Bankole’s Newsletter #1

I’m starting a semi-regular series where I share links or news articles I found interesting along with some commentary.

You can leave a comment to let me know what you think.

Less competition in Africa’s smartphone market means higher prices?

According to CounterPoint Research, 500 Brands Exited Smartphone Market During 2017-2023. This is a problem. Africa’s smartphone dreams rely on increased affordability and lower prices. Although smartphone prices dropped over 50% from 2012 to 2017, they have hardly budged since. Smartphones are still expensive to own – the cheapest smartphone is 45% of the average monthly income in Sub-saharan Africa. 1 Even worse, Transsion, the largest manufacturer with 50% of Africa’s smartphone market, will continue to increase prices and sell more expensive phones. (The average selling prices for Transsion phones have gone up 15% each year over the last 2 years). In Nigeria, I remember the influx of Chinese phone manufacturers and their partnership with the phone retailers in Lagos. Every few months, it’ll be a new manufacturer. (Remember Solo Phone?). The market has now settled, competition has cooled and companies are looking to harvest profits. This implies smartphones will become even more out of reach – not only because the economies are not doing well, but the manufacturers will continue to raise prices.

Africa’s startup winter is in full swing 

Startups are raising down rounds. Layoffs, Mergers, Acquisitions and Shutdowns. Reincarnation in some cases. The higher cost of capital is home to roost and Africa’s startups have to face the truth about their business models. In some ways this is not unique to our startups. Na everybody dey feel am. Long term, this can only be a good thing for the ecosystem. We will all learn our lessons from the exuberance of the last few years, and hopefully remember it the next time sentiment shifts. 

Uber hates this app that tells drivers whether it’s worth picking you upRestOfWorld:

Information wants to be free! This app reads the screen for Uber drivers in Brazil and automatically accepts or rejects the fare based on the price per km, protecting drivers from low-value routes. Drivers who use this app have been able to reduce their gasoline costs by 30% (!) while making the same amount of money. Uber was so bothered by this, they took StopClub to court, and lost! There’s big business in information transparency. Pair with this Invest Like The Best podcast episode with Rich Barton, founder of Zillow, Expedia and Glassdoor – on building his entire career around making secret information easily accessible. 

Other stuff

  1. If you look at cost as percentage of monthly GDP per capita, affordability has  increased, but that’s hard to take at face value ↩︎

Why AI Isn’t (Yet) a Magic Bullet for Africa

Smartphones, move over. This is the age of Artificial Intelligence. Taiwan Semiconductor, the world’s largest chipmaker, makes much more money from high-performance computing than smartphones. Handset makers are struggling, margins are shrinking and even Apple is shipping fewer iPhones. Generative AI has added fuel to the fire. Microsoft invested $10B in OpenAI, and 2020’s epidemiology experts have moved on from crypto to the risks of Artificial General Intelligence.

But where does that leave Africa and African tech? 

An outline map of the African continent with neural networks and circuitry patterns overlaid inside each country’s borders. The patterns glow with a soft blue light, showing how AI has the potential to transform the entire region. Credit: SDXL

AI in Africa Tech

There’s no doubt AI is solving problems in Africa today. Apollo Agriculture and Aerobotics use AI for precision agriculture and credit evaluation. Instadeep, founded by Africans in 2014, builds and deploys AI-based solutions and was acquired recently. Chipper Cash announced “Chipper AI day” where they plan to launch AI-powered features. Despite these, it does not feel like the seismic change we’re seeing in the US, at least not yet. 

What it could look like

It’s not for a lack of problems that AI can help with. There are several. AI can help triage healthcare patients, especially in remote areas where experts are few. In education, AI can create custom learning plans, including for endangered African languages. Governments and businesses can meet customers where they are with audio, images and video in their native languages. Maybe this new wave of AI will create fair, credible and repeatable credit assessment solutions for Africans and truly open up credit access. Those examples only scratch the surface, and there’s many more solutions to be conceived and built. 

Why are AI powered products not more widespread?

