The Alternate Universes Of Nigerian Payments

The biggest secret in Nigerian payments for a long time had been the stored value/prepaid card licenses issued by the Central Bank of Nigeria (CBN). Not many people were aware of it and It was a secret way to beat the four horsemen of the Nigerian payments apocalypse (Interwitch, NIBSS, CBN and Banks). I had encouraged a lot of players to take advantage of it but it seems the horsemen recently got wise, saw this weakness in their flank and closed it.

CBN circular  BPS/DIR/GEN/CIR/0I/11 - REVISED GUIDELINES ON STORED VALUE/PREPAID CARD ISSUANCE AND OPERATIONS, issued on 10th October 2012 changed the rules again. They closed a loophole and killed many dreams of disruption. The frustration is of epic proportions. My friend Edmund Olotu the founder of G-Pay is thinking of starting a site to track change in laws and policies in Nigeria. Personally, I have asked our Nigerian office to send me major newspapers weekly and I am thinking of hiring an executive assistant who will do nothing but monitor the CBN. Keeping up is a big challenge in Nigeria as the rules keep changing and the field gets crowded daily.
To be clear the circular makes a lot of sense from a regulatory point of view, the safeguards put in place to prevent abuse and money laundering is highly commendable. What I however don't understand are specific references now to telcos and other mobile money operators. Excerpts below:

Operators, including mobile/telecommunications operators, wishing to operate money transfer schemes with stored value/prepaid cards shall do so with requisite approval from the CBN and, at all times, in  strict conjunction with licensed deposit-taking banks or financial institutions

The limits specified for Prepaid Cards shall also apply to cards linked to mobile 
money wallets, where Full KYC has been performed on the mobile money 

Is this a preemptive measure to counter telco and other operators' efforts to gain a foothold in the mobile payments space? This effectively limits their wiggle room and ability to be creative. Cards tied to wallets is a big coup for existing players like Interswitch, the card associations (Visa, Mastercard etc) will also gain significant advantage with companion cards for mobile wallets. The banks also win because the new rules say:

Only deposit-taking banks or financial institutions licensed by the CBN with clearing capacity shall issue stored value/prepaid cards. Other deposit taking institutions without clearing capacity can issue in conjunction with those with clearing capacity.


Only one stored value/prepaid card shall be issued per person per currency per product by an issuer at any anytime

The losers are those who were building innovative products under the radar. No hope for any BitCoin type moves by innovators, no multiwallet card from people like Google, case closed.

Payments in Nigeria is not a democracy, it has never really been. It has always been a dictatorship or feudal system where the serfs must pay homage to the liege lords constantly. These lords change the rules to suit themselves and decide what they feel is best for the people, there is nothing like consultation only circulars, directives and executive orders. We still have not shaken off the military era mentality it seems.

When it comes to engaging the entrepreneur community who are interested in building an ecosystem there is a lot of condescension rather than respect or enthusiasm. Bankole Oluwafemi in a response to my comment on his recent post on Interswitch said “ they (Interswitch) create a negativity distortion field around those (payment) issues, much like; "don't even try to understand, leave it to us, this is out of your league". That condescension is not only limited to Interswitch, all other players (CBN, NIBSS, Banks) treat payments related issues as some taboo area when it comes to discussions.

There seems to be separate universes for those who make decisions and the people they affect. Their actions say "we know what is good for you, just shut up and remain compliant". There is regulation and there is technology and both are not unique to Nigeria. Some credit should be given to those on the other side especially as some of us have worked in other countries on similar projects. Nigeria is not in another universe.

To me, the reality of payments in Nigeria is that there is a lot of potential but that potential will never be achieved until a different entity similar to the NCC (National Communications Commission) is put in place for payments. We can call it the “National Payments Commission” (with acronym NPC) and they must have legislative oversight. It is clear now that it is only the legislators that can save us from the current overlords who keep changing rules at a whim. At least with the legislators we can force them to a public hearing on controversial decisions – for example, the fuel subsidy removal earlier this year. The legislators also played a big role in making the NCC successful so far as they have intervened in a number of occasions. The comatose Consumer Protection Council also needs a defibrillator. 

I mentioned my thoughts above to someone in the industry and he old me that I was probably in an alternate universe and it would never happen. He said that the interests were too entrenched and the banks were really houses built of cards. He also indicated that the CBN is probably very scared that these houses of cards will come crumbling down if there is a credible alternative and they will lose relevance. They have done a superb job of keeping these houses intact over the years and maybe it is time to build new houses with solid mortar foundations.

It is apparent that I really am in an alternate universe as my views don’t mean anything and won't change anything until it probably sparks a movement or revolution. Starting a movement however requires co-conspirators and people with a similar vision but....... altruism does not exist in any form when it comes to payments in Nigeria. Developers and entrepreneurs who complain the most about CBN policies and Interswitch are also mercenaries. We may have more aspiring megalomaniacs in the field who will be worse than existing players if given the chance.

They (entrepreneurs and developers) will be more than happy to move over to "the dark side of The Force” (thanks to Star Wars) when offered the slightest bit of enticement. Their own universe is not very different from those they complain about and we may end up creating "mini-dictators" holding different sectors hostage. It is all about the hustle for them and for the sake of the ecosystem I challenge anyone to prove me wrong. 

There is yet another group of those patiently waiting and seeing the game play out in Nigeria from outside. They see potential and are waiting for an opportunity to jump in once all the hard work has been done. The four horsemen so far have done a great job at keeping them at bay. Circular BPS/DIR/GEN/CIR/0I/11 is actually one of many defensive mechanisms against these potential invaders. The uncertainty and unpredictability of the CBN also confounds them as well.

I just hope more people get to read the book “One From Many”  by Dee Hock the founder of Visa to realize that entities like Visa are successful because they are movements and not just companies. Dee Hock started what he termed a “Charodic organization” Chaordic refers to a system of organization that blends characteristics of chaos and order. 

According to the Wikipedia explanation:

“The mix of chaos and order is often described as a harmonious coexistence displaying characteristics of both, with neither chaotic nor ordered behavior dominating. Some hold that nature is largely organized in such a manner; in particular, living organisms and the evolutionary process by which they arose are often described as chaordic in nature. The chaordic principles have also been used as guidelines for creating human organizations -- business, nonprofit, government and hybrids—that would be neither centralized nor anarchical networks.

Such a movement is possible if the regulators allow an ecosystem to evolve on its own terms rather than frequent interventions to protect a few players. I also strongly believe that more engagement with the community is required as these abrupt changes by the CBN without consultation makes it very difficult for any investor (internal or external) to take payment ventures in Nigeria seriously. There is too much uncertainty and indeterminacy. Payment systems have become of national strategic importance in African countries, Nigeria is the largest and should lead by example. 

Pardon my generous use of clichés and Star Wars metaphors in this post, I have not had breakfast and I am tired. I really hope the National Payments Commission idea catches on.

“The essence of community, its very heart and soul, is the nonmonetary exchange of value; things we do and share because we care for others, and for the good of the place. Community is composed of that we don’t attempt to measure, for which we keep no record and ask no recompense. Most are things we cannot measure no matter how hard we try – such things as respect, tolerance, love, trust, beauty – the supply of which is unlimited.  The nonmonetary exchange of value does not arise solely from altruistic motives. It arises from deep, intuitive, often subconscious understanding that self-interest is inseparably connected with community interest; that individual good is inseparable from the good of the whole; that in some way, often beyond our understanding, all things are, at one and the same time, independent, interdependent, and intradependent…” - Dee Hock, The Birth of The Charodic Age

Can Nate Silver And The Obama Campaign Help Mobile Money?

While at Sheffield in an Enterprise Systems  class I discovered for the first time that the largest retailer of Mars Chocolate bars in the world was………….. “Shell”

That’s right, the same Shell selling gasoline at pump stations and they were only able to make this discovery after they started viewing multidimensional relationships only possible after putting SAP’s data warehouse product in place.

I am still reading Nate Silver’s book “The Signal and The Noise, I bought it long before he became recently famous for predicting accurately the outcome of the US Presidential elections. He is a quantitative analyst also fondly known as "quants" and relied on data to make this happen. The Obama campaign also relied on the same data to surgically win the election as it determined their ground game.

The Romney camp probably lost because they were not looking at what the data was saying about the future but rather on historical trends and "punditry" by the media. The sheer size of the crowds at their campaigns was what they used to gauge voter enthusiasm and they were so confident of winning  based on these assumptions that the candidate only had a victory speech and no concession speech.

