Hello there! We hope you and yours are safe and sane. Welcome to the second episode of our post on investment opportunities to exploit during the pandemic. Local and global markets are gradually working their way back to optimal performance. In Nigeria, a new Companies and Allied Matters Act has been passed and FGN Savings Bonds are back on offer. Perhaps, we should have considered government bonds in this post. Cryptocurrency too… Blockchain.com reports that the highest flow activity in its wallet app since April 2020 has been from Nigeria. Hmmn.
Haha, the point is economic activities are doing better. Again, the options we are discussing are not entirely immune to present economic challenges, they are only doing better than others. Last week, we considered real estate and agriculture. Well, this week we will discuss… drum roll
Logistics
What’s up? Logistics is why those memes about Jeff Bezos exist. It is one of the fastest-growing sectors in the world. Because Nigeria is spread over 350 thousand square miles, logistics is a lucrative business investment option. Infrastructure development, coupled with a growth in the e-commerce sector are fueling this sector. In Nigeria however, it faces obvious problems. Bad roads and traffic jams increase costs. The industry therefore holds potential for disruption. Bike logistics, for instance, is effective in avoiding traffic congestion and ensuring same day delivery.
What’s fun? During lockdown, logistics have become indispensable, since food, medicine and belongings have to be delivered, as people are less eager to move themselves.
What’s new? Regulations. In July, the Nigerian Postal Service (NIPOST) announced new regulations to govern the logistics and courier sector of the economy. It categorised logistics companies into international, regional, state, municipal or intra-city, and SME operators. Accordingly, international operators were to pay ₦20 million as a license fee, national, ₦10 million and regional operators, ₦5 million. State, municipal and special SME operators were to pay ₦2 million, ₦1 million and ₦250,000 respectively. Each operator was to pay 40% of the license fee as renewal fee annually. Nigerians immediately protested this development via #SayNoToNipostFee on Twitter and similar campaigns. NIPOST has since halted the regulation. But stay woke.
E-commerce
What’s up? 70% of the world is connected on mobile and Africa is catching up. PwC reports that between 2007 – 2016, mobile phone usage in Africa increased by 344%. There are at least 25 million smartphone users in Nigeria. According to Statista, Internet penetration amounted to 46.6 percent of the population in 2020 and is set to reach 65.2 percent in 2025. What mobile phones do is afford people the means to participate in e-commerce. Nigeria’s e-commerce sector is Africa’s largest, valued at $13 billion. You may transition from brick and mortar to create your own ecommerce website or you may ride on the back of successful giants like Jumia and Konga.
What’s fun?
Power supply and broadband internet remain challenges for the e-commerce sector. Also, cough internet fraud cough. However, e-commerce is the exact kind of business that capitalises on a pandemic. Everyone is indoors and online. Families need to stock perishable goods. More persons are working from home and will require essentials like edibles, toiletries and appliances. Gadgets too. Also, the pandemic is clearly not slowing people’s use of their phones and the Internet. It is increasing it. Data from the National Communications Commission reveals rugged growth in the telecoms sector.
What’s new?
E-commerce involves searching, ordering, payment and delivery. So yeah, e-commerce requires logistics to function. So, insert the concern about NIPOST regulations here. The many consumers who have become dependent on online shopping may lose interest if these charges are enforced. This is because the prices of goods sold online may increase. On July 25, the Federal Minister for ICT tweeted at @NipostNgn saying that the increase in licence fees was not part of the regulations he approved. Perhaps a question is, which part of the regulation was approved?
Oh well, we are at the end of this ride. We hope that all of this was useful, to assist in your independent decisions. Remember, we are a private equity company and do not solicit for or take investments from the general public. So do consult your professional investment advisor. You may however join our mailing list for information on how we help businesses and private individuals. Bye for now!