It’s taken decades for the full impact of transformational technology to spread through Africa, even in cases where these are developed here. It took AWS 16 years to build its first African data center, even though large parts of EC2 were conceived and built in Cape Town. 6 years after the first GSM call in South Africa, mobile phone penetration in Africa was still at 1%. This happens for a multitude of reasons. Sometimes, it’s because the market isn’t big enough and consumers and businesses don’t have enough spending power. Other times, it’s for regulatory or political reasons. 

There’s more. For Africa’s wicked problems in Healthcare, Education, Logistics, etc, Artificial intelligence is not the long pole. There are fundamental issues to be addressed like rule of law, security, costs before considering the application of AI. Regardless of how much it’s going to change the world, AI is not a magic drug. If you believe everything you read, AI will do all the things that Crypto was supposed to do 24 months ago. (“Financial Inclusion!” “Authentication and Identity!”). It’s reasonable to be skeptical.

AI is also expensive. Training these models requires prohibitively expensive computing resources (the unstated reason OpenAI stopped becoming a non-profit). Using them is not cheap either.  The most conservative costs of LLMs is in the~$25k/month range, more if you include the cost of technical talent and data collection.  It’s even more expensive for languages other than English, where it performs noticeably worse. In any case, the purveyors of these models need their coins, and the more you use, the more you will pay.

While predictive or non-generative AI is cheaper to train and run, it’s still not cheap enough to be widespread. The nature of these models mean that they may require specialized hardware and unlike other technical problems, you may not be able to run it on commercially available hardware.  

On-device AI is showing some promise, but nowhere near useful right now. The high-end devices can do some inference (e.g., keyboard text to speech) but these models are much worse than those in the cloud. Besides, only a fraction of smartphones have dedicated machine learning chips and will be able to make use of this. For context Africa’s smartphone penetration is ~30%, and only phones like Google’s Pixel or Apple’s iPhone have dedicated ML chips of this kind to do this high-level AI.

A bustling African marketplace with people buying and selling goods. In the background, there are tractors and irrigation systems on farms enabled by AI for precision agriculture. A drone flies overhead. Nearby, a healthcare worker examines a patient using an AI diagnostic tool on their smartphone. In the foreground, a child plays with a robot dog – showing how AI can meet local needs across traditional and modern Africa. Credit: SDXL

Risks and Challenges

AI might even be harmful in the short term. Tasks like customer service, currently outsourced to Africa, may start to disappear. Data labeling will become less important as many of these models start to generate their own training data. This may end up being better over a long amount of time, but it’s clear that we will need fewer data labellers and customer service reps if some of them can be replaced with Artificial Intelligence.

It’s also not without risks. The models perpetuate existing biases in how African stories are told. They will make it easy to create and spread misinformation or even empower a police state. As with any technology, we need to carefully evaluate and put the right safeguards in place. 

Looking forward

I choose to be optimistic about the impact of AI in Africa. While AI adoption in Africa may seem slower compared to other regions, it holds tremendous promise if implemented thoughtfully. Healthcare, education, agriculture, and financial services could be radically improved through AI, boosting prosperity and quality of life. 

Africa can use AI for good while minimizing harm. With wisdom and care, the technology could help reduce the impact of systemic constraints and create a more just economic future. The global AI race is on, and Africa has much to contribute if empowered to do so responsibly.

Why Africa’s digital infrastructure needs to be public

Investors are eyeing Africa’s digital infrastructure startups, chasing the creation of an “India stack” across multiple African nations. But what does this mean? And why is the government’s involvement crucial?

Understanding the ‘Stack’

Everyone wants to invest in digital infrastructure startups. Specifically, investors have said they want to invest in the companies building the “India stack” for multiple African countries. You’ve probably heard the term “stack” tossed around. Sometimes it’s about the “identity stack”, other times, it’s a literal payment stack. The dream? Reaching that sweet spot of public infrastructure  that India and Brazil have nailed – a game-changer that sparks growth, kickstarts loads of businesses, and lets the startups cash in on an ecosystem tax. But here’s the catch – for it to really take off in Africa like it did in India and Brazil, we’re going to need the government on board. 

