Razaq Ahmed, Co-founder and CEO of CowryWise, is no small fish in the fintech space – an industry that is fast growing to compete with the banking industry. This is more so, as Cowrywise gains even more popularity among the emerging generation who have realized that the benefits of subscribing to classic investment schemes might be much more than that of leaving funds idle in the bank – savings.
Razaq’s story is a captivating one that sees one unfortunate event changing the fate of a young man. He is the focus of Nairametrics Founders Profile this week.
Razaq Ahmed was born in Kano, where his parents lived. They had gotten married in Kano town and this was the same place they had all their children. Razaq and his siblings started their early education there.
Razaq recalled that the community in which he spent the first 14 years of his life had an unusual perception of education. Not many people were particular about tertiary education and becoming an artisan was seen as a norm for the children.
“Traditionally, everyone attended primary education, and then secondary school, but up to 90 percent of the students combined schooling with some form of other works like manual works or learning a craft,” he explained.
Based on recommendations from an uncle, Razaq started learning generator repairs and maintenance. As a secondary school student at the Army Day secondary school, he would close from school with the rest of his friends, change into casual wears, and resume at the workshop for another kind of learning.
Even though Razaq was intelligent and excelled in his studies, he expected to become a generator mechanic and did not see that much could come out of his education. In retrospect, he would say, “The expectation was to spend a couple of years learning the skill, and then have the ceremonial freedom, after which you start up in your workshop and become successful. Every successful person in the community around whom we could identify with seemed to have toed that path, so this was what shaped our thinking at the time and defined our idea of success.”
Already in SS2 at the age of 14, Razaq was well on his way to becoming a ‘generator man’ as they were called in the community. Even though there was a tertiary institution – Bayero University – in Kano, it was quite a distance from the town where they lived, so the young children hardly came in contact with people in the academic community. Rasaq’s parents had no plans of relocating and the future seemed pretty much predictable. Fate, however, had other plans.
The turning point
At age 14, the family had their life disrupted by the Hausa-Yoruba crisis which rocked the country in 1999. The fracas was traced back to some Hausa men who had been killed in Sango-Ota and their bodies sent home to their families in Kano. This erupted into a major crisis that claimed the lives of many Yorubas and Hausas across the country. As Yoruba residents in a Hausa community, Razaq’s family became victims of targeted attacks.
On one of such attacks where Yoruba residents were being slaughtered by an angry mob, the entire family nearly lost their lives but for the timely sound of the gunshot of men from the Nigerian Army.
“We were all indoors hoping and praying that something magical would happen because we had seen other people being killed, and we were conscious of the fact that it could be our last day. The mob only had sticks and cutlasses. So, immediately we heard the gunshots, we knew help had come. If the Nigerian army had waited a few more minutes before they arrived, I wouldn’t be here today,” Rasaq narrated.
After shooting in the air to disperse the mob, the soldiers took them to the Bukavu barracks where they were camped as Internally Displaced Persons (IDPs) in the Army Day Secondary School – the same school where Rasaq was a student.
This was the turning point in Rasaq’s life. His parents decided then that they could no longer gamble the lives of the entire family in such a crisis. The 1999 crisis was the third major crisis in which the family survived unscathed – and it did not seem like they would be lucky enough to survive a fourth. They relocated to their hometown in Ogbomoso to start life from the scratch.
“We never had plans of coming back to the southwest, it was completely accidental and it was this accident that completely changed the course of my life,” Rasaq states wistfully.
New mentors – New dreams
Back to Ogbomoso, the Ahmeds moved into the house of an extended family located at Isale, not far from Ladoke Akintola University of Technology (LAUTECH). For the first time in his life, Rasaq started seeing undergraduate students and admission seekers, who talked about lectures, examinations, and careers after school.
He also got to meet with a distant uncle who was a Lecturer at the Obafemi Awolowo University. From interacting with post-secondary students who were seeking admission, Rasaq soon came to understand that the subjects they were studying were no different from the subjects he was already studying.
