In Search Of The Nigerian Amazon
By Gideon Ayogu
For long muted on Wall Street, the signal is now clear.
Amazon, global e-commerce giant, is on the verge of not only overtaking Apple as the world’s most valuable company but the first company worldwide to hit the $1 trillion mark. Bullish projections indicate that this could happen in late August 2018 if Amazon’s stock, which has surged 83 percent over the past one year, continues its impressive revenue growth.
Aided by an astronomical increase in online shopping and growing patronage of cloud computing by businesses, an area in which Amazon Web Services dominates, Amazon has continued a remarkable run which saw it dislodge Microsoft Corp. as the No. 3 U.S. company by market capitalization in February 2018.
A few analysts have, however, attempted to douse the enthusiasm, citing the fact that stock gains are not a reliable predictor of future performance and also in view of the fact that Amazon’s recent streak has been quite outstanding. For these, the expectation is that Amazon’s stock will rise 10 percent within the next year to reach $1,700, which would give it a market value of $823 billion. Furthermore, data from Thomson Reuters shows that Apple’s stock price will expectedly rise 11 percent and reach $195 within the next 12 months, which would put its market capitalization at $989 billion, keeping it just ahead of Amazon.
The overwhelming view though remains: should Amazon’s stock keep up the exceptional growth trajectory seen over the past year, the company’s market capitalization would hit $1 trillion in late August while Apple would reach $1 trillion around a week later if its stock price continued to rise at the same pace seen over the past year.
There is no denying the fact that Jeff Bezos, founder and owner of Amazon, has shown the world just how far ecommerce and a disruptive approach can go in leading a business to record-shattering heights.
To a smaller extent, a certain Jack Ma who failed repeatedly in school and now the brains behind Alibaba, another e-commerce giant making waves in Asia, has also shown what can happen when e-commerce meets opportunity and a conducive/supportive business environment.
To put Amazon’s mind-blowing strides into sharp relief, it is worth considering a few facts.
Nigeria’s 2018 fiscal budget, which was recently passed by the National Assembly is about N9.1 trillion. This figure, which covers the country’s entire spending for the year, is just about $25b – a paltry 2.5 percent of Amazon’s projected $1 trillion worth.
Also worth considering is the identity of the first five most valuable companies in the world.
Of all the most similar attributes displayed, one thing binds Apple, Amazon, Microsoft, Alphabet (Google) and Facebook: they are first and foremost technology companies, all of whom, as described by Forbes in its recent valuation, have successfully consolidated their power in recent years by leveraging cutting-edge technology, driving huge profits and soaring market values.
There is indeed no doubting the power of technology as a leveler and game-changer. Technology can produce power-houses, global conglomerates with market capitalization figures that can make the annual budget of several nations pale into insignificance.
What has remained perplexing is the inability or refusal of the Nigerian government to see/appreciate the power of technology as perhaps the country’s best chance of closing the ever-widening gap between it and the advanced countries of the world. Why is there hardly any meaningful form of government support for tech start-ups and other players in Nigeria’s technology sector?
Entrepreneurship in Nigeria is not a task for the faint-hearted.
The Nigerian business terrain/economy, blessed as it is with an overwhelmingly youthful population and the potential to catapult a business overnight sadly, still remains a very tough and challenging one. Start-ups here face a herculean fight staying afloat. A recent survey showed that over 70% of start-ups in Nigeria go down under before reaching their fourth anniversary. Many of these go unannounced due to the stigma associated with failure in these parts. Indeed, one of the biggest fears of an entrepreneur in Nigeria is the fear of failure. This is opposed to the case in advanced climes where business failure is treated as a cathartic process, one that is chronicled and encouraged as a learning curve for the person involved and others.
It is worse when you are a start-up entrepreneur in Nigeria’s technology sector, an industry in which the government has so far shown little more than a passing interest in and no demonstrable commitment; a battle of attrition for many.
It is a conundrum that has defied all forms of rigorous introspection, especially considering the seeming willingness of the government to commit sizeable funding and support to agriculture.
Perhaps, we are better reminded that we live in the 21st Century, one in which knowledge has become a right; where new technologies such as Robotics, Artificial Intelligence, Big Data and Machine Learning, among others, is redefining the scope of work, business and human engagement; where electric, driver-less or flying cars could soon see fossil-fueled ones become an anachronistic relic; where the power of technology and industrialization has made China, once derided as a paper tiger, a major world power giving the United States of America a good run for its money and where technology has transformed the four (actual) Asian Tigers of Hong Kong, Singapore, South Korea and Taiwan to global hubs of innovation and manufacturing excellence.
Today, Amazon has created jobs for over half a million people in America – a figure that is still rising. And in recognition of the company’s contribution to the United States’ economy, the e-commerce giant paid zero federal taxes in 2017. It is also being rewarded with further tax breaks at the state and local level.
How many potential Amazons would emerge from the Nigerian tech sector, should the Nigerian government toe the path its United States’ counterpart did with Amazon? Possibly enough to place our technology narrative and Nigerian tech companies/start-ups on the path of global reckoning.
Here in Nigeria, the country can boast of Leo Stan Ekeh, founder and Chairman of the Zinox Group – a technology conglomerate that has empowered thousands of Nigerians and through which he has created direct and indirect employment opportunities for millions – the closest entrepreneur in Jeff Bezos’ terms in these parts. It is instructive to note that he has also remained true to his chosen field of technology in spite of the considerable lure of quicker returns or existence of more institutional support in other sectors such as banking and the once-mighty oil/gas industry.
In Konga, one of Nigeria’s most prominent e-commerce pioneers which Ekeh acquired from erstwhile investors Naspers and AB Kinetic and which recently merged forces with another bold entrant Yudala, the country can also count on a business that has clear designs on improving the lot of Nigerians through a suite of creative avenues and expansionary moves.
One of these is a well-publicized impressive retail roll-out plan which is bound to see Konga establish a presence in Nigeria’s 774 local governments, a cost-intensive feat that will create tons of employment opportunities for residents in these various locations.
Renowned for its uncompromising stance on quality, a tradition that Yudala, which it merged it, was well-known for; the new Konga that emerged in May 2018 is now widely recognized as the best source for genuine products in Nigeria’s e-commerce space – a burden that has also reportedly seen the owners of the business invest in massive warehouses nationwide to enable it scale inventory/stocking, another investment that is bound to throw up additional jobs for Nigeria’s teeming unemployed youths.
But can an Ekeh, for instance, count on the government for tax breaks, tax holidays or any other form of incentives to encourage him to do more?
.Gideon Ayogu is Head, Corporate Communications, Zinox Group.