And when I say “digital infrastructure”, I mean everything that lets us live our digital lives. It’s not just the towers and subsea cables that give us internet access, but also the software that lets us chat with computers and use them to chat with each other. We’re mainly talking about the software here, but don’t forget, there’s a hardware angle to this too.

Why it has to be government-led

Prioritizing access over short-term profits

Only a small portion of the population in many African countries has access to digital services, even with the increase in mobile and internet access. Sure, digital services already exist, but they either don’t function as they should, or they charge too much for access. In this scenario, governments can subsidize various parts of the ecosystem to promote access or other public goals (for example, financial inclusion.)

Take India’s UPI as an example. It’s free for merchants and only introduces charges when they hit a high threshold. Compared to the fees charged by Visa or Mastercard, UPI is much more affordable. To get Pix off the ground, the Brazilian government mandated  the country’s largest banks to participate. Someone has to set and enforce the rules. Short-term economic incentives won’t make access a priority; they will (and should) focus on profit. The government’s involvement can offset the costs for private companies providing access – a goal everyone can get behind. Plus, financial inclusion is a fantastic goal that leads to positive economic impacts. We already know that access to digital infrastructure correlates with GDP growth.

If the existing payments infrastructure companies had their way, solutions like UPI or Pix might never have seen the light of day. UPI in India, for example, has been a financial burden for the country’s financial institutions, to the point where the government has considered reimbursing them for lost payments revenue. Access has remained an issue in many countries that have had card-based systems for a long time, even as those systems continued to be profitable for their owners and expensive for the users.  Governments, however, can put off short-term economic interests and prioritize citizens. Who else but the government can place public interests first and shift things in favor of the customers who need it most?

Government as a provider of non-rival services

There are certain things that governments are uniquely positioned – or at least most trusted – to do. Consider identity. The government collects and maintains information used  to identify people and gather other necessary information for law enforcement. Only the government needs to have this level of detail to carry out other state functions like taxation and the distribution of public benefits. How can the government tax us if they don’t know anything about us? This task would be challenging for the private sector to handle alone – consumers would understandably balk at the private ownership of public data. A publicly available identity layer can improve government performance, reduce fraud, and stimulate a new ecosystem. Currently, half of the people in Sub-Saharan Africa don’t have proof of legal identity. Having a legal identity is the first step to paying taxes or receiving government benefits. On the positive side, it seems Africans trust their government and public institutions more than other regions of the world.

Solving the Government’s problems today

Government needs these digital infrastructure solutions more than yet another lending startup or digital neobank. The government needs to have information, identity, and a cost-effective means to perform state functions, like taxation and distribution of public benefits. In other words, the government is the main customer for these use cases. TraderMoni in Nigeria, for example, emerged from a need to identify and disburse low-cost loans to Nigerian businesses. In doing so, they’ve created a reliable registry of SMEs in a country with more people than California, Texas, New York, and Florida combined. This, in turn, makes it easier to provide targeted government grants to those who need them most. This was the driving force behind the creation of India’s Aadhar – to improve benefit distribution to qualified recipients.

Slow down, so the government should build everything? 

No. But governments should actively create, manage, and oversee these solutions. Actually, the gold standard in public digital infrastructure, India’s layer, was constructed with significant input from the private sector.

Yeah, there are risks. We’re talking about data privacy, the risk of supporting or entrenching a totalitarian government, or simply facing public sector incompetence. To make things even more complicated, many African countries aren’t exactly strong states. How can they enforce or apply the necessary safeguards for something like this to work? Africa does have some promising initiatives, but very few are on a scale that can bring about significant change.

But what about the costs?

Even though it’s big, public digital infrastructure can be mega profitable. Plus, it’s not nearly as expensive as physical infrastructure. Solutions like Pix or Aadhar probably generate way more in value than they cost to create. Brazil’s Pix costs 5-10 times less than card payments, and given its scale, they must more than make up for it in volume. (One estimate says Pix cost about $10M to build.)