I couldn’t help but wonder if a lot of the talk by “consultants” on Mobile Money and a lot of the suggestions by bodies like CGAP and GSMA are similar to punditry in the elections. Total number of subscribers active or inactive etc are just useless metrics when other multidimensional relationships are not being explored. The reasons why schemes succeed or fail are also not subjected to enough scientific rigor as they should because the operators and pundits probably don’t capture all possible data related directly or indirectly to the mobile money schemes.

We know that distribution and demographics play roles in success or failure but are we really looking deeper to understand why and how successful schemes scale and others do not? Are we looking at historical trends while ignoring more impactful shifts in consumer behavior and trends? I may be wrong but I think we are all looking at Mobile Money wrong by seeing platforms as transactional platforms rather than data aggregation platforms. Mobile Money platforms should capture a lot more than they currently do and deeper analysis should be done to show trends and other nuances that are not immediately apparent.

Mars definitely knew that Shell was their largest retail outlet but Shell did not know until they mined the data. It is the same way that Coca Cola Nigeria discovered that after the GSM companies launched in Nigeria their sales were declining. They discovered (based on data) that this happened because the consumer’s disposable income became prioritized more towards communication. They easily deduced that they needed to re-capture the “share of pocket” by co-branding with companies like Econet Nigeria and started placing Coca Cola adverts on recharge cards as well do joint promotions. The result was a win-win for both parties as they increased the size of their respective markets. Coca cola had data and a value chain that Econet leveraged on and they both won.

The banks and telcos can actually learn from Coca Cola and Econet to see how they can be in a better partnership to grow the entire market rather than try to outsmart each other through attrition and strong-arming. Orange and Equity Bank in Kenya has the best type of partnership I have seen in this regard. Others like Ecobank and Airtel are yet to come to the party. Visa and Mastercard are better positioned to make this happen by opening up closed loops and presenting a common layer for data to be better aggregated.

Mobile Money does not exist in isolation of other value chains but rather intrinsically tied to them. Getting ALL data around retail distribution, consumption. and oh yes! “banking” in the ecosystem goes a long way to ensuring the success of a scheme. All mobile money products are not relevant to all markets and strategic fit requires not only serendipitous discovery by the customer, it also has to do with the same serendipity by the operator to see trends not immediately apparent from data.

It can be argued that MPesa was successful without all this “mumbo jumbo”. it can also be argued that it was the same way US elections were won in the past without data and ground game. The future of elections in the US has changed forever and Mobile Money can too if we get the data part right. The current ground game is agents but I say get the data and look at then execute based on it.

Vendors selling Mobile Money products are everywhere like snake-oil sales men making all claims under the sun while spreading FUD about their competitors. The fact however remains that it is really not about any product but how you execute a strategy based on developing a proper business case from data available.

MTN Nigeria quickly learned from Coca Cola and Econet in Nigeria to leverage on the existing retail distribution chain for commodities and won the battle for GSM. Coca Cola however won the war because they had a better strategy with data and executed based on it. Sharing data is not sharing secrets; the real secret is in execution of your ground game based on the data.

Will the ecosystem “quants” please stand up!

The Local Investor Dance - Lessons From South Africa And SocketWorks

"Unknowns are frightening."
"With a made up concept and a few words, the unknown becomes simple and satisfying."

So goes the introduction to this very interesting video on Critical Thinking


"Here be dragons" denotes dangerous or unexplored territories, in imitation of the medieval practice of putting dragons, sea serpents and other mythological creatures in uncharted areas of maps. Mark Shuttleworth decided to name his emerging market investment company "Here Be Dragons" or HBD to poke fun at this concept now that most of the world has been charted and we did not find dragons. He also mocks the perception of the rest of the world about the emerging markets especially Africa. Mark Shuttleworth is a South African and the first African in Space.

On this issue of local participation by investors in the African tech ecosystem I remember this quote:

"The only thing necessary for the triumph of evil is for good men to do nothing." - Edmund Burke (1729-1797)

 I would have added “or say nothing”. I have never failed to speak my mind on the issue not just because it is my wish but also because I have seen both sides of the coin in this same continent. I have been part of the mistake and my own corrections alone are not enough, changing the status quo requires collective awareness and concerted effort. I also believe we are taking a medieaveal approcach of simplifying this issue by branding local investors as dragons.

I have seen many reactions on discusions about this topic from lukewarm support to outright rejection of the concept but I have seen little action. A lot of people even ask what I am doing about it? Those are fair criticisms but sadly still based on assumption. Assumptions are what got us into sh*t creek. I promise Seyi Taylor I will pay him for each time I use that term to describe our ecosystem. We are actually doing a lot about it but there is no sense of urgency about it and that is because we believe that there are other shortcuts. Those shortcuts will not make us grow and we have already been there before. There is no point repeating  past mistakes.

Why we are not moving fast enough

When it comes to growing our ecosystem from within, we can give a lot of reasons and excuses as to why things are not happening the way they should in Sub-Saharan Africa (SSA) but the fundamental fact remains that we are still behind. A lot of people see imaginary obstacles (or dragons) without even trying to encounter or overcome them. A lot of players suffer from a severe case of  “analysis paralysis”. It is system wide and all parties are to blame (mea culpa). A lot of the entropy exists mainly because the stories of mistakes made in the past are hardly ever told.

I have been on all sides of the equation as an entrepreneur (funded by family), a consultant to the IFC’s SME development program APDF (African Project Development Facility which led to huge successes like SocketWorks) and on the side of investors with family owned investment entities. I learned a lot by making costly mistakes and also from watching them being made by others. What I have learned over time is that it is important to make mistakes and learn from them. What is even more important is that we talk about those mistakes so that others can learn from them.

South Africa

I have had a long history with the “rainbow nation” and in many ways still tied to players there. There are many examples I can give of successes and failures in the startup community South Africa because I have a lot of history with the country. Elon Musk is one of the Silicon Valley entrepreneurs that I absolutely adore and he was born and spent most of his early life in South Africa. I have been in and out of there regularly each year for 2 decades.

The First time I visited Fundamo was 2008 in Cape Town, they were still using Mark Shuttleworth’s HBD offices at Durbanville. Mark Shuttleworth and Sanlam were early stage investors in the company and probably made a lot of money when Fundamo was sold to Visa last year. I also noticed that a lot of the early guys at Fundamo were ex-Sanlam and they were also working from the HBD offices.

In the 90s, I also worked with a company (now defunct) named Global Technology (Glotech) in Johannesburg and their offices at Sunninghill was home to quite a number of startups who shared the same office park as well as the same investors.

My friend Andrew Turpin (ex-Glotech) and others started House4Hack a co-working location in Pretoria last year and built a tech community around it with amazing results. Andrew and Salil (my co-founder at Swifta and also ex-Glotech) had started Cyber-Mint - a company with better ideas than Paypal and Google Wallet many years ago. The venture was awesome but however did not survive the dot-com crash as the market imploded. Similar ideas from Cybermint are what Google now seems to be adopting for its planned rumoured Google Wallet and the Wallet Card. CyberMint wanted to disrupt payments and make card associations extinct with the wallet and a reloadable card. They were far ahead of their time. Cybermint is one of many interesting startups I have been fortunate to have been engaged with in South Africa.

South Africa has a lot of problems similar to the rest of Africa and probably much more after the devastating effects of apartheid. The country definitely has better infrastructure and a very self-sufficient economy that is industrialized. It is obviously not like your average Sub-Saharan African country but there are still a lot of similarities. African countries usually have similar cultures and similar problems and South African entrepreneurs capitalized on that to scale and grow across the continent.

Local entrepreneurs solve almost all local problems in SA and they have been able to scale their solutions to other parts of Africa. We are still working with a lot of South African partners till today.  Companies like Fundamo and others have become not only African successes but global leaders. One could argue that one of the unintended consequences of apartheid was that South African entrepreneurs learned to become more innovative and they grew their own ecosystem to support themselves because they were isolated.

I mentioned in a previous post that Sub-Saharan Africa startups should look towards SA and North Africa (we also work with partners in Egypt and Morocco) for inspiration rather than Silicon Valley. We can learn a lot from South Africa's self sufficiency and how they get local investors engaged. It is definitely easier to get local investors from South Africa to be part of the local tech ecosystem in Sub-Saharan Africa instead of  Silicon Valley investors because they understand Africa better.

The biggest limitations to South African investment outside South Africa seems to be their strong exchange control laws but they have been able to successfully export their knowledge and technology. We can also learn a lot from building sustainable and viable local tech ecosystems from them.


