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Who is Solving the Financial Inclusion Problem in Lagos?

The financial inclusion narrative has become an old horse.



financial inclusion, Lagos


The financial inclusion narrative has become an old horse. Anytime I hear the phrase now, I just see it as hand-waving – using the right words to get the attention of potential investors. Far be it from me to invest in a company based on buzzwords. Maybe some entrepreneurs are truly looking at solving this challenge about financial inclusion, but in my perspective, very little has been achieved. By that, I am not suggesting that it is an easy problem to tackle.

I heard an interesting perspective from a Lagos Business School faculty (I can’t remember her name), and I completely agree with her. She argued that financial inclusion does not stop at creating bank accounts for people who do not have them (this appears to be the strategy of the Central Bank of Nigeria), it is more about following their transactions. Simply put, what they do with money, or how they interact with money. If I truly understand how a financially excluded person interacts with money, then I can create a perfect system for him to be included.

I cannot stress this enough, the answer is not in a mobile app – at least not now. Claims regarding smartphone penetration can be misleading. Though smartphone penetration has been on a rise, the quality of smartphones “penetrating” has been shrouded in secrecy, or analysts just don’t care about that information.

Anyway, I am here to inform you that low-quality smartphones are largely used among most smartphone users. Check your drivers’ phones, Mama Nkechi that sells at a kiosk down your street, the cleaner at your office, etc. I can assure you that most of these people use lower grade smartphones. I mean, they hold smartphones good enough for Gmail (because they are android), Whatsapp, Facebook and maybe Insta (depending on the age and vanity level of the owner). Outside these apps, the phones will struggle to get other apps installed, simply because their memory sizes are typically less than 1 gigabyte. Hence, the “financial inclusion” app has no space on the phone.

The truth is that great quality smartphones are not cheap. A fairly good smartphone costs over fifty thousand naira, which is almost 3x Nigeria’s minimum wage. Of the employed population in Nigeria, majority earn less than that amount every month.

The Problem

This section should have been titled “My Problem” but God forbid! I don’t have any problem. The article has been long coming, but the event over the weekend further fueled the rage in me to write this.

About 2 years ago, I missed my flight (for the first time). It was a 7am flight to Abuja. Because of the unique location of my house, Uber and Taxify drivers don’t like to come. Even if I find a willing driver, I will have to describe my house to him, as following the in-app map is misleading. Because of these factors, I typically don’t use these apps when I am in a hurry.

I arranged with my trusted taxi driver to pick me up early from my house (like I typically do). Unfortunately for both of us, we overslept. By the time I woke up, it was past 6am. I jumped out. Thankfully, I had packed my bag the previous night. I got to the nearest taxi park and boarded the available taxi. I didn’t have cash, so I asked the driver to give me his account number. To my surprise, he didn’t have one. I was shocked to my bones. Thankfully, we had not left the park, so I suggested that he should ask his other colleagues (about 5 of them) if one of them could give me his account number. I almost fainted to discover that none of these grown-up men had a bank account.


I am sure you know the rest of the story, I missed my flight because I had to get to the ATM before embarking on my journey to the airport.

The event over the weekend spurred me to action.

A certain woman cleans my house every Saturday, and I ( meaning my wife ) pay her every time she does. Unfortunately, madam went out early in the morning and my house-cleaner showed up. She did her work as usual. Upon completion of her tasks, she asked me for money. I was taken aback. Anyway, her money is not my problem, so I naively asked for her account number. You guessed right, she didn’t have one. I told her to call her madam, since I could not help her.

The Contemplation

These events got me thinking. While ‘Impact Investors’ want startups to help the rural woman, these startups have not figured out how to include city dwellers financially. I have been thinking, how do we solve this problem?

I guess the key question to ask is why these older city dwellers are not financially included, despite having access to the banks. The answer to this question will sure direct us on the best route to solving this problem.

While startups brag on Twitter about how they are transforming lives across Nigeria, financially excluded people are saying, “You guys don’t understand us.” While they brag about the number of users they have and the volume of downloads of their apps, their target customers still wonder who the solution is for.

The truth is that, you cant solve the problem of financial inclusion without understanding the people who will use the product. If startups invest in knowing these customers, I am sure the solutions we’ll be seeing will be different.

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My biggest challenge though is: if we are yet to figure out financially including the urban poor, how do we think we can reach the rural poor?

Happy Entrepreneuring



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      Dangote Sugar records revenue boost despite inflation and Apapa gridlock

      Dangote Sugar has revealed it increased prices in the first quarter of 2021 to mitigate the problems of rising inflation and depreciation.



      Dangote Sugar proposes N18.2 billion as final dividend for 2020

      One of Nigeria’s largest Sugar manufacturers, Dangote Sugar revealed it increased prices in the first quarter of 2021 to mitigate the problems of rising inflation and depreciation.

