earn less than N5 million in a whole year.

    We were all shocked when NDIC told us last year that 80% of Nigerians have less than 500k ($1000).

    So the market that is supposed to buy what these tech companies are selling is small or, in most cases, nonexistent.

    Make no mistake about this: technology is raising a lot of young people out of poverty.

    Tech raised me from poverty and brought me out of my parents’ house in Onitsha.

    But not all of us can be lucky.

    A lot of capital has been raised by young people who started tech businesses that want to solve a problem in our community, but as long as the market for tech businesses is small and Nigerians are still poor, these tech businesses will continue to struggle and depend on investor funds to scale and stay alive.

    The mistake some of us in tech business make is that more often than not, we confuse Nigeria with America where tech business is booming but they are not the same.

    The size of Nigerian economy is less than $500 million but the size of economy of California, a state in America is $3 trillion.

    Apple, an American tech company has more money in the bank than Nigeria has.

    Even New York stock exchange has more liquidity and bigger than Nigerian stock exchange.

    The dynamics of the two countries are not the same.

    I know that with time, the tech ecosystem in Nigeria will develop and be profitable, with some learning from India, maybe even some from America, but largely due to our own home-grown skills.

    Don’t write the consumer market in Nigeria off because of technology.

    Not all of us will do tech.

    Also know that a bottled water business started today in Lagos has more potential to scale and break even faster than a tech company that raised $1 million from venture capitalists abroad.

    Jumia and Uber businesses are struggling in Nigeria and are running at a loss, while a small bottle water business is profitable and doing well.

    So my dear faithful reader, look around you today and see how you can start a business that solves the immediate needs of your community.

    It can be water, food, property, detergents, cosmetics, and clothing.

    I’m willing to bet that you’ll end the year richer than you started it.

    I will leave you with this quote from Dr. Ola Brown.

    “The biggest companies on the American stock exchange are companies like Google, Facebook, and Amazon. They sell Internet search services, cloud storage services, and e-commerce services. They continue to launch new ventures that specialize in advanced robotics and artificial intelligence”

    “The biggest company on the Nigerian stock exchange sells salt, sugar, pasta, and cement. In the next two years, he will be launching a petrol company. Not artificially intelligent petrol, not 3-d printed petrol. The ordinary type that JD. Rockefeller was selling 100 yrs ago. There seems to be a marked difference in terms of market needs/what people will pay for. Alhaji understands the market and therefore continues to be rich”

    Chukwudi Iwuchukwu is a Nigerian lawyer and a serial entrepreneur who likes to write business stories for fun.

    You can reach him on his personal email, Chukwudiiwuchukwu@gmail.com.

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