SocketWorks was probably the first company founded in SSA by a Silicon Valley entrepreneur. Dr Aloy Chife, (ex Apple, ex Enron, a true African pioneer and legend) when he came back home to Africa in the new millennium. With his SV experience he attempted to raise funds from local investors to build a world class technology company locally. SW Global is one of the first globally competitive technology companies to emerge from West Africa and penetrate the global information technology (IT) market. 

His attempts and my part in it as a consultant in the process opened my eyes to a lot of what we were doing wrong as a local tech ecosystem. While Socketworks may have been a success itself the ecosystem did not gain much benefit from the success because of certain decisions made and which I was part of.

SocketWorks knew when to look for money and where to look. They had many options including the International Finance Corporation (IFC) and a number of local investors. The IFC at that time had no knowledge of opportunities in the ICT sector in SSA and they asked us to do a market assessment as due diligence on SocketWorks' business plan.

While we were carrying out this assignment the first problem we encountered was that there was no data readily available. We were lucky that by coincidence a local company had done some research and produced a Forrester type report. That report served as a basis for us to carry out our research. Aggregating local data is still a huge opportunity and 10 years after we have done little about it, I accept the blame for that.

We did a mapping of technology resources in Nigeria based on the data available as at 2002 and came up with the model below to guide strategic engagement.

The local investors at that time actually wanted to invest in SocketWorks as a means of solving problems in their existing ventures and were located heavily in the top right quadrant. We felt however that the strategic way to go was in the other three quadrants where there was already a lot of whitespace and little competition.

The IFC backed us and invested in them. SocketWorks also took the advice from our assessment then became a runaway success. They scaled rapidly as they took over the systems and infrastructure of most Nigerian Universities. They even started scaling out of Africa and went as far as Sri Lanka with their technology. They now also run the entire Foreign Affairs and Immigration ministry's technology cloud infrastructure for the Nigerian government.

Where did we get it wrong?

SocketWorks' initial problem was funding and they already set their sights on the top right quadrant because it was actually easier to address. The only problem to the IFC as a potential investor was that it was a red ocean and they required blue oceans and whitespaces for their investment to make sense. The local investors on the other hand were still willing to invest in this great idea from Silicon Valley because the entrepreneur not only had a track record, he also had vision. The only problem was that the keenest local investors required controlling interests.

We steered Socketworks away from these people and into the hands of the IFC who acted as an impact investor. This was a grave mistake with long term consequences for the ecosystem. Socketworks needed very little in terms of investment as they had hit the mother lode but it was important to the ecosystem for other local players to have been involved. If you look at the shareholding of SocketWorks as at the time they made the IFC deal the minority stakeholders are still the drivers of technology and entrepreneurship in Nigeria today:

Ownership of Socketworks is as follows: Aloy Chife (CEO) 46%; Fola Adeola (Board member) 10%; Pius Onobhayedo 7%; Roland Ewubare (Executive Director) 13%; Tunde Sotunde (Board member) 1%; Zenith Bank 10%; and Socketworks’ employee stock option plan 13%.


What we should have done at that time was suggest a consortium approach where local investors partnered with the IFC to make this happen but we actively discouraged local participation because of bad experiences at that time with other local investors in companies like Econet. The IFC also had been recently burned with its foray into the banking sector partnering with local investors as well. 

Our local investors only know one way to mitigate risk and that is control. Because they lack experience with proper governance, control itself becomes a burden and prevents growth. We thought we were protecting Socketworks from that burden. It is important to note that those local investors (including family members) I was working with at that time have only had successes in enterprises where they did not have majority shareholding. Governance is better when you have more experienced and world-class investors as part of the mix.

Someone like Fola Adeola who was the founder of GTBank and seed stage shareholder in Socketworks is also one of the principal actors behind the submarine internet cable company MainOne. It is because of possible exits from companies like SocketWorks  that kept him interested in technology investing. He did not need to have controlling interests in SocketWorks or MainOne.

SocketWorks became a lone tree in the Savannah and there was no support system around it after the IFC decided to move on from APDF program. Impact investors are very dangerous in this regard as their motives and altruism can suddenly change course. It is only recently that Aloy Chife himself has decided to start investing in other smaller local ventures to help create depth in the ecosystem. Almost a decade too late.

There are many other examples I can give but the fact remains that their stories remain untold because the ecosystem is not structured to provide such narratives. The founders don’t share stories and the investors don’t talk because nobody asks the right questions. The right narratives provide a learning and feedback loop into the ecosystem and it allows it to strengthen. I can share the SocketWorks narrative because the IFC made their invesment activities public. That level of transparency is very helpful in an ecosystem.

ITWeb and others provide that same narrative for South Africa and there is also a lot of collaboration. Collaboration is almost non-existent in SSA and we also don’t know how to handle criticism or feedback well. There is little honest introspection but a lot of noise and a tendency towards inferiority complex.

Way forward

To move forward from current state I suggest 3 steps.

  1. Identification  
  2. Awareness, communication
  3. Collaboration and Validation.


I will provide my own perspectives as well as some of my experiences.


Who are potential local investors or mentors for seed stage ventures and how can they be profiled?  Potential local investors usually don’t usually have titles of "Angel" or "VC" on their business cards. Any person or entity that possesses resources which could be used by a startup in their quest for growth is a potential investor and It does not always have to be money. I will skip the normal categorization based on investment stage and investor motives to say that some of these investors are already in plain sight and don’t need to be searched for. Even existing entrepreneurs with excess resources that could be shared are potential investors. It takes two to tango and openness to collaboration by all parties is essential. 

A friend I have known for decades has been a sole founder for many years and I have encouraged him to build a team so he can grow. He told me that he needed developers to work with him on building some products but he could not afford to hire them and needed funds. I told him that we would hire them and he can use them to develop his own products so they gain experience while he provides mentorship and experience for them to develop products for our other portfolio startups. This was a win-win proposition as we basically were going to be pooling resources and experience. He seemed very comfortable with this arrangement especially as it would also come with free office space. I still have not heard from him after we agreed, he seems to have become distracted. Focus is important. This is an arrangement that can work for a lot of startups.

Another friend hits me up regularly on Skype where we have regular discussions about his business and where he is going and his challenges. I look forward to those conversations and invest a lot of my time in discussing with him because I also gain knowledge and insight into the workings of the local ecosystem. I would have not seen a lot of what he tells me on the surface. Contrary to what most people believe, mentors and advisers actually gain more from interacting with startups than the entrepreneurs themselves. Engagement is important.

Last year I woke up and realized that our business model as a professional services company was that we were actually helping startups from South Africa to scale across Africa. We had built up a lot of local knowledge and contacts around Africa that could be utilized by startups solving problems scalable across the continent. We decided to startup a different type of Aceelerator named Afrinnova. Starting up Afrinnova cost us nothing as we already had the space and resources, but to scale it we needed startups to come up with ideas.  We did not want to recruit them the traditional way accelerators in Silicon Valley were used to. We decided the best way was to start by converting our garage as a co-working space where we interact with potential entrepreneurs and encourage them to form teams. We learned that from House4hack in Pretoria.

I believe what most seed stage African startups need is basically a nurturing environment and strategic alliances that can help them gain traction. Any thing more than that is superfluous. So many startups in SA and even SV started this way, I started my first business from my uncle’s guest room. If we keep encouraging models like this we will gradually create critical mass and get to the tipping point where the next stage of serious local investors will be interested.

Yes we can create an Angel List clone and map out innovation spots but until we understand and identify how we can help each other those lists will be useless clones. I have heard a lot in the media and internet about the new initiative in Nigeria termed the Lagos Angel Network but found nothing else to tell me as a potential investor their motives and how I can become a part of it. I took this up with Gbenga Sesan who is one of the founders and they responded in a way that brings me up to my next point.

Awareness and Communication

How do you scale investor participation in the ecosystem? Creating awareness, it is just as simple as that. By awareness I don’t mean press mentions or plenty of talk in the media. Potential investors should be targeted and informed. A shotgun approach serves no purpose in this case, as serious investors will not invest out of impulse. Gbenga Sesan told me yesterday that a web presence for the Lagos Angel Network will be up shortly but he also quickly linked me up with the other founders who sent me …..”a form” to provide details and pledge investment. I e-mailed them back that this was not adequate, as I would need more information.