“This showed me that I did not need to do anything abnormal to become like them, and with this understanding, I became the first person in my immediate family in Kano that would go to a university.”
He first attempted the University Matriculation Examination (UME) before taking his West African School Certificate Examination (WASCE). He came out with the best WASC results in his school in Ogbomoso, but his UME score was 20 points below the 235 cut-off mark of the University of Ilorin which he had selected for his first and second choice.
The following year, he selected Obafemi Awolowo University and was admitted to study Economics. After a few years of ardent academic studies and educative activities as a member of the Students in Free Enterprise (SIFE) club, Rasaq bagged First class honors in Economics and secured a job with Meristem Securities in 2007, courtesy of Saheed Bashiru – a senior schoolmate, whose acquaintance he made in his final year.
The job offer came before the National Youth Service year, so Razaq served out the year at Meristem Securities as a Research Analyst. This marked his introduction into Investment banking, as he was saddled with responsibilities which helped him build capacity. When Saheed Bashiru moved to another unit, Razaq became Head of the research unit.
In 2010, Razaq left Meristem for Vetiva Capital Management, where he spent about four months as a Research analyst.
He had a short break from investment banking in December 2010, when he resumed with Shell Petroleum Development Company as Business Economist. This break affected his CFA programme which he had started at the time, delaying his completion till 2012. While working at the SPDC, he also took a professional course to become an Energy Risk Professional (ERP).
Founding Sart Partners
After completing the CFA program in 2012, Rasaq Ahmed founded Sart Partners, an investment vehicle to carry out investment management in the alternative assets space that cuts across oil and gas, commodities, real estate, and other informal sectors. He explained that his years as an investment banker had shown him the larger market in the informal and alternative asset space which, though profitable, was not exposed to investors.
“A lot of companies need to be formalized, so they become investable and provide liquidity option for investors. My target was to formalize the informal sector and make them investable options. There are lots of opportunities that evade businesses in this country when they do not have the required institutional framework.”
Under the holding company, subsidiaries were set up to handle real estate, agriculture, FMCG brands, and a Joint Venture Agreement with a distribution company to handle oil and gas. It was a mutually beneficial arrangement where the investors were issued the SART commodity link notes to make investments, and they got returns at the end of the month.
This classic investment banking arrangement was only open to private institutional investors and high net worth individuals, and the minimum Entry investment was N1million. Though the holding company started quite small with about 20 to 30 million naira, it grew fast till it was worth about half a billion naira.
The birth of Cowrywise
As the world got ‘techified’, there was a need to merge technology into the classic investment arrangement. Also, at about the same time, there were indicators showing a larger pool of ordinary individuals interested in being a part of the arrangement.
“The idea of cowrywise came in when we had a lot of people come asking ‘how do I invest 1000 naira and small amounts like 50,000 naira. After much deliberations, we decided that the best way to scale was to open it up to the public and that was what gave birth to Cowrywise.”
To eliminate bumps from the process, Cowrywise introduced the automated savings option that allows people to use a saving schedule and invest as easily as they spend.
Meristem Securities was introduced into the arrangement as a check, to ensure that the savings are actually going into risk-free instruments. The idea, Razaq explains, is to let savings become a lifestyle, you save while living your normal life.
6 managers, 5 name changes, the journey from Econet to Airtel
We explore the two-decade transition of pioneer telecoms company, tracing the journey from Econet to Airtel.
The telecommunication industry in Nigeria does not have a lot of players, but of the few in existence, Airtel Nigeria is one of peculiar interest to Nigerian subscribers.
Having seen the telco change its management six times and brand name five times, with each lasting about three years or less, a lot of users agree that they would not be surprised to see another change.
However, the company appears to have stabilised under its current management – Bharti Airtel and retained the name longer than every other one before it.
So, let’s look at the story behind the company that is now the second most popular telco in Nigeria.
The days of Econet
In 2001, Strive Masiyiwa assembled a consortium of 22 investors in order to raise money to bid for the $285 million GSM license, which he described at the time as “the most expensive license ever issued in Africa.”
