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Ade Olabode: Why Tech Startups Ignore Majority Of Nigerians

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“We need to look into how to reach the core market woman in Isale Eko ,the vegetable farmer in Birnin-Kebbi, the trader in Asaba and other core / remote areas who are averred to new technologies or ideas.”
This comment* was from my last article titled ‘3 Areas That Small Business Owners in Nigeria Need Tech Startups‘. It was profound in its simple truth and really got me thinking. To rephrase it another way, “why are startups ignoring the majority of small business owners in Nigeria?” Sometimes it’s easy to forget that Nigeria is a country with different types of small business owners. As the CEO of a startup (PrognoStore) myself, I was guilty of thinking first of people that are not ‘averred to new technologies or ideas‘. And thinking that way, may lead to excluding the vast majority of people that need technology and innovation to solve their pressing needs.

You might say hold on ‘who says a product is not meant for them as well?’. It’s not like anyone is stopping them from buying the product, right? Well, it doesn’t quite work like that. Products/services are usually made with a specific type of customer in mind. This specific customer is pre-determined through customer/buyer persona. And the way the customer discovers the product is also mapped out by crafting a customer journey. This means for start-ups, customer persona tells them who their targeted customer is, while a customer journey tells them how the customer arrives at the decision to purchase. It’s all very deliberate. In most cases, the customer persona chosen excludes the majority of Nigerians. The preferred one always seems to be upwardly mobile, tech savvy, high earner and literate. That’s just how it works.

Now before I’m accused of making sweeping generalisations, there are indeed startups reaching out to everybody. For instance, payment startup Paga is doing an excellent job making it easier for people to pay and get paid. Road Preppers is another good example of a startup tackling a problem faced by majority of Nigerians; reliable road information. Their service allows for community collaboration to provide best routes, fare quotes and transport/driving directions. A young startup, but definitely one to watch.

However the reality is that in Nigeria, the opportunity presented by our infrastructural problems is a double edged sword. On one hand, there’s no limit to the impact that a new product or service can have. On the other hand, because there’s such a wide gap in market needs, startups have to pick and choose who they serve.

So here are the 4 reasons start-ups neglect majority of Nigerians:

Lack of purchasing power
If you have a product targeted to provide solutions for the ‘vegetable farmer in Birnin-Kebbi’, can he afford to pay for it? The sad reality is that startups will prioritise for the segment of customers that can afford to pay for their product or services. This means that some customers will be excluded simply because they can’t afford to pay for it. To state the obvious, people will rightly prioritise the basic amenities such as food, clothing, housing etc before paying for a non-essential product/service from a startup.

Lack of internet connection
Good and reliable broadband access is not compulsory for startups to deliver their products/services. However the internet is the preferred method that start-ups reach the market, deliver their products and get paid. This means that if ‘the trader in Alaba’ is without access to good and reliable internet connection, the chances of him hearing about solutions to his problems are slim.

Technological/Design challenges
It’s actually ‘hard’ to build an ‘easy’ to use product for people not familiar with technology. Thinking about how many times I’ve had to show my mum how to ‘use’ a phone, has made me determined to build a product anybody can use. But in reality, this is not an easy task. Startups sometimes miserably fail in designing a product that is easy and simple enough for anyone to understand, while at the same time powerful enough to solve their needs. It’s a tough one.

Difficult to reach
Startups by nature are very scrappy. There’s never enough money to do all the things they want. So it’s only natural that they concentrate on urban areas, which are easily reachable and probably neglect the potential customers living in ‘core/remote areas’. This is further compounded if people living in the remote areas lack internet connection (see #2). This means not only are they hard to reach, they might not even be aware that there are available solutions.

Now you might be unhappy about this sad state of affairs. Or maybe even angry. But I’m actually optimistic that more startups will start providing solutions which will benefit all or majority of Nigerians.

Here are 4 reasons why start-ups will start focusing on reaching ‘the core market’:

High purchasing power
The ‘market woman in Isale Eko’ who has owned a store for the last 20 years is probably a millionaire in dollars! She can afford to pay for any product a startup has to offer with only one simple condition; it’s easy to use. Make it easy for her to use and you break the greatest barrier to adoption.

By the way ‘Isale Eko market woman’, my startup PrognoStore is coming your way soon. It’s a simple Point-of-Sale solution to run your store. And dear readers, if you want to help in spreading the word about PrognoStore to your own clients, join me here.

Diversified market
An airline sells first class tickets and economy class tickets on the same flight. A startup will have an advantage by diversifying its customer’s base along product lines. Of course the ability to do this will differ from each startup and care has to be taken not to cannibalise yourself in the process.