There is a great startup in Kenya we were interested in working with and they opened up to me that they needed to raise some money to gain traction. I told them to send me a deck and one year after I am still waiting for it.  Sometimes anything at all is better than nothing. The current information we have online for Afrinnova was created in 30 minutes before I had a meeting in Silicon Valley, yet potential investors were still interested. We have used almost one year to prepare an acceptable web presence for Afrinnova and fired 3 UI teams (because I didn’t feel the message was right) but… we achieved more from content created in 30 minutes than one year of effort. The feedback based on information provided from those 30 minutes of effort made me realize that we were on the right track.

While the media can play their own role in getting the right narratives out, I believe that entrepreneurs themselves should do much more than getting people to talk about them. One of the new African gaming companies caught the interest of a local investor I know and work with and he asked me to find out more about them. I tried reaching out but all I got was a stonewall. It seemed they were more interested in getting their stories out to the press to boost their ego than provide meaningful information for guided decisions by potential investors. Someone told me that maybe they did not need local investors and I asked then why do they go for startup events? Folabi Esan calls them "Event-preneurs".

Collaboration and validation

There was and still is a stupendous amount of ignorance all around the local tech ecosystem. We don’t know when to bootstrap and when to seek for help. Even when we decide to look for help we often don’t know where to look. A lot of daylight exists between potential investors and local entrepreneurs for many reasons already over-flogged but we definitely require a lot more than introspection and awareness to solve this problem.

Before iHub, ccHub and other co-working spaces came into existence we had other models that still exist but not immediately obvious which could be applied to tech startups. Models like “Imu-Ahia” originating from Igbo traders and craftsmen involve apprenticeship and subsequent funding by a principal who employs the services of the entrepreneur for a period. I always say that the Igbo trader invented the concept of the startup accelerator. Imu-Ahia has helped the Igbo tribe to become the African ethnic group that has arguably been the most successful in business. A technology company can use the same model but it requires a level of trust between parties.

Collaboration builds on awareness and it involves a lot of back and forth communication between investors and entrepreneurs. If you don’t know what the problem is then how can you solve it? Feedback is also very essential to growth and scale. A lot of people complain about "vulture capitalists" or "greedy entrepreneurs" and make generalizations, the few that succeed locally never get heard.

I have been kicked out of a startup (Saturn) I helped to start in 2001 by these "greedy types", I should be the last person encouraging local investment but I am also honest with myself to realize that doing a business deal with people is not the same thing as setting up a venture. Folabi Esan of Adlevo who was a witness to what happened to me always used to tell me that there is a big difference between building a business and doing a deal.

Positive behavior has to be reinforced negative ones discouraged by highlighting not only the failures but also the successes. Failure is a learning process and one thing I learned from the Saturn experience was to be on the same page with your investors and co-founders at all times. It does not help when you have long term vision and they are only interested in immediate profit.

The more successes there are with a model in an ecosystem the more validation it gets but people need to start with a slow dance before they do the Tango. It takes two to dance but one must take the lead. It does not matter who takes this lead it just has to be done. Strategic fit with any potential investor is more important than the resources they bring in. You have to decide if you can remain married to the investor for a long time, it is usually not a one-night-stand. The type of dance between both parties in this case will not be is not the seductive and suggestive "Konko Below" as Oo Nwoye suggested but more of a waltz and tango. Some useful insight and advice here: “Shall We Dance? Some thoughts on approaches by VCs vs entrepreneurs to getting a deal done”


We are doing our best in our own little part of Africa and we encourage others to do so and share their stories. We will be very open about our adventures with Afrinnova and Open Garage and we will welcome you to come aboard for the ride. We intend to collaborate and not compete with other similar entities who have the same vision of growing our ecosystem, it is not a zero sum game. It is the same zero sum mentality that got us into sh*t creek - sorry Seyi Taylor.

I had an interesting conversation with Mbwana Alliy the Managing Partner of Savananah Fund yesterday on Twitter and he suggests we remove “need to” or “have to” from our vocabulary and Just Do It! I agree with him. We have been “doing it for over a decade and will keep talking about it.

The Importance Of Local Capital To The African Tech Ecosystem


Last year at the StartupWorld launch by Hermionne Way in San Francisco I met two black people for the first time with different views. One was Mbwana Alliy and the other was a Partner (name withheld) with SV Angel. I had very deep discussions with both of them and what was clear to me from those conversations were the following:

  1. Silicon Valley investors are not philanthropists they are capitalists.
  2. Silicon Valley investors usually have a very intimate relationship with the companies they invest in and proximity helps that intimacy.
  3. If you have a product or service with global demand you are more likely to get SV investor attention. If Local they will not be that much interested if local investors are not.
  4. Africa was fascinating but…..there were many “buts”

The SV Angel partner told me clearly that investing in a company halfway across the world was out of the question. If there is a global market for the startup then they bring the entrepreneurs close to the money rather than take the money to the entrepreneurs. Mbwana on the other hand told me of his plans to launch Savannah Fund working with local players in Africa like Erik Hersman. He was “taking Silicon Valley to Africa and not Africa to Silicon Valley”.

I have been to the Bay Area 4 times in the last year and met several people who surprisingly had more knowledge about Africa than the typical mainstream tech blogger or media person. One of those people I met was Joe Mellin the founder of nReduce an innovative new Accelerator. Joe had actually worked in Accra, Ghana and knew Africa well. Afrinnova sees nReduce as valuable partner to the African tech ecosystem.

Several others like Joe had visited and worked here for a while and were keen on coming back. Several of them have actually stayed behind (Kopokopo etc) and are helping us build our local tech ecosystem. We should continue to welcome those from outside who are genuinely interested in helping us grow while also achieving growth themselves but we should not buy into the media narrative of Africa taking "baby steps" and requiring "adult supervision" or sustenance from Silicon Valley. Africa is not Silicon Valley and should develop its own unique ecosystem. I am not saying this because of pride but because it is important for us to grow a complete ecosystem and not a partial or dependent one. 

There are many thriving African entrepreneurs and role models in Silicon Valley and they also have started to look back home. One of them is Eghosa Omoigui of EchoVC. I met him at Palo Alto on my last visit and we had a good discussion about what is wrong with the local tech ecosystem. There was a lot of blame on all sides from entrepreneurs to investors and Eghosa’s company is focused on turning things around for good based on his experience with the Asian market and tech scene.

Asia and Africa have a lot in common as emerging markets but the difference between Asians and Africans in the tech startup and Silicon Valley context is very glaring. Asians travel to America to learn and dominate while it seems a lot of Africans go there to seek for help or aid.

I made it clear from my very first visit to the Bay Area last year that I came to learn and not look for money and a lot of people looked at me as if I was from outer space. We have so much to learn from Silicon Valley and the Asians as we grow our tech ecosystem and companies like EchoVC are perfectly positioned at the intersection of all the cultures.

Vivek Wadwha notes the role Asians have played in the growth of Silicon Valley his book and he clearly shows that Asians are a great asset not only to that ecosystem but globally. The Asians in Silicon Valley are also contributing a lot to the growth of their ecosystems back home in form of knowledge transfer as well as investments and this is important. Can Africans also have similar aspirations or is it important to solve our local problems first? I believe both can be achieved first by getting the narratives and perspective right then getting Africans who have distinguished themselves to add value.

I doubt that a truly rich ecosystem can be developed if all we produce is “one-hit wonders” featured in the global media hungry for any news from Africa. Recent successes by startups who have raised funds from outside Africa based on such coverage should not mean that the model is the best way forward. If you are solving African problems you should look grow deep and strategic African partnerships especially if you intend to build an institution or industry and not just flip a company for the money. Exits are important and local exits even more important for validation of an ecosystem. Silicon Valley was build by institutions who are still alive and doing great business long after the founders have departed.

There are many people who have written the story of Silicon Valley and made suggestions on how other ecosystems outside SV should evolve. They are all however unanimous in their assertion that local capital is VITAL for the growth and sustenance of any ecosystem. Mark Suster makes it even more explicit in his Techcrunch article “12 Tips To Building A Successful Startup Community Where You Live”:

 “I do believe that you’ll struggle to get a community started without some local capital. And in many communities new to building tech startups I’ve found that a lot of angel money is not very sophisticated at investing in startup companies……… There are two reasons you need local capital. First, it is unlikely that a serious investor will commit to funding a company outside of their geographic sphere until you have a degree of success, traction, scale – whatever. So usually the first money comes locally. When you’re Dwolla, anybody will travel to see you.

