MARCH 21, 2021 This newsletter is a weekly in-depth analysis of tech and innovation in Africa that will serve as a post-pandemic guide. Subscribe here to get it directly in your inbox every Sunday at 3 pm WAT
Last week was packed with inspiring African news. Flutterwave’s integration with PayPal opens up a major payment channel for African businesses. Kuda raised $25m to build a bank for every African on the planet. Burna Boy and Wizkid scooped Grammy awards, hoisting a north star for millions of dreams.
But the week threw up a grim picture too hard to ignore.
We can now confirm that Africa’s most populous country and largest economy has a chronic unemployment problem. This grim reality has led me to wonder about something that has happened in my kitchen for the second time in many months: why do rotten eggs explode?
The Flutterwave Mobile app, the app that turns any smartphone into a mobile POS is now redefining commerce. The Flutterwave Mobile App makes it super convenient for anyone to take their business with them anywhere, anytime. Learn how you can take your business anywhere, anytime here.
Now, let’s dive in.
There has never been so many jobless people in Nigeria. Only Namibia, a country of 2.5 million people, has a worse unemployment rate than the African giant’s 33.3%.
Boluwatife Sanwo/TC Insights
According to Bloomberg’s report:
“A third of the 69.7 million-strong labor force in Africa’s most-populous nation either did nothing or worked for less than 20 hours a week, making them unemployed, according to the Nigerian definition. Another 15.9 million worked less than 40 hours a week, making them underemployed.”
That’s about 23.2 million people who supposedly lack access to employment opportunities that offer stable income. The shortage of regular inflows mean they are likely living austerely and not saving. Without meaningful jobs, they must be bothered about being unable to access health insurance.
The 10 million who do not work probably depend on benefactors for data subscriptions if they must stay online.
This is a snapshot of a country in dire straits. But the real devil emerges on a graph tracing back to the last half-decade.
“Nigeria’s jobless rate has more than quadrupled over the last five years.”
Boluwatife Sanwo/TC Insights
Bloomberg attributes the rising joblessness to two recent recessions, the latest one somewhat induced by 2020’s pandemic. But this steady climb is a sign that Nigeria is incubating something awful.
Eggs get bad and explode for a number of reasons. Typically, it’s caused by bacteria from some source, spills from nowhere, dirt or plain old neglect in bad temperature environments.
When bacteria builds and permeates an egg, it forms a foul smell, kills any embryos inside and gases begin to build within. At the slightest crack… boom!!
A 33.3% unemployment rate means Nigeria’s government is failing badly at one of its three macroeconomic responsibilities. It’s not doing any better on the other two; food inflation is at a 15-year high of 21.79%, and GDP isn’t going to grow past 2% in 2021. At the slightest crack, frustrated Nigerians could go… boom!!
Nigeria is a gauge for Africa, for better or worse.
Africa-focused investors with an eye for high-growing sectors like financial technology and e-commerce want their money to multiply in Nigeria’s 200-million-people market. But the brutal indicators mentioned above will challenge their sunny hopes.
But the clouds are not all dark. In fact, real investors are thrilled by the challenge of spotting the companies who will stop the rot.
If we imagine the question to be, “how will your app be sticky for the 40 million unemployed and underemployed Nigerians?”, the answer is that such apps are platforms for market-creating innovations.
That’s the lesson from Flutterwave’s unicorn status; from Kuda’s ambitious drive; and even from Burna Boy’s calculated collaborations with artists that increase his international discoverability on Spotify. The only way to systematically reverse rising unemployment is to intentionally engineer platforms that enable new opportunities.
One would hope the Nigerian government runs with this insight, by consciously investing in initiatives that encourage rather than stifle innovation. Nigerian startups have hugely benefited from private-sector-led efforts in that regard – whether it’s Co-creation Hub, Y Combinator or Startup Bootcamp Afritech.
That means carefully curating eggs, and making sure the environment is set to the right temperature. That means not letting spillages and dirt from politics alter the ecological balance needed for growth. A steady crate, a safe space. Then watch those embryos hatch and bloom.
FROM THE CABAL
Earlier in the month. Nigeria received 3.62 million doses of the AstraZeneca vaccine of an expected 16 million doses allocated for the country through COVAX. But reports in Europe raising concerns about the vaccine have fed existing pessimism and reluctance to receive vaccines in Nigeria. Muyiwa has the details here.
Facebook has launched a light version of the Instagram app in Sub Saharan Africa. It’s built to load quickly, consume less data and still be good enough for users to create and consume content. But will it help Instagram find more users in Africa?
Did I promise to write a story about an NFT art creator in Nigeria? Well, it’s not just any creator – he’s the best-selling in Africa. Dive in!
“I fundamentally believe there’s no reason why technology built on the African continent cannot be used anywhere in the world,” said Tayo Oviosu, Co-founder at Nigerian fintech, Paga in an interview with Quartz.
Oviosu echoes the mindset among a growing number of African founders. It is in line with the popular “Think global, build local” mantra and an answer to the question: How do you build huge, profitable businesses from Africa? How do you build an African unicorn?
Olanrewaju Odunowo/TC Insights
There are a number of underlying motivations. One is that there are not a lot of big African markets in terms of population and economic size. “The reality is that a lot of the African markets are actually very small,” Oviosu said.
This could mean two things; that there is a limit to how big African startups can grow within a short time or that the global market presents an even bigger opportunity for startups to scale very quickly outside their local markets.
Having a global mindset can help founders grow very quickly and reach profitability more quickly. It can also shield their companies from economic shocks in their home markets.
It protects startups from hinging their company’s performance on the success of any one country’s economic decisions, such as foreign exchange policies or other factors that are crucial to a company’s growth. A global mindset also helps companies expand the quality and diversity of talent they have access to.
But scaling outside home markets is not without its challenges. Founders will face existing competition and need local understanding to succeed. For very early-stage startups trying to manage their resources, it will be best to focus their energies and resources at home.
The global mindset doesn’t imply that the African market doesn’t remain promising and rewarding. But thinking global from day one means that founders significantly increase their growth opportunities and probability for success