Ran into a friend yesterday in Lagos. He relocated – part relocation; divides his time between Lagos and NY – to Nigeria two years ago to start a service business. He actually cashed out his 401(k) pension plan and invested it in his Lagos business. Now he wants to expand into another line of service business, and he’s fundraising in Nigeria and abroad. Has commitments in excess of $750k. A chunk of that money is from Nigerians living in Nigeria. He attributes this success to the fact that he already has a business running quite successfully. He’s optimistic about success, but at the same time worried about the security implications of the 2015 elections.

A few hours later I ran into another young Lagos entrepreneur. Interesting conversation about the size of Opportunity in Nigeria, considering we’re starting from a low/no base. He highlighted retail distribution as one of the biggest codes waiting to be cracked in Nigeria. I mentioned NIPOST, the government-owned postal system that almost no one I know still uses. I recall Minister of Communications Technology saying NIPOST has the largest existing infrastructure spread in Nigeria. In excess of 3,000 buildings nationwide. The closest competition is banks – but no Nigerian bank has got up to 1,000 branches.

The problem is that NIPOST is in government hands. Which means it’s not quite dead, but also nowhere near alive-alive (grossly underutilised/underperforming, when you put output side by side with potential). Privatisation has been in the works for several years now, but this is Nigeria. Mrs Johnson appears to have big plans for it, but I’m not sure how feasible that would be without some form of private-sector involvement.

Will NIPOST infrastructure – in the right hands – play any role in altering the face of retail in Nigeria?

The answer is chilling in the post…

Tolu’s Takeaway

1. There’s money in Nigeria. The problem is connecting the Money with the Opportunities. On the one hand there’s money, on the other hand there’s very little of it going into seed-stage financing for good ideas.

2. There could be even more money in Nigeria. There are people who’ve got money sitting idle, who haven’t even realised what their money could be doing (This story, from a few years ago, always comes to mind).

3. My friend believes there’s not enough entrepreneurial passion among young Nigerians. Says he’s pained he keeps meeting young Nigerians who claim to be entrepreneurs but are ready to up and leave at the first whiff of a modest-paying office job offer.

4. Home-based Nigerian investors are too focused on traditional areas like oil and gas, and real estate, to devote their attention to newer areas of growth like e-commerce and services targeted at upscale clientele.

5. As local manufacturing and e-commerce and Nollywood grow there will be even more intense demand for distribution systems. The sort that allows you to release a line of shirts or a DVD in Lagos and have it stocked in a few thousand outlets across Nigeria in days. Of course people are at work on all sorts of business plans to tackle this – I doubt there are any successes yet…

2014-07-13