Get involved

The somewhat awkward(?) conclusion here is that the change we need – be it social, economic, or political – starts with getting involved with the government. Private companies can only do so much, but government direction is necessary to truly transform the lives of the millions of Africans who come online each year. When electricity was first discovered, people didn’t know what to do with it besides using it for lighting. But it’s a different game in Africa – we know what works and why.  It’s time for the government to lead. 

Best things I read this year

This is a list of the best media I consumed last year.

AI and the limits of language – Yann LeCun & Jacob Browning

With the hype around large language models, the authors make a compelling argument about the relationship between thought and language. Language is not thought or sentience, and can never be human-like in any real sense.

For more about how large language models like GPT work, check out this paper for a detailed explainer and a comparison between Humans and Large Language Models. Also see this rebuttal to the idea that Google’s large language model is sentient.

Abandoning the view that all knowledge is linguistic permits us to realize how much of our knowledge is nonlinguistic. While books contain a lot of information we can decompress and use, so do many other objects: IKEA instructions don’t even bother writing out instructions alongside its drawings; AI researchers often look at the diagrams in a paper first, grasp the network architecture and only then glance through the text; visitors can navigate NYC by following the red or green lines on a map.

What does a Batsman See? – SB Tang

This article is ostensibly about cricket (It’s in a magazine called Cricket Monthly!). However, I read it as a metaphor for life. Experts and amateurs look at the same things and see different things. What does a professional batsman see? I used to think that reflexes were about quick responses after observing an action. In reality, at the highest level, the fastest reflexes are about action after accurate prediction. It’s predictive, not reactive. They don’t have faster muscles, they have better ability to predict what’s going to happen, faster and quicker than anyone else, and act on that information.

Well, science now tells us that elite batsmen aren’t much different: they know where the ball is going to be before it gets there and saccade their vision to that point. That’s how they appear to have such quick reflexes.

Build: An Unorthodox Guide to Making Decisions Worth Making – Tony Fadell

If you build products for a living, you should read this book. In the interviews leading up to the release of the book, Fadell said how this is a collection of answers to the questions he gets asked the most. And boy, does it deliver. Tony Fadell has strong opinions about everything – hiring, the integration of product development and marketing, curating and managing a comprehensive product experience and much more. You won’t always agree with everything, but you’ll have to think carefully why you disagree with someone who helped create the iPod and the wildly successful Nest line of products.

Reversion to the mean – the real long Covid – John Luttig

A thoughtful note in May 2022 that foreshadowed the wave of technology layoffs through the end of the year. Despite Sequoia’s predictions of doom, the pandemic ended up being a good thing for founders and entrepreneurs, at least in the short term. More people were buying things online, and valuations were up and to the right to the new normal. However, by May 2022, most of those gains had been erased.

I’ve included my favorite chart from the article below.

Maybe e-commerce is not accelerating as much as we thought

There’s so much more in the article about what this means for investors and entrepreneurs. It appears, only a small subset of these long-term trends are permanent, if any.

Honorable Mentions

  1. Sandy Kempner on Fintech One-On-One podcast: This podcast opened my mind to the amazing world of working capital financing. The more credit is available, the more valuable “niche” solutions can be. I’m also fascinated because the product has its own growth loop embedded in it.
  2. So You Want to be the next Warren Buffet, How’s your Writing? : Investing is hard, we’re doomed to suck at it. And good work only comes from doing something consistently over a long period of time. And luck.
  3. My First Impressions of Web3: One of the more balanced takes on Web3 in a long time. You don’t have to agree with everything, but participants in this ecosystem must have a point of view about the points raised otherwise, they’re choosing to have their heads in the sand.

What’s next for Africa’s Telcos

Africa’s telcos are at once the best and worst investments in Africa tech. On one hand, costs are high, upgrade cycles are shrinking, and there’s competition in every layer. But, they have the largest number of users and sell a product that’s more important than food. Despite anaemic growth, telco bulls believe the trajectory is about to change. That’s unlikely. The reality is somewhere in the middle.