The second reason for local capital (this time in the form of venture capital) is that without it every company that starts scaling will have to talk to Silicon Valley VCs who – I promise you – will tell the company that they have to relocate to the Bay Area in order to be funded. If you’re super hot / successful you can resist. Otherwise, good luck!

And not that I blame them. If you’re working with early-stage companies you need to be spending quality time with them, which means you need to be nearby. And with thousands in your backyard, why would you go to far flung places to find deals?


Mark Suster’s assertion validates two things:

  1. The need for proximity between startups and investors
  2. The need for local capital

SV should be a template to learn from as we grow other communities and not the place where we go for help and that is what I have been trying to point out in my previous posts here and here.

Local communities should evolve on their own terms and find out models that work for them. Saying that “there are no serious local investors” is an indictment on the entrepreneurs as well as a local community. It means that either there have not been any serious companies to generate interest or the investor community has not been properly educated or organized.

One very important point that came out of my discussions with Eghosa Omoigui is that investors also don’t fund lifestyle changes but put money in places that are of strategic interest to them. A lot of the local entrepreneurs I meet think funding is the end of all their problems instead of seeing it as the beginning of new challenges.

There are a lot of local investors who are strategically important to local entrepreneurs but the entrepreneurs either lack the credibility to make them interested or don’t even know how to pitch their ideas and that is where mentorship as well as assistance from those who have "walked the walk" is vital.

There is plenty of local money in Africa and I have seen lots of it. I have seen Econet Wireless Nigeria start as an idea by bright young men who formed a startup called First Independent Networks Limited that raised $285 Million as license fees in one month for Econet. Local investors who provided bank guarantees raised all of that money.

Econet’s future problems however were as a result of some parties not meeting their obligations when the time came to raise more money but the point that was proven was that huge sums of money can be raised for a startup locally when the right people are involved. The late Osaze Osifo was one of those people and he brought in his HSBC expertise back home to do just that.

The same investors who provided $285m for Econet are still around 10 years after but we have seen very few deals of that magnitude. The only recent ones that have come close are the Interswitch deal by Helios and Adlevo Capital ($110m) We need more of Osaze Osifo, Eghosa, Mbwana, Yemi Lalude and Folabi Esan type people to come to come back home and give the ecosystem the credibility as well as knowledge badly needed. We should not remain in sh*t creek when there are paddles all around us.

A potential investor told me once that all he sees are wannabe SV companies and plenty of midgets not giants. We need the giants to create the path and those giants should have both the street cred and local connections to all players (entrepreneurs and investors) in the ecosystem.

OO Nwoye reacted to my post yesterday with his views on why local entrepreneurs should look up to Silicon Valley and my responses to him are in the comments on that post. My next post will be on what we need to do to spur local investors into action. The point I have tried to make in this post is that the future is already here and not in Silicon Valley. All we have to do is scale the future not make excuses. Those who look deeper will see things that are not apparent on the surface. Those who dont see will get shipwrecked.

The future is already here; it's just not evenly distributed.
- William Gibson

The Fastest Way Up Sh*t Creek [Rant]

I love the Otekbits tech blog (even though I dislike the name) and admire what they are trying to do in the local tech space. It is because of that fondness it would be remiss of me not to point out stuff that I do not like and I have done so in a lot of comments on posts there.

I tried to post this as a comment to an article on Otekbits but the Disqus commenting system was in maintenance mode. I decided to post it now as a separate blog post because I think it really deserves some attention and thought.

I don’t understand the title of this article on Otekbits and the purpose of the Demo Africa contest. Are we doing these events to seek validation from Silicon Valley or to try to grow our own local ecosystems? Are there no mentors and investors in Africa that these startups should "head to Silicon Valley"?

I am very happy for us to play in the global stage but we must stop all this nonsense of trying to seek external validation. These are African startups solving African problems and meeting African needs so why do they have to travel to Silicon Valley?

We can learn from others around the world and compete with them but we don’t need them to “fund us” or provide validation. The same way we are trying to grow the startups in Africa we must also educate investors and encourage mentors to play their part or we will never have a real ecosystem but an extension of Silicon Valley or a place where bored investors come out to try out their luck.

MTN, Econet etc are African enterprises that started from Africa as startups and were funded by local investors then became huge institutions. There is nothing we are trying to do now in the African tech ecosystem that is different from what these giants have done. I am thinking the SubSaharan African tech scene should learn more from South and North Africa than California.

An Ecosystem is not comprised of just startups, there must be a wider support system and I believe that was the purpose of the recent gathering themed “The Lagos Angel Network” which was also misreported by The Economist in an article that did not do any justice to this topic or highlight the challenges of putting this support system in place.

Our local bloggers should not be part of the annoying trend the Western media has adopted of seeing our local tech ecosystem as a novelty or circus. This is serious business, serious people are required to build this ecosystem and that includes the media.

I am happy people like Bankole Oluwafemi have started to call others out on taking hype and snark too far and we need more people like him to keep doing that. We will all also be available to call him out when he strays and that kind of honesty and genuine introspection is what we all need to grow and not “digital high fives” or developing an “inferiority complex” that makes us to seek acceptance and validation from Silicon Valley.

Local angels, mentors, VCs, lawyers, accountants, developers and entrepreneurs are all important to growing an ecosystem. We need to give all of them coverage and encouragement as they all play their own part in making the magic happen. 

If we keep encouraging this Western narrative of treating our startups like infants or toddlers taking baby steps we will end as Seyi Taylor eloquently put it “up sh*t creek without an ecosystem to support us”. Silicon Valley will not save us if we cant save ourselves. I say it once again we should “wake the f**k up”.

[Rant over]


Mobile Money In Nigeria - The Case of Pessimistic Indeterminacy

I am sure there are very some very serious people at the Central Bank of Nigeria (CBN) and Sanusi Lamido Sanusi the Governor of the apex bank is on top of that list. He did a lot of things people did not like in his first year in office but he gave us a stronger financial sector and we are grateful for that. A lot of what his administration corrected was however due to flawed policies of previous ones.

The CBN also finally kick-started efforts towards greater financial inclusion by issuing mobile licenses and we were very hopeful. One year later however, there is more uncertainty than hope as none of the Mobile Money license holders have been able to reach any meaningful scale. The total number of Mobile Money users so far is less than the population of one suburb in Lagos. If Ernest Ndukwe (the former Executive Vice Chairman of the Nigerian Communications Commission) had been put in charge of the Mobile Money initiative the same way he presided over the GSM licensing process, we would have had all licenses revoked by now for dismal performance.

Nobody said it was ever going to be easy and nobody expected it to be but nobody also expected things to get so messed up that we will have over 20 players and not a single one with a clear plan or the clout to move things forward rapidly. It is now very obvious from the way the initiative has gone that a lot of the players are seemingly totally out of their depth in terms of financial clout and expertise and the regulator probably made a the wrong call with the framework.

The Nigerian Mobile Payments Problem Explained Using Peter Thiel’s Framework

The Mobile Payments framework document (on which the initiative is based) is sometimes ambiguous and vague in certain areas and was more like a school term paper with general guidelines than a visionary policy document. It is not determinate on expected outcomes and also not based on the realities of micro payments in the emerging markets. It seemed like a document crafted by bureaucrats to protect the interests of a few institutions at the expense of the greater purpose of the public it was meant to serve.

The Central Bank of Nigeria is pursuing a Cash-Less or (Cash-Light initiative) as they have termed it. The idea is to make the financial sector more efficient as cash management has become a burden to the system.

The fundamental flaws in the process by the CBN can be explained by the famous entrepreneur and venture capitalist Peter Thiel’s  “Determinate, Indeterminate, Pessimistic, Optimistic” framework described in his Stanford University CS 183 course. Details of the lecture can be found here and the diagrams below summarizes the framework



The NCC Telecommunications Approach

Using the framework and looking at the rapid growth of the telecommunications industry in Nigeria, the previous NCC’s options in licensing GSM companies could be explained as such:

·         Optimistic, Determinate: 

Nigeria needs solid telecommunications infrastructure to spur economic growth. The potential for success is high when done right and it will help a lot of people out of poverty. There is a clear plan for success in telecoms initiatives and only serious players with clout are allowed to play. We decide to bet on GSM technology, make the barriers to entry high to allow only serious players in but keep them strictly regulated.

