Things Have Changed
Things Have Changed
Revolutionizing Nigeria: How Silicon Valley Dreams Are Transforming an Oil Giant
Over the past few weeks, we've delved deep into the stories of remarkable companies, visionary founders, and dynamic landscapes of emerging markets!
So, where are we zooming in today? Nigeria, Africa. We're exploring the remarkable story of Nigeria, a nation that has emerged as the largest economy in Africa. With a diversified economy and abundant natural resources, Nigeria’s journey isn't just about oil anymore. It’s about tech, entertainment, and an entrepreneurial spirit that refuses to be quelled.
Join us as we dive into the secrets behind Nigeria's transformation on the global stage, exploring the factors that propelled it to an economic powerhouse on the African continent.
In the past few decades, it's been like watching the world shrink right in front of us. Globalization has turned our planet into this super connected place where everything's buzzing borders. They've become kind of blurry. I. Businesses. Oh man, they're popping up all over the globe and Tech. Well, it's like the ultimate game changer, making even the most remote spots possible market hotspots, but the winds of change are blowing. Once again, enter globalization. While it might sound like we're hitting the brakes, it's a bit more complicated than that. Countries are revisiting the whole global trade angle. Thanks to the volatile past few years we've witnessed from rising trade tensions, evolving geopolitics and supply chain crises driven by covid. We're moving from that whole worldwide party mode to a chill regional hangout scene.
Shikher Bhandary:Over the past few weeks, we've delved deep into the stories of remarkable companies, visionary founders, and dynamic landscapes of emerging markets. So where are we zooming in today? The answer, Nigeria, Africa. We're exploring the remarkable story of Nigeria, a nation that has emerged as the largest economy With a diversified economy and abundant natural resources, Nigeria's journey isn't just about oil anymore. It's about tech, entertainment, and an entrepreneurial spirit that refuses to be quelled. Join us as we unravel the secrets behind Nigeria's transformation on the global stage.
Jed Tabernero:Some songs that have been coming up in my on repeat playlist. It's been like number one for the last maybe three months. Just one song, bro. Who Told You featuring Drake. You know that song?
Nigeria_V0-02:no, no.
Nigeria_V0-01:Who told you bad men can't dance? You don't know that song? It's so good. It's so good. This really popular song is kind of a part of a wave of Afrobeats, dude. It's been hitting the nation. Everywhere I go, when you hear clubs playing music, there's some Afro beats. So crazy,
Nigeria_V0-02:of like, um, reggaeton, right? Where six years back, how many people were actually listening to like, reggaeton?
Nigeria_V0-01:Yeah. I mean, people in Latin America probably,
Nigeria_V0-02:talking about like the global stage, right? Bad Bunny wasn't a thing. Now Bad Bunny is the biggest artist in the world. So there's, there's a huge wide shift.
Nigeria_V0-01:Hell yeah. And I feel like bad bunny working with artists like Drake and folks in the U S like that was kind of insane for us to see and to have songs where like English and another language was there. I don't know. I felt like that was really cool to see that.
Nigeria_V0-02:Yeah, and and with this whole Afrobeat sensation, it definitely is an export of like culture of the African culture, which is really cool to see a big driver of all this comes from Nigeria.
Nigeria_V0-01:Exactly. And, um, Nigeria, of course, if you've paid attention to the news, know that it's a growing economy it's got a GDP of half a trillion as of 2022. It's quite a large economy,
Nigeria_V0-02:Yeah, I wouldn't have guessed that it is half a trillion, right? That seems like a big number, considering how infrequent. It's mentioned in business media.
Nigeria_V0-01:Yeah. I mean, if you've been paying attention, kind of like what shows like the economist, which I fricking love, they've been talking about this phenomenon of Africa being kind of the next economic powerhouse because it's growing so much. And the theory that the economist at least laid out was that because Africa had a really young population, Yeah. And especially in like Nigeria, dude, 70 percent of the population is under 30. Isn't that crazy?
Nigeria_V0-02:Say that again. Say that again.
Nigeria_V0-01:percent of the population is under 30 years old.
Nigeria_V0-02:That's insane.
Nigeria_V0-01:that's a big number. That's a big number. And it's, it's a young population. A lot of new ideas are coming out. Like it's significance in the African stage has been growing, but it's not immune to like what's happened in the world in terms of inflation. The topic that we've been talking about the last two years, like it's still kind of crazy over there and unemployment is still pretty bad. Like it's up 30%. So it has its problems, but You're right. It's economic significance in the region is is growing.
Nigeria_V0-02:Yeah. And what's interesting is, uh, you know, a lot of, um, Indian companies have explored Nigeria and Western countries too with subsidiaries in Nigeria. So Airtel, which is a big telecom company in India has an Airtel Nigeria. Right. Which is public and one of the biggest stocks on their stock market. Same with like, uh, Cadbury, you know, growing up in the developing world. You, you might know as well, Jed, we had Pepsi, we had Cadbury, we had, you know, those staples. So you do see those subsidiaries still having a big presence in the Nigerian market, but staggering that it is home to the largest youth population in the world.