Alongside MTN Nigeria and MTEL, Econet won the bid and was granted a Digital Mobile License (DML). Econet Wireless Nigeria immediately set up shop and started operations, gaining an estimated 57% market share in a short period, despite the existence of competition.
All seemed to be running smoothly until Masiyiwa was asked to pay about $9m in ‘bribes’ to senior politicians in different state governments, who had facilitated the fundraising to pay for the license.
According to Masiyiwa’s social media post years later, he did not authorize the payments and thus invoked the wrath of a Governor in the South-south region at the time, who was one of the most powerful politicians in the country and had a reputation for getting what he wanted at any cost.
The Governor made good on his threat and without justification, the shareholders met and voted Econet Wireless Nigeria out of management, effectively cancelling their contract.
Masiyiwa recalled that at the meeting, one of the politicians who also happened to be a businessman told him, “Unfortunately for you, God does not have a vote.”
This move nearly drove Econet into bankruptcy and led them to withdraw about 200 foreign staff and left Nigeria. It also marked the beginning of Vodacom, the name adopted by the big international operator which was invited to take over as technical partner and operator.
Although there is no evidence to conclude that the new operators paid the ‘bribes’, Masiyiwa insists in his blog that he has access to documentation showing that they paid the money. It was on this basis that he would later write a letter to the United States Department of Justice.
Vodacom to the rescue
With the change of management, Vodacom came into the picture in 2004 but its contract was over before it even started.
Not much information is publicly available about the events that led to the exit of Vodacom in such a short while, without even having the opportunity to change the brand name.
Within a couple of months, Vodacom left the wheels and management changed hands again – this time to Vee Networks. At this time, the company had close to a million subscribers.
Now V-mobile and it’s all about you
With Vee Networks as the new manager, the company’s name was changed to V-mobile and it launched a rebranding campaign in 2004.
Perhaps, the name change was to send a signal that a new company is in charge or to assure customers that the change of management could only be in their interest. The campaign branded the telco as the network for the Nigerian people, with the catchphrase being “It’s all about you”.
According to the company, all of its investors were Nigerian-based, including three state governments – Lagos, Delta, and Akwa Ibom.
The name V-mobile is believed to have been adopted from the Vee in Vodacom, and the new managers also retained quite a number of Vodacom’s South African staff, with some of Econet staff as board directors.
In this way, V-mobile retained a little of the character of its past owners.
Then came Celtel
In May 2006, exactly two years after Vee Networks took over the reins with all its corresponding campaigns, Celtel communications acquired V-mobile for $1.005 billion and gained a controlling share of 65 percent ownership.
The transaction covered the purchase of existing shares and a substantial equity injection expected to boost Vmobile’s financial ability to realize its growth potential.
Celtel International, a subsidiary of MTC Group and a leading mobile operator in Africa was thus going to expand its presence to Nigeria, making a total of 15 countries.
Before this acquisition, V-Mobile had already grown the subscriber base from less than 1 million to over 5 million subscribers in two years – the most significant growth the company had witnessed under a single management at the time.
History strikes again
There was yet again another change in management. In 2008, another telecommunications company, Zain Group, completed its acquisition of all Celtel International’s shares of over $3 billion.
The Zain Group had earlier acquired 85% stakes in Celtel International and its 14 African subsidiaries in May 2005 in a $2.84 billion deal and increased it to 100% two years later.
With the completion of this acquisition, all of Celtel’s operations in Africa had to be rebranded into Zain. So, it was not just the end of Celtel in Nigeria but also in Africa, as the new owners rebranded the entire African operations to Zain.
“We believe the Zain brand provides an optimal platform upon which we can build a top 100 global brand with the ultimate goal of better serving our customers. It builds upon the success of our African operations and will propel the Zain Group towards becoming one of the top ten global mobile telecommunications companies by 2011,” Zain Group’s Chief Executive Officer, Dr. Saad Al Barrak said at a press conference.