·          Pessimistic, Determinate: 

Nigerians don’t really need phones and it would be a waste of time to craft a robust policy or invite bidders. “Phones are for the rich and not for the masses” - according to a former telecommunications minister. We should focus on building the public telephone monopoly NITEL and put enough payphones in public places for those who must use them but can’t afford them


·         Optimistic, Indeterminate: 

Nigeria needs telecommunications infrastructure but we don’t know how much it will cost to put it in place and what is best or will work. We do a whole portfolio of things, we try everything until we find what works best.  We allow all players in and give everyone a chance. Anyone who survives wins the race.


·         Pessimistic, Indeterminate:

We don’t know what the best way to provide telecommunications infrastructure and the investment required to provide basic infrastructure is more than what we can afford at this stage. Any serious players we may bring in will make the services costly as they will provide their own infrastructure and would want to recoup investments, the masses may not be able to afford it if we allow the big players to come in. Take a portfolio approach with many small players and let each one provide infrastructure for their own niche. Build regional or local networks all connected to the National Carrier Nitel.

The NCC decided to do two things, for GSM they took the “Optimistic, Determinate” option by licensing a limited number of players after inviting all prequalified players to bid for licenses.  For CDMA they took an “indeterminate, optimistic” approach allowing smaller niche players to build local or regional telecommunications entities. While people may argue that the technologies may have made the difference in the huge disparity in growth, the GSM companies fared much better than the CDMA companies as the players were more serious and committed.

Universal licenses were later introduced with the players not limited to technology and we are better off for it with subscriber growth now over 100 million from only 500,000 in 10 years. The financial sector has not seen the same growth because the Central Bank took a different approach.

The CBN’s Mobile Payments Approach

The problems with the financial sector started way back before Sanusi’s era when the foreign owned banks were nationalized and the financial sector left in the hands of local investors. One of the central bank regimes earlier took a portfolio approach with massive deregulation of the financial sector allowing players with a small capital base to enter the sector. A lot of licenses were issued for banks and non-bank financial institutions including boutique finance houses and primary mortgage institutions.

That approach led to several failures and almost total collapse of the financial sector with several costly corrective measures taken afterwards to consolidate the portfolio of institutions into more solid players. A lot of people lost their life savings (many I know personally) and it led to a crisis of confidence by consumers with the result that cash became the predominant transaction mechanism.

With the banking and the rest of the financial sector, the government had initiated a “Pessimistic, Indeterminate” approach with nationalization of institutions. The central bank later moved to the “Optimistic, Indeterminate” quadrant by choosing a portfolio approach with deregulation.

After several failures and almost systemic collapse they have adopted a more “Optimistic, Determinate” approach by consolidation, raising the barriers to entry with increasing capital requirements, liquidity ratio and stricter regulation. They also allowed the foreign banks back in as well. All the damage and backwardness in the financial sector could have been avoided if they did not embark on the costly experiment earlier.

We are seeing history being repeated again with the same portfolio approach that failed with banking being repeated again in mobile payments. The current mobile payment initiative that has failed to achieve scale in the last year can also be explained by Peter Thiel’s framework.

·         Optimistic, Determinate: 

Nigeria needs a solid and sustainable mobile payments infrastructure to spur financial inclusion and economic growth. There is a clear plan for success and only serious players with clout and can scale rapidly are licensed. Allow prequalified players to bid for licenses, the barriers to entry are high and the industry is well regulated.


·         Pessimistic, Determinate: 

Nigerians don’t really need a separate mobile payments framework, and it would be a waste of time to craft a separate policy. We should focus on bank consolidation and growth. The banks and companies like Interswitch, Etranzact  or NIBSS will drive payments.


·         Optimistic, Indeterminate:

Nigeria needs a mobile payments infrastructure to spur financial inclusion and economic growth but we don’t know what is best approach is and what may work. We invite all players and do a whole portfolio of things. We also don’t enforce strict regulation to allow the free market determine the best option or players.


·         Pessimistic, Indeterminate: 

We need to reduce the cash burden on banks and The Mint. Mobile payments is one of the options we have to tackle this but we don’t know the best way forward with it yet. We will take a portfolio approach and see if it will work but we will exclude the big players with existing infrastructure, as we don’t want monopoly or unfair advantage to the banks we regulate. We also can’t really regulate this sector properly with the telcos involved as it would mean reaching into NCC’s turf so we stick to our comfort zone with bank and non-bank players. Telecommunications companies will remain only as infrastructure providers and they must ensure that they work with the other players who will take the lead.

If historical antecedents in the financial sector have a predictive value of future prospects then we all know what will happen if we choose either an “Optimistic, Determinate” or “Pessimistic, Indeterminate” approach to mobile payments.

The same deregulation, portfolio approach, indeterminacy and pessimism that characterized banking in the early days is being replicated in mobile payments and it should come as no surprise that there is slow growth.  Excluding telecommunications companies from being primary license holders out of paranoia shows a tendency towards pessimism and the portfolio approach in issuing over 20 approvals indicates indeterminacy. 

The Nigerian Cash Problem And Paranoia By The Banking Sector

Money is a store of value while bank accounts, mobile wallets and other storage locations are repositories of value. Successful payment initiatives are simply those that allow value to flow between repositories with relative ease and convenience. If cards and cash are more convenient than barter then so be it. If other mechanisms come that make these flows more efficient and convenient, the market will adopt them.

Because we want a Cashless Policy to succeed, we basically cannot force a market into a default mode because theoretically it seems more efficient when all the evidence is to the contrary. You also cannot force people to use sub-optimal solutions on consumers when the banks and other financial sector operators are not ready or totally out of their depth. Efficiencies have to be discovered by the market itself. Mobile payments and other forms of electronic payments thrive when markets discover those efficiencies. What successful payment companies do is accelerate this speed of discovery after providing the infrastructure at scale. The scale problem is what plagues a place like Nigeria and current efforts to try to force market adoption from players not structured to cope with scale will fail

The infrastructure to enable mobile payments succeed in Nigeria is already in place as the telecommunications companies have put in a lot of investment to build it over the years. These same telecommunications companies are already doing a lot of micro-transactions in form of airtime transactions of immense magnitudes but they have strangely been excluded from participating directly. It does not take the wisdom of rocket scientists to observe that the only two mobile payments initiatives in Africa that have reached viable magnitude are led by dominant telecommunications companies - MPesa by Safaricom and MTN Mobile Money by MTN Uganda.

The first product telcos enable their mobile money for is always airtime purchases and doing this at scale takes out a lot of cash based transactions and makes them electronic. They do this not just because they want to reduce churn but because it also saves them a lot of distribution costs and the customer also benefits from it. The telcos can also roll out an agent network for Mobile Money faster than any player because they already have nationwide distribution networks in place. If we are serious about going cash-less this is a win-win-win scenario.

When a robust mobile payments framework is in place it seems the only losers will be the banks as they would be deprived of commission on turnover (COT) when telco airtime distribution becomes more efficient. Loss of COT is probably the only reason why the banks are scared and are fighting this. Dependence on COT is probably the main reason why banking has not evolved properly in Nigeria

One year is enough time to look seriously at the current Mobile Payments Framework and do a review. The role of the regulator is to act in the best interest of the consumers not in the interest of the banks or bankers.

Full disclosure:  Companies I am involved with do a lot of technical consulting work for telcos and I have been part of the startup team of a major telco while working for an investor in Nigeria.  The opinions in this blog post are mine as an observer and customer/subscriber they are not of my company,  partners or clients. 

Nowhere To Hide

Someone asked Eric Schmidt the Chairman of Google a question on Nigeria after his keynote at the last GSMA Mobile World Congress in Barcelona and without skipping a beat he replied explaining with uncanny clarity the last mile problem with Internet access in Nigeria. I guess he could only do this because his company was very serious about Nigeria and are investing a lot of resources in the future of data access in the country

Nigeria and the rest of Africa are gradually moving away from the dark mysterious continent people are used to, instead becoming one not just of great fascination but attracting the attention and investment of the heavy hitters in the future of technology. Even Apple is also in on it as they have a Nigerian version of the iTunes store already. 

Samsung and other Asian companies are not to be left behind in this race and they are fervently courting the developer community with events and contests as well as partnering with telcos to introduce hardware products to the African market. Nokia is collaborating with ccHub in Nigeria and local developers to build the next generation of local apps.

Conquering invaders and their hordes are not just at the gate, they have breached the barriers and are rapidly gaining foothold. Africa is not the same again and can never be the same just at it changed the first time the European explorers discovered the rich human and natural resources. This time around they have discovered consumers. Consumers of technology, consumers of luxury items and commodities. New and used cars are probably being shipped more to Africa than any other continent. Companies like RIM who are struggling to survive on their home turf have found a loyal and growing customer base in Africa.