Nigeria_V0-01:Yeah. It's pretty interesting and I think one of the things that make it such a powerhouse is the natural resource of oil. Right? I think if you know anything about oil reserves in the world, Nigeria has one of the largest. So it's been kind of endowed with this natural resource that they have been exporting at like very large rates. Like it's been very significant in its entire GDP. Oil takes up a lot of that. And right now, kind of the recent developments in the industry and oil prices in the last few years has been very volatile. It's hard to stick to one resource. We were chatting right before this call and we talked about, you know, Saudi and how that's going for them. Them switching from a really resource heavy economy into like something more like tech.
Nigeria_V0-02:Yeah, it's just about spreading risk, right? 80 percent of Nigeria's export revenue comes from oil. Like, that is just one misstep in that direction could cripple your entire economy. So, uh, which is happening right now, right? In recent years, they have been hit hard by the decline in oil production causing a recession. Right. Yes, it did rebound into 2021, but still the growth has been slower than what it was in the early 2010s. My money's coming from just one source. I need to start diversifying that risk. I need to start investing in other economies. And that's what we're seeing with Nigeria, where they're investing in agriculture, tech. The population is young, so they want a cell phone, they want e commerce. And we are seeing these trends accelerate.
Nigeria_V0-01:Yeah, really interesting. And you know, what's kind of been happening to oil generally has really been pushing that trend, you know, pushing them to make those decisions about risk and how to spread it. Like for a 13th consecutive quarter, oil sector has contracted, you know, it's It's a long and slow burn for them, but investing in these new things, you know, like one of, one of the biggest kind of projects that has happened to the last few years is that then go to refinery, this refinery helps them actually refine the oil, instead of just being able to extract the natural resource, the raw natural resource, right? A capability they didn't have before. So. That's kind of one of the big investments that is going to define how they interact with other industries going forward, spreading that risk.
Nigeria_V0-02:So you mentioned that the oil sector shrank, right, for the 13th straight quarter. So how is it that this country with so much dependence on oil still managed to grow, considering their biggest industry shrank? So what's the cause? Is it, is it the non oil stuff?
Nigeria_V0-01:It's gotta be dude. It's gotta be right. Like these other economies like tech have been growing like crazy, a lot of investments. Also there's foreign investment like crazy because of kind of the relative stability that it's achieved over the last few years. Very relative by the way. Still not like Western standards in a way, but you know, it's getting there. Therefore investment is flowing in, especially for tech tech is a huge driver in this, you know, a lot of large, um, tech giants are already forming up from Nigeria. Like flutter wave, right?
Nigeria_V0-02:I just pulled up the stat and it showed that this whole diversification of the economy is kind of bearing fruit because even though the oil sector shrank, the non oil sector grew by 4. 6%. So overall, you know, The economy still grew so very interesting to show that shows that hey, you know Your tech and entertainment can emerge as a key driver of growth We started this call talking about afrobeats. They are actually exporting their culture.
Nigeria_V0-01:Yeah, dude. Burn a boy, burn a boy, baby.
Nigeria_V0-02:Yeah. Yeah
Nigeria_V0-01:you know what I mean? Like,
Nigeria_V0-02:Okay, he was The opening act for the 2022 champions league final. So his, his rise to stardom is incredible. He's selling out stadiums in the UK, in Europe, in Paris, uh, in the U S. So, yeah, I mean, the beacons. Of this new Africa, this new Nigeria, right? So, uh, it's definitely coming together and hopefully this continues over the next 10, 20 years. Uh, because there are, the trends are not lying. Like, uh, you have these global tech giants that are establishing presence in Nigeria. Stripe acquired Paystack, right? Flutterwave, you just mentioned, raised over a billion dollars.
Nigeria_V0-01:Raising a lot of money. Google, Microsoft, Facebook, all of them have offices out there. Also, we mentioned the population was young. Right. And so a lot of them are open to these kinds of new tech environments, and they're getting used to that, like getting used to working in that. And so very interesting where it all plays into the tech wave, the population. And so it's more successful in this area. There's a lot of people that are, you know, taking larger risks and coming into these tech spaces to try to innovate. One of the interesting startups that are coming out of Africa and Nigeria specifically is, is Jumia. Think about what Amazon kind of did for the U S it was a huge unlock for small businesses, for consumers in general, right? Like expecting now that I can get a package by either tonight or tomorrow is ridiculous, dude. If I wanted something, whatever it is, I could order it online. That's a huge unlock for the economy because that presents a lot of opportunity for other companies to build up. There are brands that have been born in Amazon, that have made it out of Amazon, right? And become an independent brand. And so Jumio is one of those things, a platform that allowed other businesses to grow. As well. And it's a fricking large company, dude. 10 K people in Nigeria now.
Nigeria_V0-02:And. That growth of digital trade just helps bring more people participating in the economy.