Mobile internet access has transformed Africa. The African consumer is “mobile-only” and more people are online than ever before. Lives have changed, and fortunes have been made. The largest telcos have grown to hundreds of millions of subscribers and more. They have become the largest companies where they operate. For example, MTN is the largest taxpayer in Nigeria (both intentionally and unintentionally). They create good jobs, and have an overwhelming distribution advantage.

All these haven’t helped them recently. Their customers are rejecting high margin voice and SMS, using free alternatives instead. Well-funded fintechs are threatening to turn telcos to dumb pipes. Even worse, the upgrade cycles are accelerating as customer needs are exploding. Telcos are making less money per user as users expectations grow.
Yet, there’s still money in bringing people online. Internet penetration is still less than the global average. 80% of Africa’s mobile connections are of the slower, less capable 2G/3G variety. But, unless there are material changes in cost structure (e.g., Jio or OpenRAN), it’s clear that the next customer will be less profitable for the telcos. Africa’s inequality is well-documented, and the wealthiest people are already online. In a world of declining ARPUs, subscriber growth will not be enough. The future is in value-added services. Besides customer growth, telcos have to figure out how to get more from the customers they have now. Safaricom’s M-Pesa validates the opportunity in high-value financial services. Every telco is asking “Beyond voice, data and phone, how do I get a share of my customer’s wallet?”

That’s the space to watch. Every telco is rebranding from “Telco to TechCo”. MTN went as far as creating a new brand. And then there’s mobile money in Africa’s biggest, poorest and most unbanked market, Nigeria. Smartmoney believes this is an opportunity for the ages. On the back of this, MTN and Airtel have raised money at eye-popping valuations.

Can Africa’s telcos transform from government-protected oligopolies to nimble, responsive technology companies? Can MTN provide a better experience for Nigeria’s SME’s than any of the one million startups doing this? Time will tell, but the telcos will have to win this battle to create any kind of value in the long term.

African startups need more money

African startups have raised more money in Q3 2021 than they did in 2020. Yet that is not even enough, and neither does it suggest a bubble in African startup investing. 

Like all capital markets, Africa is downstream of loose western monetary policy. Interest rates are low and investors are hungry for yield. Despite being high risk with many countries facing economic distress, African Eurobonds are 4x oversubscribed . There is money sloshing around the global economy looking for a place to rest. Why not Africa’s startups?

Skeptics say these companies cannot justify these sky-high valuations. The true market is small, customers cannot pay, and property rights are inconsistent. That may be true, but even in the worst case scenarios, the impact will be limited. Some Many investors will lose money, sure, but they knew the game before they started playing it. No singular implosion will be the reason investor sentiment turns. Case in point: Jumia. Even in the depths of its rollercoaster public market journey, African investment continued growing. 

It’s also not that much money. Relative to Africa’s population, economies, infrastructure deficit, or any other metric, startup fundraising has a long way to go. No African country is as developed country as Japan that lacks for nothing

Africa’s startup problems need asset heavy solutions. Your startup wants to build Electronic Health Records software? You need to pay for internet, electricity and on-site support.It is not enough to build a successful drug procurement platform for pharmacies, you must alsooperate your own.. There’s no USPS for Africa’s Amazon to piggyback on. In the West, you optimize your Facebook ads to find a seam and you’re off to the races. Some asset-light companies exist, but these are the exceptions that prove the rule.

Fundraising has positive externalities. When done right, these vast sums of money will buy African services, hire Africans and build infrastructure and services for Africans. In the US, the 2000s dot-com bubble built the infrastructure for a new generation of internet companies. Wages for skilled workers will go up as productivity increase. More young people will be attracted to a career in technology and consider starting a business themselves. 

Finally, the opportunity is massive. People are coming online faster than ever. Africa’s internet usage growth over the last 20 years is many times larger the “Jeff Bezos number”. Data costs are falling and will continue to do so, even as more of this young, mobile-first population comes online. The world is only just starting to pay attention. African entrepreneurs need the capital to build for these people. Keep it coming.