Where does all of this leave the indigenous tech entrepreneur and the technology ecosystem? It means that we are now the focus of global attention and a lot of us are already just basking in it or using it to our advantage by getting serious investors curious about potentially lucrative plays. Monopoly of ideas or execution has now become a thing of the past as it has become very easy for successful plays to be replicated across the continent. It also means that the foreign entrepreneurs are also gradually beginning to understand our continent more and they are becoming bolder. The mystery is fast fading and very few areas remain un-infiltrated.

These foreign entrants are mostly better funded and hire brilliant local employees to help them execute their strategy. We may laugh as some of them stumble but let's make no mistake about it, they are not going away anytime soon. The promise and potential of a very large population of consumers will make them keep trying until they get it right. They may acquire local companies for their talent and local knowledge or they may just keep iterating or pivoting until they hit the mother lode.

What all this attention means is that we have not been doing enough or as much as we should have especially as those opportunities existed for centuries. Chasing after the foreigners or trying to chase them out is not the solution and will not work. It is probably those policies that have made us backward anyway. Nationalization of institutions by African governments decades ago created inefficient monopolies or mediocre local institutions and protectionism is actually defeatist and more a sign of pessimism than optimism.

We need to be more optimistic about what we can do and we need to have bigger goals than just copy the next guy or try to replicate the model of those from outside. I have always believed that unique African models exist and they can be refined for greater impact and success. Those models stare at us in the face yet we don't see their usefulness in tech. From “Imu-Ahia” that has helped the Igbo to become arguably Africa’s most successful ethnic group in commerce to Ubuntu collaboration in Southern Africa that HBD has taken up as the brand for its flagship open source product. Ubuntu does not have to be the name of a product alone and “Imu Ahia” is not meant to be for only traders or artisans.

There is a big difference between Asia and Africa and it is the way the Asians have used their culture as a means of advancement rather than a barrier to growth. Asian cultures are not pushed to the back of a any business initiative but rather defines the businesses in their own way. My fascination with Asia started with reading James Clavell’s books and dabbling briefly into the martial arts. That fascination has been rekindled again as I have been reading more and more about Asians recently and currently reading Dambisa Moyo’s book “Winner Takes It All”. The book examines the international growth strategy of the Chinese and what it means for all of us. It is highly recommended as it provides a tremendous amount of insight.

Asian companies grow at unbelievable rates and a recent visit to Silicon Valley made me realize that this invasion is not only limited to Africa. Vivek Wadwha sees an exodus of talent but I see a dominance of Asian talent in the Valley over time. I was at a hotel Sunnyvalle and most of the occupants in that hotel were Asians and they were mainly people working in a number of technology companies in the valley for a short time. These guys will no doubt go back home as the real growth is happening where they are coming from and they are just in America to learn and get the right credentials. Even Vivek Wadwha or the US congress cant stop that.

I saw the advert below from HSBC on the plane as I was coming back from San Francisco and it drove home everything I believed.



The last part of the conversation is priceless: Don’t you want to ever leave? Leave? Everyone is here.

A bank should know when a market has emerged and I believe HSBC has and it is curious that they are not all over Africa the same way they are in Asia. Maybe they are coming just the same way other invaders will come. The market will welcome them with open arms as African banks have already failed us.

Gallup says: Economies south of the Sahara are poised to experience a boost in economic growth between now and 2020. This builds on the real GDP growth of 6.5% between 2004 and 2008. Most of sub-Saharan Africa has bounced back from the global economic crisis, with growth rivaling the high levels during the mid-2000s, according to a regional economic outlook study published by the International Monetary Fund. Growth is expected to average 6% in 2012 throughout sub-Saharan Africa.

Banks that focus on a customer-centric approach become market leaders.

Yet the financial system in Africa -- though stable and well-capitalized -- lacks sufficient complexity. Retail banks mainly focus on short-term transactions, which is hardly conducive to true economic development

HSBC will come and so will other Asian entrepreneurs.

Africans should learn from Asians the same way they have learned from the West and become masters of the world. We can fight them in the marketplace but we can’t chase them away. They have found the market and everyone is here already. They will either bring out the best in us or take everything from us. We have nowhere to hide.

Africa needs a paradigm shift at the speed of thought.

Why Nigerian Techies Should Wake The F**k Up And Read TechCrunch Instead

There are two things a tech blogger should learn not to do and the first one is accusing other bloggers of hustling to get page views (Paul Carr in Pandodaily accused BusinessInsider and VentureBeat of that same thing weeks ago) then turn around to do the same thing. That is HYPOCRISY.

The second one is trying to disguise a personal political rant by a closet racist as a commentary on "The American Dream". That is PATRONIZING. Insulting your readers for speaking their minds then blocking is on a different level altogether, it shows DESPERATION and COWARDICE.

You can’t say (Paul Carr's own words on Pandodaily), I hate them (BusinessInsider) because they’re brain-dead entertainment and linkbait masquerading — to readers, and advertisers — as news and insight.” Then actually provide a brain dead rant (from a closet racist in response to a political ad by a strong black man) to try to shore up pageviews on your site and say it is not hypocrisy. You just cant do that and expect readers to “scroll through”. You just cant get away that easily. Someone will call you out and I did.

They also accused Arianna Huffington of preventing editorial independence at Techcrunch so that was why they left but they use their moderator's powers at Pandodaily to block comments on the Pandodaily blog in response to their insults. They can have independence to say rubbish but readers cannot respond honestly. Mike Arrington was at least honest enough to turn off comments on controversial blog posts rather than selectively block some. 

There is an African saying that "Only your friend will tell you bluntly when your mouth smells from halitosis". Others will laugh at you behind your back as they are doing here in this post:

Twitter is not a very good place to have sensible conversations and my goal initially was to point out to Sarah Lacy that they were doing exactly the same thing they were accusing BusinessInsider and VentureBeat of doing when they sit on their high horses on the Pandodaily feature "Why isn't this news". Paul Carr (the moron) talks about journalistic ethics and purity accusing others of losing it but allows Pandodaily to shamelessly plug his controversial political story into a tech blog to increase their falling pageviews while also shamelessly publicizing his (Paul Carr's) own blog.

I was actually talking to my sick wife on Skype when the Twitter conversation featured on Techloy started and lost it when Sarah Lacy started swearing and Paul Carr started with insults. I had to make them realize that there is no monopoly in swearing or insults. If by one in a Billion chance you featured an African who was able to raise funding as a result of the publicity you should not expect others to cower each time you bark. I could have just let it go but really who exactly do they think they are? They dont feed me and have zero impact on my life or career.

They must think that we are sheep to keep taking in all the bullsh*t and nodding our heads in agreement. Maybe we probably are as Pandodaily's country ranking in Nigeria is higher than any other country yet their pageviews globally are dropping into the abyss.

Sarah Lacy came to Nigeria and ironically told us to stop reading TechCrunch but crazily Techcrunch these days is on point and provides much more relevant content to the tech ecosystem than Pandodaily and their page views have not taken the same dip.

Techcrunch was the blog to point our Pandodaily's mistake in featuring an East African Accelerator as the "First African Accelerator" by sending Mike Butcher to Ghana to talk to the guys at MEST. Mike Butcher brought out all the great things happening there over the years and Saya was able to become a Disrupt Finalist.

Techcrunch is more relevant to Africa as they are providing more objective coverage of the continent. We dont need to hear about petty peeves of people who in an NSFWCORP podcast once called referred to Africa as "a country". Racisim and ignorance seeps out in suprising ways. Douchebagery is no cover up for racism.

To borrow from Samuel L Jackson Nigerians should also “WAKE THE F**K UP” to see that reading Pandodaily is not going to help us build anything bust instead we should follow Sarah's advice and stop reading her blog. We should read Techcrunch instead because at least they don’t pretend to be who they are not and give Africa objective coverage.

I have told Mike Butcher of Techcrunch already that we have space for them in Accra should they decide to put together a dedicated Africa team and I am serious about it.

Yes I don’t know how the media works because I was naïve enough in the past to believe that a lot of objective and true journalists exist (and I still believe there a few out there) but I would rather have respect for a blatant hustler providing linkbait for page views than others who pretend and sit on their high horse yet do the same thing.


Paul Carr is the same guy who alluded to Nigeria's Okonjo Iweala being made President of The World Bank as being the same as allowing Nigerian scammers to run the global financial system.

Go Saya!! Support Saya!!!

