Hello there,

Where would you be in 30 years time? Who would you be in 30 years time? 

If you haven’t been thinking about that, the Nigerian Government has been. Since it’s clear Vision 2020 didn’t work out, earlier this week it announced agenda 2050 which is anchored on the projection that Nigeria will become the world’s third most populous country by 2050 with over 400 million people. 

30 years is a long time away, we’d be watching.

Upcoming elections: Edo state 19th of September 2020.

Putting the house in order

The Nigerian Government is in talks with investors to sell majority stakes of its 4 refineries to private companies. All 4 refineries had been shut down in April due to the need to refurbish them. 

But we’ve been hearing about talks to privatize the oil sector since

That’s true, hopefully, this time it’s for real. The pandemic induced revenue decline has meant the government would go extra measures to ensure things are running smoothly. All the government has to do here is to give private companies an opportunity to make the refineries operational again. 

And if this happens to be just all talk and no action?

Well, at least Africa’s largest Oil refinery -- Dangote’s refinery in Lagos -- is slated to begin generation of 650,000 barrels per day in early 2021, while BAU’s refinery which would be located in South-South Nigeria is expected to be operational in 2024. 

Why it matters: As part of the move to revive the Oil sector, the move to have refineries in Nigeria up and running is important because a major contributory factor to why oil prices are unnecessarily high in Nigeria and costing the Nigerian government a lot in foreign exchange is that Nigeria exports crude oil to later import a more refined version at a higher cost. 

Another story we’re following

The Nigeria government is trying to salvage the remains of a Government - private sector deal gone bad, as it asked Eni and Royal Dutch Shell to pay $1.092 billion as an immediate advance payment for damages in one of the oil industry’s biggest-ever corruption trials.

Wait, How did we get here again?

The golden rule of doing deals in Nigeria is to do them quickly and quietly but not all deals turn to be like this. One of such is the OPL 245

Image source: The Africa Report

Daniel Etete who was Petroleum minister from 1995 -1998 awarded an oil block to himself via his company Malabu which was owed by him and Mohammed Abacha, the son of the from Nigerian head of state, Gen. Sanni Abacha. Yes, the one who’s always sending pocket money back to Nigeria from the great beyond even until this day.

The Oil block was later sold to European oil companies Eni & Shell, but years later the deal was contested by the current Nigerian government as it was said to be corrupt. And since then it’s been back and forth.

Dig Deeper: Shell, Eni and the Nigerian corruption quagmire of OPL 245

Why it matters: Deals between the Nigerian Government and private companies in the Oil sector has often been riddled with corruption charges. The privatization of the refineries offers great promises but could also end up in tears.

We are tired of selling ourselves short

Cocoa farmers in Ghana and Côte d’Ivoire haven’t been making it big in the global market, even with their position as the world's top producers, so they decided to do something about it. 

How so? They have successfully managed to convince chocolate sellers to pay more so they can have a boost in revenue in future. 

Previous supply chain: ECOWAS member Countries including Cote d'Ivoire, Ghana, and Nigeria supply about 68% total amount of cocoa, topping the global supply chain in the sector. This means that 3.4 million tonnes were harvested in the 2019-2020 season, out of a worldwide total of 5 million tonnes. Still, they haven’t exactly seen much proceeds compared to America.

Revenue: Although they are in the top list of the world’s biggest cocoa producers, Africa’s cocoa-producing countries cover just 3% of global chocolate revenue. In 2017, Côte d’Ivoire produced 2.1 million tonnes of cocoa which is about 44% of global output, it brought in just $3.3bn (€2.9bn) from the trade, compared to earnings of $22bn for US chocolate majors. 

The OPEC of Cocoa: This is an agreement signed by both country's presidents in 2018 to harmonise their prices so chocolate producers can pay more. 

How this turned out: Not so great. In 2019, Côte d’Ivoire’s Coffee and Cocoa Board (CCC) and the Ghana Cocoa Board (COCOBOD)  imposed a pricing method to enable producers to earn better wages whilst also suspending forward sales of cocoa beans. This, in turn, had a negative impact on global prices and chocolate traders as the makers had to agree to the idea of a $400 a tonne premium on all cocoa sales contracts.

What can be changed? Improved local production. CCC is planning on building two primary processing facilities, each with a capacity of 50,000 tonnes, in the port of San-Pédro which is the world’s top exporting port of cocoa beans and in Abidjan. This is so there will be an increased grinding capacity of 1 million tonnes by 2022 instead of  500,000 tonnes at the moment.

Moving forward: The goal for both countries is to set a standard price for producers as well as ensure better pay for them in the long run. 

Spurring investments during the Pandemic 

Image Source: FEMME

In June, we spoke about VC funding and its impact on innovation and entrepreneurship on the African continent ( here). Fast forward a few months from then to now, we can see there have been some changes.

What changes?

Well, nothing you haven’t heard before. The unfavourable economic conditions are affecting start-ups adversely because investors have become more cautious. In Nigeria, the amount of funding raised by startups between Q1 and Q2 dropped by almost 100%! (From $55.37m to $28.35m).

Startups in the healthcare, fintech and agriculture sectors were mostly not shaken by these changes because of the economic viability of their products. However, there are still other elements that attract investors in these challenging times.

Investor Relationships 

Startups that have managed to develop prior relationships with investors in the early stage of the product have the upper hand because the product’s vision would have been communicated and a social contract would have been made.

It should be noted that the first funding round is likely to be the most challenging to complete, but once investors can establish that the startup effectively used previous funding, it is easier to gain their trust.

This may not necessarily mean the same set of investors will provide subsequent funding, however, it will be helpful when approaching new financiers during a crisis where investors are reluctant to invest.

Having a good market image through the efficacy of the startup’s product and effective business partnerships also help to instil confidence in the mind of the investor.

Tik Tok daring investment

The fastest-growing social media platform of all time, Tik-Tok just-announced its Pitch Up In The Sky challenge open to founders of early-stage startups (pre-seed or seed stage) in Africa and the Middle East in areas of healthcare, education, artificial intelligence, media & entertainment, and transportation. 

Applicants have to submit a one-minute video pitch to a panel of judges will select the best three who will have the daring chance of skydiving in UAE while simultaneously dishing out their winning elevator pitches.

The winner gets a star prize of 10,000 USD from Gritti Fund, Tik-Tok’s partner for the event and applicants that finish in the top 10 are also entitled to different prizes.

What this means

First-time fundraisers and up-and-coming founders should take a cue from startups that have successfully raised funds by developing a quality product and connecting investors to them early on. 

By adapting to the pandemic-induced uncertainty, they grow their business and more importantly show their worth as true entrepreneurs.

Worth reading  📚

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Quote 💭

Looking at life from a different perspective makes you realise that it’s not the deer that is crossing the road, rather it’s the road that is crossing the forest.

– Muhammad Ali

Thank you for reading this week’s edition 💙 

Written by Daniel Adeyemi, Damilola Amusan & Bright Azuh