"Clear and Present Danger!"



Earlier this year, I wrote a post titled “Why Ghana is the best location for an African Startup Accelerator” in response to an article by Sarah Lacy on Pandodaily.

That post generated a lot of interesting responses a lot of which I failed to understand as I saw this as obvious. Before we decided to start Afrinnova in Accra we looked at all possible locations including Nigeria, which is where I was born and grew up.

Nigeria definitely has the market, plenty of entrepreneurs but lacks infrastructure and other basic things for a startup community to thrive. In summary, the RISKS in Nigeria far outweigh the benefits.

Ghana’s proximity to that market and all other great features made it the best possible location to support our vision and I am glad Mike Butcher also validated this in his recent TechCrunch post.

Although Mike Butcher’s post as he admitted was still early stage work, in closing he made two points, which were: 

1. “The consensus on the ground amongst seasoned AfricaTech watchers is that while Nigeria has the fastest growing economy it’s also pretty dangerous at the moment

2. “Ghana is quickly gaining a reputation because of its relatively stable business and political environment and the English language is widespread. It’s also becoming a big airline hub because airlines prefer not to drop their staff into potentially dangerous countries.”

His emphasis on “Danger” in association with Nigeria has as expected sparked a lot of backlash in social media by my fellow compatriots. Even the Kenyans want to know the “issues” he alluded to about them as well.

My take is that the problem in Nigeria is not just the obvious “Danger” which those from outside see but the hidden “risks” that the “danger” compounds.

I reposted an article by Chris Dixon about “founders risk” where he listed all the different types of risk that startup founders assume. I added a comment there:  

“I think you forgot to mention "reputation bias risk".  Peculiar to African startups

It occurs when you are fighting an uphill battle where some people brand a certain nation or region as bad. Can a payments/collections service or product from Nigeria ever scale globally? I doubt it.”

Mark Essien also added a detailed list of African/Nigerian related risks listed below:

1. Bandwagon effect: Many African startups are too focused on very visible spaces, because of a lack of knowledge about more obscure things. E.g, a blog/media is very visible because many people read it, but controlling software for IO on machines is much less visible and needs specialist knowledge. So there is excessive competition for highly visible spaces and very little competition on things that are just as profitable, but not as in-your-face

2. Not exporting: Many African startups are too focused on selling locally. It's very easy to export software, and nobody needs to know where the makers of the software are in. And frankly, most buyers don't care one bit where it is located, if it fulfills their needs. E.g, when I was actively selling my mpeg encoder, there were only 3 software encoders on the market and I used my Nigerian address for the sales. Nobody cared, because the software fulfilled their needs and there are little competition.

3. Logistics: There is no logistics structure in Nigeria. Startups need to properly allocate cash for logistics issues, and increase their prices appropriately

4. Bad eggs creating patterns: People invest based off patterns. If many Nigerian startups who take investment fail or mismanage funds, then the amount of investment that will be available for Nigerian startups will drastically sink

5. Grants: Many Nigerian startups, once they reach a certain level, will have the possibility for many types of developments grants a.k.a, free money. Free money destroys companies in many cases. The companies lose their competitive edge and stop improving, but still have enough money to keep upstarts out of the market.

6. Founders spreading thin: Most Nigerian business-men like to have a finger in many different pies. Real Estate, supermarkets, filling stations, hotels, etc. Startup founders will not be any different.

7. Timing: Nigerian market is in different stages of development. Your particular product may be too early.

These risks mark listed above are real and present daily. The “Clear and Present Danger” to building a viable startup community in Nigeria is “Nigerians” and not “Bravo Hotel”, MEND, kidnappers etc. Those other factors compound the risk and they are not the main problems themselves.

For me I think that the risks can be mitigated by awareness and major paradigm shift in mindset. The problems in Nigeria should be seen as challenges to overcome them rather than limiting factors, but one cannot rule out the fact that one startup or a few individuals gathered in a co-working space cannot solve them all by themselves. Nigerians are known for being realists and for once lets put all the sentiments aside and find what really works. 

My bet is still on Ghana as the savior of not only the startup community in Nigeria but Africa as a whole but Ghanaians also need a paradigm shift in mindset as well. My wife is Ghanaian (I am now too) and I have lived there now for almost half a decade so I know when to call a spade a spade. Ghanaians cannot demand the impossible from those coming there to do things and grow the economy when there is no will to do it by themselves. 

I have always avoided stereotypes but I have seen enough now to know that there is a real work ethic and “entitlement” problem in Ghana that will also kill most entrepreneurial initiatives. You cannot drive employment of Ghanaians when the people are not ready to work or don’t have the right skills or mindset. Ghanaians need examples and role models from outside to spur them on and not protection from imaginary invaders.

The government does not help too as they pay lip service to investment drive yet we have failed to get a Free zone license even when we bring in over 90% of our revenue into Ghana from other countries. That story is for another blog post. There is this latent form of xenophobia present and funny enough it is fired up mainly by non-Ghanaians from Asia and elsewhere who see the other Africans coming to learn of Africa’s best kept secret as a threat to them.

Kwame Nkrumah ranks with Nelson Mandela amongst the greatest Africans of all time and his vision was a greater Africa led by Ghana and not a smaller or closed Ghana. Had he been alive today, East Africa, South Africa and others will be learning technology from Ghana and not vice versa. The potential is still there but the will or the exposure is lacking.

The world is coming to Ghana but “Ghanaians” themselves are the clear and present danger to the growth of technology in Africa.