But it only took two years before the management ran into a brick wall.
Bharti Airtel arrives to save the day
In November 2010, another acquisition took place and Bharti Airtel paid a sum of $10.7 billion to become the new owner of the telco. Zain Nigeria became Airtel Nigeria.
It is now exactly a decade since this acquisition, and it seems like the company might be done with the days of management and brand changes.
The company seems to have now stabilised, and was even rated as the second largest in terms of subscriber base at the end of Q2, 2020. The financials have also remained in the black.
In 2014, a decade after Econet lost its management contract, the Appeal Court sitting in Lagos ruled that Econet Wireless International remains a bonafide stakeholder in Airtel Nigeria.
This ruling frustrated the efforts of Bharti Airtel to prevent Econet Wireless International from reacquiring its stakes in the company.
The court also held that the earlier sale of 65 per cent of the telco to Zain of Kuwait was in violation of the pre-emptive rights of existing shareholder, Econet Wireless and null, since it did not follow proper procedures.
In a separate but similar ruling, the Federal Appeal Court in Kaduna had ruled that Econet Wireless was an existing minority shareholder in the company and urged Bharti Airtel to accept the reality.
Prior to this time, Bharti Airtel had continued to reject Econet Wireless as the holder of five per cent equity stake and tried to get Econet removed from the register of shareholders.
The dispute between Zain and Econet over the 2006 sale was already on and Bharti Airtel inherited the dispute. Econet was thus seeking equitable compensation for multiple breaches of the shareholders’ agreement.
Econet said in its submissions that its experts believed the quantum of the equitable compensation and damages amounted to more than $3 billion.
In December 2011, an international tribunal constituted under the auspices of the United Nations Commission for International Trade Law, UNCITRAL, ordered Celtel Nigeria to pay damages and equitable compensation to Econet Wireless for the violation of the company’s rights, which finally freed Bharti Airtel of any charges.
Ratification, border opening and stakeholders’ views, as AfCFTA is set to commence January 2021
As the AfCFTA is expected to commence in January 2021, stakeholders discuss the ratification in view of Nigeria’s intended reopening of its land borders.
The African Continental Free Trade Area (AfCFTA) is expected to open up Nigerian businesses to a market of over 1.2 billion people and a GDP of $2.5trillion.
The Nigerian Government ratified the agreement on November 12, ahead of the December 5 deadline issued by the African Union to its 55 member states, as AfCFTA is expected to commence January 2021.
Despite this welcome development, some stakeholders are still concerned with the border closure policy of the Federal Government and dumping of substandard goods in the Nigerian market, with the recent disclosure by the FG that the borders will be reopened soon.
Key stakeholders spoke to Nairametrics on the significance of the ratification to Nigeria, the highly anticipated border opening, and the necessary steps that should be taken by the FG to fully maximize the trade agreement.
Importance of the ratification
Mr. Muda Yusuf, the Director-General of Lagos Chamber of Commerce and Industry (LCCI), opined that the ratification has addressed the uncertainties within the Nigerian business circle concerning the FG’s stance on AfCFTA.
He said, “The ratification of the AfCFTA is good news. This decision has cleared the uncertainty and anxiety over Nigeria’s stance on the agreement. The truth is, we have seen a great deal of equivocation and prevarication over the agreement in the last two years.”
Mr. Cheta Nwanze, Partner and Senior Analyst at SBM Intelligence, said the move is in Nigeria’s best interest since trade has historically been a pathway to prosperity.
He said, “Nigeria’s agreement to ratify is a good move, which is ultimately in the country’s best interest. Now, the country must position itself to make the best of it. Trade has historically been a pathway to prosperity, and this should be no different.”
After the ratification, what next?
Mr. Yusuf said, “The next step is to support the Nigerian private sector to take advantage of the 1.2billion market and $2.5trillion GDP, which offers tremendous opportunities. We need to strengthen the competitiveness of our domestic firms, especially those in the real sector.
