Joseph Agunbiade, CEO Univelcity, took off time to discuss pivotal issues bothering on the technology sector in Nigeria. In this interview co-facilitated by CSNewspaper, Agunbiade talked about the progress made and the challenges that have to be surmounted in Nigeria’s indigenous tech scene.
Excerpts:
Q: The technology scene in Nigeria has seen some disappointing results with the recent acquisition of Konga and the shutdown of GoMyWay. Is the digital space in Nigeria non-viable?
A: Let me give a direct answer to that. I think it is viable. However, there are two sides to the problem. The first problem I see is that most tech companies in Nigeria want to run a Silicon Valley model. So they come into Nigeria and they want to speed a whole lot of money forgetting that this money is not even coming from here. Most people who have raised an excess of a million dollars oftentimes do so from outside the shores of Nigeria. So they bring that money in and want to spend a whole lot to run the system.
So, I will talk about Konga and I will use that in symbiotic terms to describe the e-commerce scene. You see, e-commerce is not new. It is basically added innovation to existing models of trading, which is basically buying and selling. For instance, I want to buy this product and I want to deliver to my home. Someone now provides an electronic means by which that can be done. The very first flaw I saw with Konga is the fact that Konga came in and hired too many engineers meanwhile they were using existing tools like Magento. Now a single individual can build an e-commerce solution or platform on an integrated gateway without the need for 200 engineers. The biggest engineering challenge they had was the server management. You can imagine the amount of traffic that they will get per term. I think that they can have a very modest team of ten to twenty experts on that side. You and I know that running business in this Nigeria is very tough in itself. Think about cost of power, the people themselves, and all of that, then you now add the problem of overhead salaries.
Thirty days come so fast. So when they did that, the burnout rate will be very high. You can’t do business with the hope of what you will make in the future. You look at the market and say, ‘If I can just reap this percentage of people, then I will have so much money’. So I see that it is one of the biggest challenges. All they needed to do was just focus on the business. Get the product to the people. Create customer satisfaction. Most of complains people give is that they have been trying to reach customer service, especially when they ordered a particular item but got a wrong one instead.
I think if the manpower they had was concentrated on creating customer satisfaction other than technology which they focused on; their success rate would have been much more than these.
Q: Are you saying fundamentally, they are not a technology firm; they are just using technology to enable an existing process?
Thank you for that question. The way I look at it is different. When you say you are a technology firm with such number of staff, the problem to solve has to do with the market. But what is the need of the market? Alright, the need of the market is to bring the products closer to people. You want people to order and get the products. So you have to think about the problem you are solving. Is it engineering problem? So if you say you are a technology company, do people really need a technology company, or they just need an innovative company that can solve their problem? And so, at the end of the day, the biggest challenge we will always face is trying to solve a problem in our own way, not what the people need. It must be the people first. Build your business based on the people’s need and not based on what you think people need.
Q: Does this portend evil for Jumia and Yudala, which has just invested a lot of money on Konga; do we have that digital market?
A: Technology is a tool that is meant to help existing processes we have. So we need to understand the place in all of these things. The core is the trading. I can guarantee Yudala is going to be a very successful company. Already, they have shown that promise by acquiring Konga and when you look at them, they understand the way Nigeria works. A lot of companies acquire problems that other firms had in the past. But by the ingenuity of the leader they are able to turn things around.
Look at Yudala’s strategy. They understand what Konga did not understand. Konga setup pickup centres Yudala setup shops; real shops closer to the people. So this is it. Yudala is famous as Konga was popular. What they know is Nigerians want to see what they are buying so they can quickly walk into a shop not far from them and pick up what they want to buy. Even though they have looked at what they want to buy online. The Igbos master that art. So when you get to the shop and you don’t see exactly what you want, the guy at the shop can guarantee you will have it, just pay a deposit.
In business, there is no guarantee than collecting money upfront. You are sure this person will definitely come back for this product. So Yudala has created that system that works traditionally with our own culture. This is our lifestyle. So Yudala understands it. I can assure you that in years to come Yudala is going to be a huge success.
Q: Many tech talents are eager to leave the shores of Nigeria immediately they are skilled enough. I know you run one of such outfits that train them as well. But is this not the same brain drain that we saw with the doctors, how do you think we can stop it, how do you think we can have developers that build Nigerian products stay here in Nigeria, and profit from it?
