Aspirations of Nigerian firms, cum Africa, especially those in the technology space to hit the $1 trillion market valuation like Apple and Amazon, may not happen until 2050.This is the submission of industry experts, who spoke with The Guardian. To them, the fundamentals in the country have not shown anything promising, but more or less a bleak future because of obvious challenges in Nigeria and Africa as a whole.
The President, Association of Telecommunications Companies of Nigeria (ATCON), Olusola Teniola, agreed that the new unicorns in Africa that can hit the $1 trillion valuation in ICT will most likely come from Kenya, South Africa, Egypt, and Nigeria. Teniola however, noted that on the long term, these unicorns may grow into the likes of Apple and Amazon by 2050.
According to him, on the back of a growing demographic that is below 34 years old, and “the penchant to diversify the economies of Africa away from reliance on the extractive industries, there’s a possibility for the youth to leverage local music and film content.
The main challenge is the youth mindset in not believing that they have their own destiny in their hands.”To Kehinde Aluko, a telecoms expert, getting to that level requires ruggedness and huge investments, coupled with a favourable government enabled environment, “I am looking at 20 to 30 years from now for that to materialise.
If you check those companies, I mean Apple and Amazon, they didn’t just start now, it was a journey for them. The earlier we start the journey here, the better for the economy as a whole. I don’t think we have started here.” From his perspective, the Group Managing Director/Chief Executive Officer, CWG, a listed firm on the Nigerian Stock Exchange (NSE), Mr. James Agada, believed that on paper, it is possible for indigenous IT firms in the region to get to that level, but practically it may not materialise on time.
Agada explained that Nigerians often place value on companies based on their ability to pay dividend, “but if you go and check, Amazon has never paid dividend, but their Chairman and CEO is the richest man in the world. They don’t pay dividend and they are not about to pay. Even if you check their figures, they are barely breaking even.
The issue in Nigeria, is that what we consider as assets here differ from what they consider as assets or capital there. In America and other developed countries, they are looking at the firm’s future potential. They see Amazon, Apple in that clan of bringing out huge potential. “Even if you look at our banks, you will think they are big, but they are actually small. They are small because if you look at how much dividend they have to pay every year, to do a major investment may be difficult.”
Agada said the country may end up seeing Nigerian-majority owned companies operating from the U.S., to adopt American operating system to grow very large, as is already happening in startups, like Flutterwave. “This firm is registered as a U.S. company, even though it is mainly run by Nigerians, and same goes for Andela.”
On the possibility of government‘s policies changing some things positively, Agada noted that the American system believes strongly in future value to be created in another 20 years because they have policies that create stability that will guide against major shocks or disruptions. But in Nigeria, there are very few people, who believe in its future.
“So, in terms of policy in my view, it will be to start creating that environment that will give people confidence that there would be a future; if not, Nigeria would continue to be a short time country, banks will not give long terms loans and the challenges will persist.” At his book launch in Lagos, the Chairman, Zenith Bank, Mr. Jim Ovia, believed that the future is bright for technology companies, saying: “The Internet enables you to do online transactions, online sales, online education and everything.
Amazon is now over $1 trillion. This Amazon doesn’t have a factory anywhere. They don’t have any oil well at all, but have over $1 trillion in market capitalisation – richer than Nigeria with twice the GDP of Nigeria. It is because they embraced technology and the Internet.