“We need to liberate them from the shackles of constraints putting pressure on their costs and inhibiting their competitiveness. The quality of our infrastructure needs to improve, our policies need to facilitate competitiveness, our regulations need to support business growth, and our institutions need to demonstrate a better appreciation of the value of investment and investors in the economy.”
However, he emphasized that the competitive nature of the agreement would create ‘winners and losers’ and urged Nigerian businesses to review their business models.
“The AfCFTA will produce winners and losers across sectors. The vulnerability risks vary from sector to sector. Investments in the real sector are more vulnerable than those in the service sector. It calls for a review of the business models of many firms and industries in the light of new competitive forces that will emerge.
“The business landscape will change and many investment assumptions would have to be reviewed to ensure sustainability,” he added.
The anticipated border reopening
Mr. Nwanze believes the FG has taken the right step with the planned reopening of the border. But, believes that the borders will not be opened, with the perceived contradiction that exists amongst government agencies on the border closure issue.
Nwanze said, “The Finance Minister already said that the borders will be reopened. However, her disclosure, which is in the right direction, has been contradicted by the Agriculture Minister.
“Ideally, what should come next is for the government to put things in place for an export driven economy. That’s the way to take advantage of the AfCFTA. Unfortunately, the signal that we are seeing indicates major opposing views within the government.”
“If I were to bet on this, I’d say that the borders will remain shut beyond 1st of January, and this attitude to trade will continue as long as Customs remain under the current leadership.
“It is quite contradictory, especially as a Nigerian, Ngozi Okonjo-Iweala, is set to become WTO DG and as a result, one of the world’s leading advocate for trade. This represents a major irony,” he added.
Mr. Yusuf said, “The border closure is not consistent with the ratification of AfCFTA, which is why the FG has considered reopening the land borders ahead of its commencement in January 2021.”
The fear of dumping from neighboring countries
Mr. Nwanze said, “There are already a number of bodies who are tasked with ensuring that certain goods are of the required quality.
“Customs, the Standards Organization of Nigeria, NAFDAC, and others should do their jobs and stop harassing business people. The final arbiter of course is the consumer, who decides where and on what to spend his hard-earned money, rather than just settling for substandard goods.”
What you should know
- Vice President Yemi Osinbajo disclosed in a conference with the Chartered Institiute of Personnel Management of Nigeria (CIPM) on Thursday, November 26 that quicker implementation of ratification protocols will ensure free movement of services, goods, and persons.
- Yewande Sadiku, CEO of Nigerian Investment Promotion Council (NIPC), said in September that Nigeria is more ready for the African Continental Free Trade Area (AfCFTA), due to her domestic market manufacturing value addition capacity, which is 7 times the average of the top 20 economies in Africa and others.
- The Nigerian trade office also disclosed that the Instrument of Ratification will be deposited with the AUC at Addis Ababa on Tuesday, December 1, 2020.
Nigeria has the potentials to benefit from the trade agreement in the areas of agriculture and service exports. However, Nigerian companies should be strategically prepared to compete with other African countries for the 1.2 billion market share.
Summarily, just like the EU and ASEAN trade bloc has produced some ‘winners’, the same is expected to happen when AfCFTA commences next year.
Drive-ins, photo shoots, outdoor catering, hotels in Nigeria adopt new ways to survive
Hotels in Nigeria have adopted several creative measures to survive the negative impacts of the Covid-19 pandemic.
Operators in the Nigerian hospitality industry have created opportunities for themselves amid the Covid-19 pandemic, in order to redefine value propositions and keep their heads above water.
To survive the negative impacts and ensure that they give their patrons reasons to continue patronizing their services, some of these hotels came up with initiatives like drive-in events, outdoor events, promotions, guest engagements, and group conference events, amongst others.
During its Q3 2020 Investors Call, the Managing Director of Transcorp Hotels, Dupe Olusola, told Nairametrics that though the revenue of the hotel, dropped by 54% year-on-year due to the lingering negative impact of Covid-19; Through the various initiatives implemented to reduce the impact of the pandemic, over 237% increase was recorded in Q3 revenue compared to that of Q2.