Content marketing and Africa’s tech scene

The best adverts don’t resemble ads. It’s why it’s getting harder to tell which Instagram story is an ad or from your friends, or why your favorite influencer puts “#ad” at the bottom of the post telling you just how much they’ve been working out lately.1

US venture capitalists and Tech companies do the same thing. Their CEOs write marketing pitches thinly disguised as books. Stripe moonlights as a book publisher. Basecamp has a blog, podcast and independently publishes books. 

This is much more than a startup’s corporate account creating a meme on Twitter. I’m talking about creating long-form content that requires investing time and money. 

Ostensibly, these companies create content to “give back” or “explain their secret sauce”. More likely, it’s an important part of controlling the narrative around their businesses. The content they create help attract people to join the company and venture capitalists to invest. This is especially helpful for companies who do not have access to the traditional reputation building opportunities available to more established companies. 

Why don’t we see more of this from African VCs and startups? 

My best guess is the participants think the market is too small. In Nigeria tech, all the players are a few degrees removed from each other. Paystack and Flutterwave worked together at founding. A chunk of the new startups founded in 2020 used to be at other companies. If you believe this, then it’s not clear how content can help you hire or attract funding beyond where you are right now. If you’re part of this space, you already know most people you need to know, and those that you don’t, your friends know. And if you don’t know, maybe you should go back to where you were working before.

However this isn’t true at all. The tech scene is growing exponentially in ways that are hard to see in real-time. Startups are attracting senior hires from Nigerian industry. Investor interest is multiplying as more VCs become interested in the Nigerian market. Content is a way for participants to get noticed, either by investors, future partners or prospective employees. 

On the other hand, creating quality content costs time and money, two things young businesses and startups lack. Again, this is a short-sighted view. It is easy to ignore the “marketing” part of content marketing, but getting customers and partners is part of the job at an early stage company. The right content marketing strategy helps you attract the resources you need to grow, whether customers, investors, employees, business partners, etc. 

Not all African startups hold this view. For example, Paystack has a great podcast and creates tons of content. Many founders appear on podcasts and give interviews that build their profiles and those of their companies. In the past few years, a number of startup-focused PR agencies have emerged to guide early stage tech scene participants through all this. But there’s still much more room to grow, and many more stories to tell. And yes, the marketing matters. 

  1. Well, that and FTC regulations that state an advert must be clearly disclosed. Otherwise, both creator and advertiser would rather pretend it is not an advert. ↩︎

Nigeria’s secured lending opportunity

Whoever figures out secured lending for Nigeria can build a billion-dollar business. Secured lending has worked in other emerging markets, e.g., Brazil with Creditas, and investors tend to bring business models that work in other emerging markets to Nigeria. Jumia’s existence was foreshadowed by FlipKart (2009) and Ola(2010) and they share the same investors. Why not Creditas and Nigeria? Who’s building this? 

It’s not enough to say, “Nigeria is different. Secured lending can’t work here” Rather, it’s looking at what the challenges are and whether intrepid entrepreneurs can overcome them. 

The secured lending opportunity

Secured lending requires borrowers to have collateral and Lenders can claim the collateral if the borrower defaults. Secured loans have higher approval rates, lower default rates and are more likely to be paid in an economic downturn. 

Whoever you ask, the opportunity is big. By some estimates, consumer loans is a NGN10.1T ($24.6B) market opportunity, and this most notably excludes small businesses. Moreso, Nigeria’s lenders believe customers want these loans and see demand increasing.


Creditas is a Brazilian fintech that provides customers with loans secured against a house, car or monthly paycheck. Creditas does not take customer deposits but instead chooses to build financial products around these 3 assets. Creditas has no branches; customers apply online or via WhatsApp and get a decision in minutes. They’ve also raised $564M and, as at Dec 2020, they have reached a $1.75B valuation.

Why Creditas works aka Sao Paulo =/= Lagos

Brazil is not Nigeria and Creditas works in part because of Brazil’s unique circumstances. Brazil has a relatively mature credit market, with $500B of debt outstanding. However, the rates are one of the highest in the world and there’s little competition in their concentrated banking sector. Creditas’ customer is the top 15% of the population with wealth trapped in a house or car. Their ideal customer takes out a loan from Creditas to pay off a higher balance loan from a bank. Brazil also has an economic and regulatory environment that’s favorable to non-bank lending companies. (Real Estate fiduciary liens that let you claim and sell collateralized property without court proceedings, Open Banking, etc)

What’s different about Nigeria? 