A: The bad news is that more doctors are still leaving and more are still going to leave. Most of the developers that come to get trained by us tell us that they want to learn those skills so that they can work abroad. We have trained medical doctors, people who work in oil and gas sub-sector, currently, we have two of those in major oil and gas companies come in to get trained in their old age. I believe that they are probably trying to relocate.
It is very simple. Nobody comes to this life and wants to just suffer and die. Everyone wants a better life. So when they come with their hard earned money, they get trained and of course they have to look for a better life by getting out of Nigeria. So it is going to be the same thing. The only thing we have seen in recent times is that as we have more talents, more companies are coming in. but I worry because some of these companies are still burning out. Even though they hire and try to pay high salaries and the time it takes them to make that money is so slow. The factors limiting companies can be attached to the business terrain which is very terrible. Take a look at Konga, which hired over 400 staff. State government gets personal income tax from these people. Government was inspiring people to start new businesses and people are saying if Konga can do it, then I can do it. This means that as new businesses take off, salaries are being paid, personal income tax is being paid, the state wasn’t smart enough to see this as a big opportunity for growth in the state to ensure that it never happens, Konga should not fold up. Lagos is trying now with LSCTF with the smart governor that is there but they are losing out on many fronts. Sometimes, the partial investments they do they don’t get the complete sum of these things. At the end of the day, these will go to other markets.
So if the governments wake up early enough to see that businesses must not die, how will a tax man come to your office and ask you why you have not paid your personal income tax and you are still trying to explain that the company has not even paid that salary, and all they want is for you to pay your income tax; the business must be able to pay salaries first and they must be able to make money first to pay salaries. So these matters must be brought to the table. Let’s not say that once we develop the state we want hit certain threshold in terms of state GDP and all of that, when business starts, like I said, LSCTF is doing that, they train people and give them money. Oftentimes, you have a technology person when starting a business. He needs business education, the right business person to train and guide him on how to run business. In some cases, someone may take the cost and say that for three to six months, a business expert will be brought to help run the business for that period. With that, the business will take off on a good note. I’m not saying they should come later. But they should identify how many businesses we have in Lagos, how many of them need help, how many of them actually have potential. It all comes down to creating the right business climate that helps the market to thrive. You must identify the challenge your market has and then give the right support early enough, before the business crumbles.
Q: The Secretary-General of the Federation has spent 65 million naira on maintaining a website. What are your thoughts on this?
A: This is a basic website and I think it is really ridiculous and a lot of money to be paid for maintenance but sometimes as well, we need to know who is doing the job in the first place. Sometimes, they patronize foreign developers who sometimes tell you that it is the rate in their country. That’s one. Secondly, they talk about such things like servers and some ridiculous amounts for some of these things which they end up paying for. I have seen a situation that even a private company paid that much just because they didn’t know. So what I recommend in a case like that is that companies that have IT teams need to do themselves a lot of good by ensuring that they have the right people on their teams.
Imagine a company that has about 20 people in the IT department and they still have to outsource maintenance for such a high rate. Let maintenance be that you are paying the tech company a fee that’s reasonable.
Q: What’s reasonable to you?
Reasonable is relative and depends on the size of the project. There’s no fixed charge for such projects. There is a standard market price but one of the things we need to do is review our labour law. So I can price myself hourly. I can say that I’m going to spend an hour on this project and let them pay me 50, 000 naira for the project and then we can cost it by the amount of hours I’m going to spend and that can easily be tracked and measured. Here, that kind of system don’t exist and if you are not careful; if you try to bring a standard and price to this thing, you run into trouble. You give a fixed cost after negotiation then you get into the project, then you find out the project is not exactly what the person told you that you would be doing.
So, to solve the problem, I think that the IT teams in these organisations need to be well trained. The fact that somebody read computer science means he is a good software developer. They need proper training. I’m not talking of training because of estacode such as what is happening at most of the government agencies. These people need to be trained, tested by independent testers and ensure that the right people are working for the agencies. That’s how to save a lot of cost.
There’s an idea called open contracting which we have been pushing. If it is implemented when a project is about to be given out, the price is listed there, the portfolio is listed there, we can see the portfolio of the project managers, and the amount they are sinking into the project. At the end of the day, with a merit-based system, we can actually make a selection which will of course save the country a lot of cost than we are burning at this moment.
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