She said, “Drive-In Events product, launched in May, is for ‘top of mind’ awareness for the hotel amongst our targeted audience. It has also driven sales in the restaurant and other business areas within the hotel.
“Continuous promotion of our meetings, simplified product offerings like the Weekend Staycation, Work-From-Hotel package, amongst other initiatives, and have increased leisure business at the hotel.
“With the launch of EventReady and the CleanStay program, we have seen an increase in meetings.”
She added that the hotel had witnessed improvement in room revenue, majorly driven by the transient and group segments, as well as its continuous marketing campaign of hotel offerings.
She said, “Our Weekend Staycation is to attract both Abuja residents and potential guests from other states, in order to drive local and leisure demands.”
Ikeja Hotels Plc
Ikeja Hotels Plc also adopted some initiatives across its hotel chain to survive the pandemic. A staff of Sheraton Hotel Ikeja, who preferred anonymity, as she was not permitted to discuss on behalf of the hotel, told Nairametrics that the hotel had adopted some initiatives like outdoor events and promotions to attract more patrons.
She said, “As part of our strategy to improve operational efficiencies, we have put in place cost-cutting and recovery measures, including negotiating vendor contracts, energy conservation, and optimizing our workforce to the required manning at different occupancy levels.
“Our Food and beverage revenue has improved, driven mainly by the conference and event businesses. We recorded a week on week increase in the month of October.”
In the case of L’eola Hotel, formerly known as Protea Hotel, surviving the challenges created by the pandemic is key and this made the hotel to introduce some initiatives.
In an interview with Nairametrics, its Deputy General Manager, Tunde Oduyoye, explained that the hotel had to invest more on social media tools to reach out to its clients and also to meet the needs of some patrons, who wanted to hold social gatherings despite the social distancing rule.
He said, “We just did a photoshoot, which we shared with our existing and potential clients via our social media tools, to remind our patrons that we are back and fully compliant with the Covid-19 protocols.
“We now host weddings and other occasions and Zoom to other guests that cannot attend physically due to social distancing rules. We also host occasions on our open field to guarantee the safety of our patrons.
“We deliver food to our clients and also engage Jumia for deliveries. The hotel has also started baking bread for lodging guests and others within and outside the community.”
Radisson Blu Anchorage Hotel
Like other hotels earlier mentioned, Radisson Blu also adopted several measures to remain relevant to its patrons.
In an interview with Nairametrics, a source at the Hotel, who preferred anonymity, as he was not permitted to speak on behalf of the hotel, disclosed that it had adopted an outdoor catering service for both corporate clients and individuals.
He said, “Continuous promotion of our product offerings and other initiatives, has boosted patronage in our hotel. We now offer outdoor events and new discount rates for using our facilities. With this development, we have seen an increase in meetings at the hotel, compared with when the lockdown was eased few months back.”
What the future holds
Hotels in Kenya, Egypt, and South Africa rely on local tourism to drive occupancy rates. In contrast, locals in Nigeria prefer smaller mushroom hotels that are cheaper and often well-furnished to meet their needs, especially the short-stay apartments.
Hence, hotels in Nigeria rely on commercial room sales, driven by the influx of business and leisure travels into the country.
With several airlines yet to be fully operational due to reciprocal bans and lockdowns in some countries, it is highly unlikely that things will improve anytime soon.
What you should know
The lockdown effect on the revenue of these hotels is reflected in the 2020 Q2 results of the main listed hotels.
According to the data, Ikeja Hotels (Sheraton), Tourist Company of Nigeria (Federal Palace), Capital Hotels (Abuja Sheraton), and Transcorp Hilton Hotel Plc all lost 90% of their revenue in the three months preceding June 2020.
- The hotels earned a combined revenue of N1 billion in the quarter, compared to N10.2 billion in the corresponding period of 2019.
- They lost over N4.7 billion for the quarter alone.
- Combined, they had about 3,502 employees as of 2019.