Today, most Nigerian banks provide mortgages, car loans or salary advance. However, rates are high and the duration is only 30 days. For example, Fidelity Bank “Fast Loan” for salary earners has a 2% monthly interest rate. To contrast, Carbon, an unsecured fintech lender charges similar rates for twice the duration, with no collateral required.

Regulation makes everything worse. For the Nigerians who have assets, you can’t use those as credit. Existing secured credit options focus on financing new purchases, not securing credit for existing owned items. For many reasons, you can’t get the paperwork required to use a security as collateral, and when you can the banks won’t accept it. I haven’t heard of a Nigerian bank to take an existing car as collateral for a loan, but I’m willing to be wrong. Case in point: Standard Chartered will only accept fixed deposit, mutual funds and treasury bills as collateral.

Also, credit penetration is low. Less than 6% of Nigerians have access to credit, and this has implications for how big lenders can grow in Nigeria. In developed markets, the primary way lenders assess credit worthiness is through credit history. It becomes a chicken and egg problem. No credit in the past equals no credit today. Unless, of course, someone figures out alternative credit scoring (completely different story), or secured credit. 


Some of the core problems are infrastructure related and Entrepreneurs are addressing these problems. In the last few years, many companies have started to build for entrepreneurs, for example solving problems in identity, payments, credit scoring and infrastructure. 

The National Collateral Registry promises to enable movable assets as credit. If it works, borrowers can register movable assets and lenders can confirm prior liens on the same asset. Unclear how successful this has been so far.

Lending depends on understanding Risk

In its simplest form, Lending depends on understanding a customer and being able to measure that customer’s unique risk perfectly. When lenders can’t accurately assess risk, the default is to assume everyone is risky. Most people only lend to friends because they have some assessment of how likely they are to pay back (credit scoring) and what their options for remediation are (zero to none). 

When done right, secured loans are lower risk and should be treated accordingly.

For more on Africa’s lending opportunity and the startups in this space. Listen at afrobility.com/lending

Nigerian entrepreneurs succeed despite Nigeria

Nigeria is a country of extremes. It is the country of limitless tech opportunity and the country with the highest proportion of poor people. As a result, investor sentiment swings wildly. We’re either the darkest part of the dark continent, or the bright spot for opportunity. 

Today, Nigeria is in the incandescent phase aka “The future is so bright it burns my eyes”.

But why now? Headline acquisitions and fundraising are lagging indicators. The hard work of building a company worth acquiring happens well before TechCrunch. Also, Nigeria’s economy has continued on the same wobbly path as it has for the past decade. Something else is going on. 

Acquisitions and Fundraising news are smokescreens

The last 12 months have been amazing for the Nigerian tech scene. Paystack was acquired by Stripe. Flutterwave reached unicorn status. Jumia went from $3 per share in April 2020 to $62 in November of the same year. 

But these stand in opposition to Nigeria’s economic reality. The fundamentals of the economy are in free-fall. Nigeria’s jobless rate has quadrupled over the last 5 years and today, less than half of Nigeria’s labor force is fully employed. Violence and insurgency threaten lives and property in Nigeria’s north-east. It is harder to start a business in Nigeria than in Egypt, South Africa, or Ghana. Permits take months instead of days, and incoherent government policy is a cloud over startups that could rain any moment. All this as the population inches towards 300 million by 2050. 

Despite these dire circumstances, there’s still opportunity. 

What Nigerian entrepreneurs are doing differently

Successful Nigerian entrepreneurs are fearless and many go against conventional advice. They try new business models and are starting to attract capital on their own terms. 


Businesses are the primary customers for 4 of 5 Nigerian startups in Y Combinator W21. This is also true for the W20 batch

These B2B startups are important because they make entrepreneurship less risky. The businesses use the startup’s services to make money so they are easier to get and keep. Also, the more customers you get, the less sensitive you are to individual businesses.