I arrived San Francisco Sunday on another of my “learning trips” this time as a Startup Alley participant (cheaper tickets) as we decided to supportStarlogic/Pontaba an HTML5 gaming platform founded by Amaete Umanah who is also the founder of the Silicon Africa Startup Group.

I was still jetlagged and woke up at 2:50am that morning and the first day’s event was like a blur. I had never expected with all the drama and departures from the company last year that TechCrunch Disrupt would get this packed. The International Pavilion was bigger than a few startups from Israel this time as Brazil, Argentina, Chile and Mexico joined this year. The international startups had to take up another space equally as big as Startup Alley itself.

I saw a couple of battlefield presentations then decided to leave early as I was tired and needed to retire on time …. BIG MISTAKE!.

I woke up again early on Tuesday morning to see chatter on Saya Mobile’s awesome presentation all over my Twitter timeline. Saya is one of MEST Ghana’s portfolio companies and the guys from Meltwater were there fully to support them as well. Watching the presentation all over and seeing their stats simply blew me away. You can see how easily we underestimate the needs of the new generation of Africans and think that those canned solutions already available on the web will continue to do it for us.

Saya is disruptive on many levels and not just because of its product but because it was the first African startup to my knowledge that has pitched at Techcrunch Disrupt’s Battlefield. This is further validation that the African startup ecosystem has come of age and we can stand our own anywhere and battle with the best from the rest of the world.

I met the Saya team on Startup Alley yesterday and everyone else I met kept talking about them. Victoria Haynes of MEST said she even met Dave McClure of 500 Startups who said he actually owned the original Saya domain as that was his wife’s name.

Saya Mobile needs funding and that is why they are here in San Francisco pitching to investors and in the Disrupt Battlefield. I have been the one shouting that we dint need money from Silicon Valley and the money is back home in Africa. Why don’t we prove this by pledging "African Money" to backup Saya Mobile? Can we get them to setup a Kickstarter page or for Meltwater to arrange this for them?

Whatever the outcome today they are already winners, if we can also get together as Africans to give them more than the $50,000 they plan to get from winning the battlefield finals then we would have also disrupted TechCrunch Disrupt. I have already pledged $1,000 and other entrepreneurs on Silicon Africa added $3000 as well so we are on our way already with $4000 pledge so far. I will keep updating this post with details of pledges made.

Clinton Dale Mutambo from Zimbabwe said today in the Silicon Africa Group:

“I worship the power of progress! Isn't it fitting that Saya and the MEST family are setting historic examples for the African ecosystem. My heart would have bled had some neo-colonial douchebags been parading themselves as the "saviours of Africa". Whatever happens from here; Team Saya has set a new bar for millions of young Africans across the continent. There is hope and this is just the beginning”

This is indeed a new beginning, the true emerging market renaissance that Africa will lead.

Whatever deity you worship please pray to it for Badu and Richard to win the final TechCrunch Disrupt battle today. Lets fill the #TCDISRUPT hashtag with #sayamobile. I will be rooting for them and shouting at the top of my voice today. I have also brought out my kente strips to wrap around them if they win this.

My very first post on this blog is validated daily by MEST and great stuff from Ghana

Update: Posterous text formating really sucks! $5000 and counting...

The Interswitch Conundrum

Interswitch is Nigeria’s foremost payments company and we had an animated discussion over the weekend in the Silicon Africa Facebook group over the decision of Interswitch to reduce connection fees by merchants registered with SMEDAN (Small and Medium Enterprise Development Agency of Nigeria).

Bankole Oluwafemi was inspired by this discussion to put up a blog post on Techloy titled “We Hate Interswitch So Much We Are Going To Disrupt Them”. A lot of this post is based on my comment in response on his article.

I guess that by the “WE” he means the new payment initiatives in Nigeria which he later acknowledged also have no choice but to connect to Interswitch as well.

As far as I am concerned, the way I see it is this: The problem with Interswitch is not Interswitch it is Nigerian banks, Central Bank of Nigeria (CBN), Nigeria InterBank Settlement System (NIBSS), Valucard(Visa) etc..... I can keep naming all the players who have been complacent and have not pushed the payments space to the very edge in Nigeria. I had mentioned in an earlier post that most banks in Africa are not innovative do little to grow markets and that was the same case with Nigerian Payments. Interswitch actually aggressively grew the payments space and we must give them credit for that.

Interswitch was primarily licensed as a switching company and NOT as an online payment gateway, a card issuing company or an acquirer but it has evolved to fill all those needs in a less than satisfactory way because the policies were flawed and the competitors were either dormant or playing by the book. The banks who were once shareholders who formed it abdicated all their responsibilities to create a monster child. Each area of business Interswitch tries to dabble into outside its core switching function are actually huge business areas in their own right and they formed subsidiaries from the main payment switching companies to address them. Other companies can also work with Interswitch to perform these functions in the marketplace but obviously Interswitch’s subsidiaries have an unfair advantage over all others and the regulators or the banks should have seen this coming.

All banks are interconnected by switches and NIBSS and every Nigerian bank has the capability to build their own payment gateway or become a major issuer or acquirer and some of them actually have done so but a majority choose to abdicate this responsibility to Interswitch. The few exceptions are either the foreign owned banks and the really forward thinking local banks like Zenith or (sadly) GTBank.

Interswitch has been successful no doubt even though its strategy for survival and self perpetuation has been aggressive. They have been able to push the envelope to the point where they almost owned the entire post office. On its way there the banks, CBN and other idle bystanders stood there waiting until they became the gatekeepers for all payment initiatives in Nigeria.

The Central Bank of Nigeria (CBN) has a lot of licenses for stored value providers, switching companies etc but how many people or enterprises have had the vision or foresight to invest time and effort in doing the hard work to get these licenses and build something truly awesome from the ground? We all dont want to do the hard work but want to do the easy work on the web. Paypal grew not because of its web front end but because it fought hard to build relationships with banks and card associations.

To be fair however, the banks seemed to have also conspired against the growth of other switches as those not owned by the banks like Etranzact have struggled while others like Chams have died. But a banker once told me that one of the main reasons why they support and prefer Interswitch was because of reliability and uptime. Other players do not take service delivery and service levels on their switching platforms as seriously as Interswitch. A lot of the consistently high service levels to the banks came from the fact that Interswitch was run by the CEO as a foreign startup and not a local bank or civil service. 

Interswitch employees are highly motivated and are well compensated for their efforts. I have not seen the same passion and zeal I have seen from Interswitch workers elsewhere in the Nigerian financial industry. Interswitch had to fight to survive as they had limited capital to start with as they were funded from SME funds set aside by each bank. The banks could not put in more money than they had initially invested and the company had to make money for itself. Mitchel Elegbe the CEO is from my alma mater and that tenacity is what you pick up from UNIBEN.

Where Interswitch has failed is in not recognizing their weaknesses and allowing those who are strong in those areas to take charge while they work with them. The payment gateway service is problematic. Backoffice reconciliation with 3rd parties take too long and they are not the strongest on user interface or user experience. Collaboration with Interswitch is difficult because of their aggresion. A lot of people are afraid to take ideas to them as they are afraid it would be hijacked and that fear is largely justified as I have indirectly been a victim but that is another story for another time.

Other than the deeply flawed mobile payments initiatives, current payment drives in Nigeria focus largely on the web interface. POS infrastructure is still epileptic and no sensible investments have been made by players to really move things forward. In 2006 when I came back from the UK, I was part of a team that tried to do a management buyout of another major payment company with the same roots as Interswitch to put in place the largest POS infrastructure in Africa but potential investors were not interested. They backed out at the last minute to go into other more lucrative areas as they thought payments was still a niche business where the banks will continue to stifle innovation. When I heard of the recent Adlevo/Helios led investment in Interswitch it was validation of what I had always said that the payments market in Nigeria needs major investment. It was basically money to allow Interswitch get the banks out of the way so they can grow.

I doubt that any of the players on the web layer will do anything to dent Interswitch's dominance in payments for now but they can give it a better more human and business friendly face by aggregating connections to it. Interswitch has always been better suited to be a backend switch and a payments aggregator and not a front-end solution so while we wait for the messiah in switching (NIBSS) to wake up we should tolerate them for now while we wait to see if the CBN will allow telcos to build the infrastructure for high speed trains to move value around instead of rickety molues or danfos. BRT buses are just glorified molues and will not make much of a difference as they will still go at the same speed when the roads have potholes in them. Once the road is made smooth, even interswitch will fly.