Increase in valuation
Generally startups value can be viewed as a function of revenue (eg gross merchandise volume for eCommerce start-ups), users (eg active monthly users for a payment startup) or combination of both revenue and users. This means that a firm which is able to increase its customers/users numbers will likely benefit from an increased valuation.

Competitive advantage
Now Mr or Ms CEO, remember how you sometimes dreamt that you could ‘own’ the market? Well, how can you do so if you ignore a huge chunk of Nigerians? This is your chance to corner the market, win mindshare and truly own the market. You can only do this by catering for the majority. Go for it!

In summary, there are indeed various well documented problems Nigerians are facing. However this provides a unique opportunity for tech start-ups to impact the life of many. Solving these problems is a work in progress, but examples of Paga, Road Preppers and PrognoStore (soon to launch) gives us confidence that the work has started

*Thanks Lekan O for your comments. My dear readers, I always want to hear your thoughts so please let’s continue the conversation in the comments below.

Photo Credit: Dreamstime | Innovatedcaptures

Papa Olabode is an adviser to small business owners. He's the co-founder & CEO of PrognoStore (www.prognostore.com), the Point-of-Sale Software for small businesses. PrognoStore is a 3-in-1 solution as it combines point-of-Sale, Inventory and Analytics to be all you need to run your store. He's a chartered accountant and has previously worked at Deloitte, Credit Suisse and co-founded HGE Capital. Follow on Twitter @papaolabode

8 Comments

  1. Chuka

    October 28, 2015 at 6:07 pm

    Good write up..

  2. Tito

    October 28, 2015 at 6:25 pm

    I had actually never heard of Roadpreppers before today,, checked it out just now and it’s a really cool site. I like it.

    Internet connectivity is a big problem in Nigeria. Infact, there are many problems in Nigeria – things that are basic everywhere else in the world; on the plus side this means the opportunity is there to create solutions to these problems but funding is needed. More support for SMEs.

    I enjoyed reading this article btw.

    • Ade

      October 28, 2015 at 9:50 pm

      I’m a big fan of Road Preppers! Even if they can fufill just 10% of their potential, they’re guaranteed to improve the lives of millions of Nigerians….on a daily basis. That’s awesome!

  3. Tosin

    October 29, 2015 at 12:22 am

    wehdone!

  4. Taiwo Olaiya

    October 29, 2015 at 10:54 am

    These are very spot on points, however one cannot stop to imagine how Facebook or Apple for example are able to make their product offerings basic to “everybody”? How hard is it to think at this product offering frequency? Or maybe it’s not about the thinking, but the investment of time and money in cracking these basic ideas?

    • Ade

      October 29, 2015 at 7:50 pm

      Good observations Taiwo. And you’re right that the Facebook and Apples of this world have invested considerable energy in making their products usable by a wide range of ‘people’. They’ve not always gotten it right every single time, but the key thing is that they’ve kept at it. That’s what we also need to do! We also need to spend enough energy explaining (marketing) the benefits of our products.

  5. Lekan O

    October 29, 2015 at 6:30 pm

    Hi Ade, nice write up once again. I like the idea of highlighting the pros and cons of reaching out to core cum remote customers by tech startups.
    I feel one other way of breaking the communication barrier is trying to gain investor confidence(I believe this applies across board) . But since we are trying to concentrate on a particular market ,which has been ignored for too long, it has to take a gradual,systematic approach by tech startups to gain the confidence of this target customer(s).
    The FGN did something similar via introduction of GSM to local farmers in aiding with the distribution of Fertilisers to break the hegemony of the middleman.
    I met with a few farmers who hitherto only used their GSM phones to make and receive calls,now they are able to get necessary info about availability of fertilisers,and other farm inputs. See:
    hotnaijanews.com/2013/10/06/the-opinion-of-farmers-in-gombe-state-nigeria-on-fertilizer-distribution-using-gsm-phones-growth-enhancement-support-schemeges/

    My point is that tech start ups ,if possible,should engage local authorities in helping them reach out to these target customers.
    People by nature are often skeptical when it comes to embracing new ideas but tend to relax their guard once a known or familiar face or person is involved hence investor confidence via community relations.
    As you opined,introducing new technologies to ‘local’ audience should not come at cut throat cost and attention should be paid to user friendliness…
    Nigeria is a huge potential for existing and new products because of her demographics consisting basically of youths,and approximately 50% urban dwellers, who wouldn’t want a share of the market?
    Best wishes.

    • Ade

      October 29, 2015 at 8:03 pm

      Good points as usual Lekan! I totally agree that there’s a BIG role for government to play, in bridging the gap between people and efforts from startups. The truth is that the GSM example while good, is probably one of the few and rare examples where government has played its part very well. We need more of that support on a consistent basis. So from policy, investment in infrastructure (eg broadband), education reform etc, government can make a massive difference. We can only hope…

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