Nigeria_V0-01:Yeah. Jumia has achieved so much, right? There's a lot of transactions happening on Jumia today. And it's still like doing the same thing as Amazon was burning through money, right? Not making enough money to, to keep up. And it's really difficult to operate with within this environment, but that shows you that even an unprofitable company can strive in this economy. It's growing. It's growing. They're able to mimic what happens in Silicon Valley.
Nigeria_V0-02:And other global players start looking at these economies for growth, big global players. enter the African market through acquisitions. Now Paystack, we just mentioned another Nigerian fintech company. They provide payments processing solutions, right? To businesses and consumers. Stripe, which is the largest, uh, payment processing solution out there in 2020 and bought them for 200 million, right? So this is one of the largest exits for an African startup, which is massive, huge lift for the entire economy. Uh, the tech and startup ecosystem, because everyone thinks now, Hey, you know what, maybe I can start something and get enough traction and there could be significant dollar amount for this business, for this idea, right? Paystack has been an incredible success story. They, they, what. What process close to 25 million transactions per month, right? What every bill, what over a billion. So, um, you know, these big companies, big international, uh, multinational corporations are looking to Africa to be their growth engine.
Nigeria_V0-01:It's an opportunity for them to grow where they're having, you know, like a lot of the large FinTech FinTech firms, Visa and MasterCard, right. Are investing in companies like Paystack because they're trying to look for growth. They're already based in areas where growth has kind of stalled and there's not too many new customers anymore. Like in a market like this, Nigeria, one of the most populated countries in Africa, you know, they can really grow in these spaces. So it's interesting what's happening for them in, um, tech generally.
Nigeria_V0-02:yeah. Now, uh, just shifting gears a bit, uh, Jed, how, how does their, um, trading and their policies look like, because I know we did cover it in the Mexico episode, in the Brazil episode, so I kind of wanted to touch on that because It's great saying, Hey, population is young. They're addicted to phones. E commerce is growing. They are trying to diversify from oil to tech, but there's got to be some policies and regulations that's probably allowing a lot more commerce, right?
Nigeria_V0-01:Yeah. It's super important for their growth and the growth as a region, I think in Africa. Um, so there's. Two major organizations. I think I'm just gonna glaze over, which is one is the African continental free trade area. It is a coalition of countries that have signed up in Africa to be able to support each other, similar to what NAFTA would be in the U. S. For North America. It's kind of the same type of free trade. Right. Lowering import export taxes for certain goods that are strategic, um, for their advantages so that the region can grow as a whole. So that's one interesting thing where Nigeria takes a really huge leadership role. So when they're important policy decisions, Nigeria has a very large vote. Um, for that region and that increases, it's kind of soft power in the area. Yeah. And then another one is the economic community of West African states. It's similar to what, um, the AF CFTA is as well. Uh, where it allows for easy trade and sort of like cultural trade in between the countries as well, like it's economic benefit, economically beneficial for both countries, supposedly, that's at least the intent. Of these organizations. So we're also seeing that where everybody's investing in regional growth, finding out what is best to do for, um, each other in the region. I think that's key to a lot of these like developing nations experiencing crazy growth at the moment and who've changed like entire economies, right? Like we're talking about Nigeria shifting from oil to tech. Like that's, what's happening as a result of these partnerships as well. Flutter wave is operating in multiple African. Um, countries because of easy trade like this as well, right? Like there's a lot of incentives for trade in between these African countries. What's happening in Nigeria and generally Africa has been pretty interesting. And this soft power concept that we talked about is also another way to say that economically they're improving. So it's nice to see that the average GDP per capita will probably also grow as a result of this. So it's a nice positive, um, thing that's happening for the region and for the folks that live in Nigeria. It's crazy dude, like one in every five Africans is Nigerian. That's how significant, kind of like,
Nigeria_V0-02:Wow.
Nigeria_V0-01:from a demographic perspective, Nigeria is in addition to the soft power it's like, you know, currently growing into. So it's, It's nice that we're able to explore stuff like this. I enjoyed the research that we did.
Nigeria_V0-02:And I wanted to actually drop a link, a Howard business study link of the interplay between soft power and hard power. You cannot be a true big, big. Economy, unless you can leverage both, right? So we'll drop that link. It's really interesting. Soft power is more about being able to shape the preferences of others. They want your KFCs. They want your Nike sneakers, the Air Jordans, you know, that's, it shapes the preferences of someone else. So it's interesting how, you know, music media, uh, coming out from this part of the world is actually influencing people on the global stage.
Nigeria_V0-01:Exactly. We hope you liked this episode on Nigeria and our kind of foray into talking about African countries. It was really fun to do all this research and to learn about how much Nigeria has grown and changed. Um, but thank you so much for tuning in tonight. And as always, stay curious.
The information and opinions expressed in this episode are for informational purposes only. And are not intended as financial investment or professional advice. Always consult with a qualified professional before making any decisions based on the concept provided. Neither the podcast, nor is creators are responsible for any actions taken as a result of listening to this episode.