      In a note to investors, the company revealed its recent 41.5% surge in revenues was due to an increase in sales volume as well as an uptick in price. In the first quarter of 2021, Dangote Sugar posted a revenue of N67.39 billion compared to N47.6 billion, the same period in 2020. The increase in price was driven by 5.7% pop in sales volume as the company sold 200,510 tonnes of sugar in the quarter compared to 189, 724 the same period in 2020.

      But while sales value surged by 41.5%, volumes only rose 5.7% suggesting that price increase was a catalyst for the growth in revenue and the company alluded to this in its statement.

      READ: Dangote set to earn N13 billion in dividend from his sugar business

      Dangote Sugar’s performance

      “Group sales volume increased in the quarter by 5.7% to 200,510 tonnes (2020: 189,724 tonnes). Growth continued to benefit from the sustained efforts to drive customer base expansion, several trade initiatives and investments. Group production volume also increased by 4.3% to 200,783 tonnes (2020: 192,584 tonnes) due to our operations optimization strategy despite the challenges of the Apapa traffic situation. Group revenue increased by 41.5% to N67.39 billion (2020: N47.64 billion). Growth in revenue advanced ahead of volume growth due to pricing benefits. Gross profit increased by 41.8% to N18.04 billion (2020: N12.72 billion) on account of better topline performance. EBITDA increased by 34.7% to N17.02 billion (2020: N12.64 billion) on account of increased earnings. Group profit after taxation for the period increased by 30.3% to N8.30 billion (2020: N6.37 billion) reflecting management’s unrelenting drive to deliver consistent shareholder value.”

      The company also explained it had no choice but to increase prices because of the impact of the 2020 devaluation, higher inflationary environment, port congestion issues and a rise in global sugar prices. The company imports raw sugar from Brazil, under the government’s backward integration plan.

      “We have continued to witness high cost of raw materials, energy costs and other input costs due to rising inflation and FX rate fluctuation. Further cost escalation is anticipated in the year as inflationary pressure mounts,” the company said.

      READ: Dangote Sugar yearly revenue surge by 33%, announces a dividend of N1.50


      Dangote vs BUA Sugar Scarcity Controversy

      Just last month, the company’s adversary and competitor BUA Group accused Dangote Sugar of conniving with Flour Mills of Nigeria (FMN) in price-fixing and arbitrary collusion to create sugar scarcity and keep the price of the commodity high.

      This triggered Dangote Sugar and FMN into issuing a joint press statement denying the accusations.

      The allegation made by BUA was triggered by a joint letter written by John Coumantaros of FMN Plc and Aliko Dangote of Dangote Industries Limited, reporting key developments in the Nigerian Sugar Industry to the Minister of Industry Trade and Investment, Niyi Adebayo.

      The duo in the letter dated January 28, 2021, pointed out how BUA’s new sugar refinery in Port Harcourt may lead to a spike above the import quota as stipulated in the National Sugar Master Plan (NSMP), and how BUA’s investment in the sugar industry via the new refinery is non-compliant to the undertakings under its Backward Integration Programme, in line with local production.

      READ: Dangote’s stakes in his sugar enterprise has earned him N90 billion in 365 days

      BUA’s response however led to an immediate reply by the duo of Dangote Sugar and Flour Mills of Nigeria.

      “In line with this, the Dangote Sugar Refinery wishes to vehemently refute the allegations and assertions made by BUA Sugar Refinery as they are not only false but defamatory, malicious and libellous, as they were geared at tarnishing the good name and brand of Dangote Sugar Refinery Plc and Dangote Industries Limited.”

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      The Group Managing Director, Mr Ravindra Singhvi, explained that the Dangote Group is socially responsible and considers price-fixing to be unethical and disastrous to the nation’s economy, and as such, the allegations made by BUA is highly mischievous and defamatory and should be considered a malicious attempt to smear the reputation of DSR.

      “DSR does not engage in artificial price manipulation of its products, either during the Holy month of Ramadan or at any other time. We have never ever increased the price of our food items or commodities during the Holy month of Ramadan in the history of our operations,” Ravindra Singhvi said.

      Outlook for Dangote Sugar

      Despite the operational headwinds, the company insist it is on track to improve its operations and seek growth in its sugar sales volumes. It also recently received approval from the government to revise its local sugar production targets to 550,000 metric tonnes annually from over 1 million metric tonnes annually.

      “Despite these uncertainties, achievement of our Sugar for Nigeria Backward Integration Project goal remains a key priority, though we anticipate increase in cost to completion in Naira-terms and some delays in Letter of Credit establishment for the importation of plant and equipment. The focus is to achieve the Federal Government’s revised sugar production target of 550,000 metric tonnes annually by 2024. We remain confident of the huge benefits the Backward Integration Programme would deliver and the positive impacts it will have on the economy.”

      Find out why Dangote Sugar is recommended as a buy in our Stock Select Portfolio Newsletter? Click here.

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      GlaxoSmithKline in big trouble as losses mount

      The results were less than impressive with several key indicators showing a year-on-year decline.