Because businesses use the startups to make their lives easier, they are easier to acquire and retain. Today, Paystack and Flutterwave make it possible for businesses to pay and get paid. They eliminate an important business risk for other businesses. These B2B startups also enable new business models that were previously impossible. Many of the savings, stock trading, and food delivery apps are only possible because of these B2B companies that handle, say, payments or identity verification. 

These B2B startups provide the building blocks for other entrepreneurs. Over the next few years, the best companies will build for other builders. 


Nigeria’s upper class is minuscule relative to the rest of the population. Yet, because of the size of the country, the middle class remains a significant market. There’s not enough of the upper class to build a big consumer business and the lowest income classes are either too poor or too expensive to serve. The opportunity is in the middle class. These customers’ needs are not met by the current solutions, and the high-end options are out of reach either because they’re too expensive, or for other structural reasons (e.g., I can’t use Venmo for P2P in Nigeria because licenses)

The startup that comes to mind here is uLesson. Their product, education, is one that most want. Nigeria’s upper middle class can afford to send their children to the best schools. They hire private tutors for after-school classes. The rest of the middle class have to make do with the available schools and find ways to supplement their children’s education. For these customers, uLesson provides an affordable, technology-enhanced supplement. They price this product on the middle-class’ willingness to pay, and have recently raised prices to reflect this (and of course, to cover their costs). 

See this HBR article for more on building for customers in the middle. 


This is more relevant to services or software. Services are unrestricted by physical borders, and in most cases have near-zero marginal costs. 

This is already happening. Startups like Moneymie are going after the immigrant population using remittances and money transfer as a hook. Individual creators are selling NFTs and making a lot of money. Sight unseen, a Nigerian produced a billboard-charting song for Tekashi 6ix9ine.

Startups that serve international customers develop good habits as these customers tend to have a high quality bar. At the same time, the Nigerian entrepreneur can provide these services at a much lower cost with better margins. Shola Akinlade, Paystack CEO, built and sold a software solution to 200,000 international customers before starting Paystack. The best customers for Nigerian entrepreneurs may not be in Nigeria or even Africa. 

Whatever happens, entrepreneurs need to keep building. Nigeria’s collective and individual success will have to happen despite the current macro trends.

”Everybody is doing it” is a bad reason

People worry about starting projects in crowded spaces. Peter Thiel says competition is for losers($). Kevin Kelly, the founder of Wired magazine, says you should work on something nobody has a name for. Everybody wants to work on a new thing or do something that has never been done. 

However, for every company that created a category, there are more that entered crowded markets. Facebook was not the first social network, and Google was not the first search engine. This is as true for individual creators as it is for businesses. 

When does it make sense to go where others rush in? 

People have been concerned about crowded markets for centuries. Everybody was printing books after Gutenberg’s invention1. I’ve read that reducing the cost to create content reduces the value of all content created. By this logic, the mobile phone, which makes it easy to record audio and video, reduces the value of all created content. 

This isn’t true. In fact, the opposite happens. The more people can create content, the better the best content becomes. For example, it’s trivial to write and share a newsletter, but few do this as well as Byrne Hobartor Packy McCormick. Something else is happening. 

The lower barrier to entry creates new opportunities. It allows creators to differentiate themselves. Some do by finding a niche. For example, the most popular newsletters create content for a narrow niche, or 1000 true fans. At least they start there; Matt Levine’s newsletter is for finance nerds but has gone mainstream

There is also the opportunity to differentiate by providing higher quality or a different approach to solving the problem. Google developed a better way to search by analyzing the relationship between websites. Facebook took advantage of network density and engagement in US college campuses. 

The next time you walk away from something because “many people are doing it”, remind yourself that is not a good enough reason. There is second order question to ask about if you can differentiate yourself in this space

  1. Fifteen million books were printed in the first 42 years of the movable printing press, more than have been printed in the preceding 1000 years. https://www.uh.edu/engines/indiana.htm ↩︎