      GSK Consumer Nigeria Plc records 3.34% increase in 2020 9M revenues.

      GlaxoSmithKline Consumer Nigeria Plc (“GSK Plc” or “the Company”) is a public limited liability company with 46.4% of the shares of the Company held by Setfirst Limited and Smithkline Beecham Limited (both incorporated in the United Kingdom), and 53.6% held by Nigerian shareholders.

      The ultimate parent and controlling party is GlaxoSmithKline Plc, United Kingdom (GSK Plc UK). The parent company controls GSK Plc through Setfirst Limited and SmithKline Beecham Limited.

      The Company recently published its unaudited first quarter (Q1) 2021 consolidated financial statements for the period ended 31 March 2021.

      READ: GSK Consumer Nigeria Plc records 3.34% increase in 2020 9M revenues

      The results were less than impressive with several key indicators showing a year-on-year decline. For example, Group revenue (turnover) declined from ₦4.99 billion in Q1 2020 to ₦3.46 billion in Q1 2021 a drop of over 30.66%. The revenue drop was due to a sharp decline in the local sale of its healthcare products.

      Total loss after tax as of Q1 2021 was ₦238.07 million compared to a profit after tax of ₦113.47 million for the same period to Q1 2020.

      The company is essentially divided into two segments viz: Consumer Healthcare and Pharmaceuticals. While the Healthcare segment was largely profitable in Q1 2021 (making a profit before tax of ₦ 8.73 million by March 31, 2021, the pharmaceuticals segment made a loss of ₦262.93 million in the same period.

      READ: GlaxoSmithKline Nigeria announces changes in its board


      The Consumer Healthcare segment of the company consists of oral health products, digestive health products, respiratory health products, pain relievers, over the counter medicines, and nutritional healthcare; while the pharmaceutical segment consists of antibacterial medicines, vaccines, and prescription drugs. While goods for the consumer healthcare segment are produced in the country, the pharmaceuticals are all imported.

      The largely imported pharmaceutical products are thus exposed to the vagaries of foreign currency fluctuations coupled with a negligible to no revenue from the foreign sale of its healthcare products (same as in Q1 2020) as it barely exports its products out of the country.

      The cost of importing the antibacterial, vaccines and prescription drugs, and the significant local operating expenses wiped off the marginal gross profits made by the pharmaceutical segment of the company. In effect, the gross profit of ₦508.12 million made by the pharmaceutical segment of the company was eliminated by an operating expense of ₦735.7 million and this resulted in a net loss for the pharmaceutical segment of the business.

      READ: Nigerian Breweries posts N7.66bn as Q1 2021 profit, shares gain 2.2%

      Apart from the impact of imported pharmaceutical products as already discussed, other issues that affected the company’s Q1 2021 results and are likely to continue to affect its performance in future include:

      1. A limited product mix that has only the likes of Macleans and Sensodyne (Oral Healthcare); Pain relievers (Panadol and Voltaren); Digestive Health (Andrews Liver Salt); and Respiratory Health (Otrivin and Panadol Cold and Catarrh) all within the Consumer Healthcare segment.
      2. Increased competition, particularly from local pharmaceutical manufactures of similar over the counter medicines and other prescription medications and vaccines.

      In addition, in October 2016, GSK Plc divested its drinks bottling and distribution business that manufactures and distributes Lucozade and Ribena in Nigeria, and other assets including the factory used for the drinks business to Suntory Beverage & Food Limited. The loss in revenue from these popular brands continues to impact its topline.

      GlaxoSmithKline (GSK) is a global healthcare company and is well-known and acknowledged for its pioneering role in discovering and distributing vaccines for the likes of hepatitis A and B, meningitis, tetanus, influenza, rabies, typhoid, chickenpox, diphtheria, whooping cough, cervical cancer and many more.

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      It is also renowned for its manufacture and distribution of prescription medicines such as antibiotics and treatments for such ailments as asthma, HIV/AIDS, malaria, depression, migraines, diabetes, heart failure, and digestive disorders.

      Perhaps GSK Plc’s fortunes may change if the company is able to obtain the parent company’s licence to manufacture GSK-owned vaccines and prescription medicines within the country while also exploring the possibility of extending the sale of its products outside the shores of the country.

      Since different expertise is required for vaccines and prescription drug manufacture and distribution as compared to manufacture and sale of consumer healthcare products, perhaps another alternative may be for the company to create two separate companies with one company being a 100% vaccines and prescription drug pharmaceutical manufacturing and distribution company while the second company specializes entirely in the manufacture and sale of consumer healthcare products.

      As a result of the Q1 2021 performance, the company’s earnings per share (EPS) dropped to -20 kobo compared to the 9 kobo earnings per share reported in Q1 2020. At the start of 2021, GSK Plc’s share price was ₦6.90 but the company has since lost over 10% of its price valuation as the company’s share price closed at ₦6.20 on April 30, 2021.

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