Author: Adedeji Olowe

Let me start by asserting that no nation can be more prosperous than its average citizen. The experience of the common man in any country is the most accurate representation of the state of that country, and any contrary position is misinformed.

When we compare the economic landscape of prosperous nations against that of poor nations, the prosperity of the majority of the citizens takes center stage. Despite the vast resources and potential in many African countries, there is a stark contrast between a handful of wealthy individuals and the majority of the population struggling in penury. For instance, countries like Nigeria and South Africa have notable billionaires, yet the average citizen struggles to make ends meet.

That’s not to say the ‘1%’ don’t exist in the better developed and more prosperous countries. However, what you see in those countries is that despite a concentration of wealth at the top, most people are doing just fine and living decent lives. 

There is more data available to support the provision and access of a robust set of financial services to a significant proportion of the populace in developed countries. Although African countries struggle with a largely underbanked and financially excluded populace, there is a strong argument for the application of open APIs using mobile phone data to support financial inclusion and even create a credit scoring mechanism better suited to developing countries. 

So how do we attain prosperity in Africa?

If we’re talking about prosperity, this means we’re thinking about African countries stepping up to provide enabling environments for people to develop ideas to fruition, build successful businesses and create generational wealth.

Building this enabling environment is a key component of lasting prosperity. It’ll allow for individuals to pursue quality education, establish businesses, and improve their lives. However, obstacles such as the inability to afford quality education and access resources to support entrepreneurship hinder progress.

Think of the average person who wants to go to school, become a professional or set up a business and build a life for themselves. Such hope is snuffed out by the bleak reality that quality (higher) education isn’t free or cheap. Even if the fees are subsidized, what about the money needed to pay teachers and buy equipment to teach specialized courses? What you get from this is usually underpaid, overworked, apathetic teachers and under-equipped schools. 

This is a recipe for generational disaster, but that’s a conversation for another day.

The solution is clear. 

To address the myriad of issues in our economic landscape and bridge this prosperity gap, there must be a shift towards empowering the broader population through access to credit. Let’s provide the means for individuals to invest in their education, start businesses, and ultimately contribute to the economic well-being of their nations.

Credit has a primary role in stimulating economies

If you take a closer look at countries that are doing well across the globe, there’s always some form of credit in the background driving value creation and prosperity. This makes it easy for us to build a case for credit in Africa. Although, I will always advocate for accessible and affordable credit, otherwise, it’s just a waste of everyone’s time. This is what also underscores the work we do at my loan management SaaS fintech, Lendsqr.

Let’s say we were to create a structure for people to access credit in Africa. It would require short-term, medium-term and long-term facilities which should look somewhat like this: 

Short-term credit facilities could be used to empower small traders and entrepreneurs. They could stock their shops or address immediate financial needs that will allow them to expand their businesses, employ more people, and contribute their own quota to overall economic growth. Even for those who perhaps have a small contract to execute and are strapped for cash; they should easily be able to get a loan from the bank, do what they need to do and pay back within 90 days. Same applies to the use of credit as a safety net during emergencies, ensuring that individuals can overcome health challenges and return to productivity.

Need I point out that taxes only get paid when people make money? And only people who are willing, able and equipped to be productive make money.

In the medium-term, credit could support buying equipment and establishing small factories. An injection like this can stimulate domestic production and promote import substitution. People may import the machines but at least they’ll produce domestically, employ people and everyone gets paid and in turn pays their taxes. It’s a win all round.  

Recently, I watched a video of pressure pots being produced in a local factory in Asia and I think it serves as a compelling example of how domestic production can satisfy local demand and even prepare goods for export. This way of doing things is good for the economy and we’ve seen it work in China as well; millions of people producing varied quantities of things to cater to the domestic market and also reach into foreign markets.

When it comes to supporting heavy industries and large investments, long-term credit facilities should come into play. Dangote’s ventures in Nigeria, such as cement factories and the recently commissioned oil refinery which cost about $20 billion, demonstrate how large-scale projects, though requiring substantial investment, contribute significantly to a nation’s economic development over time and generate value through which the loans can be repaid.

On the less tangible side of things, education is also a long-term investment and a critical aspect of building generational wealth. It enables individuals to build careers, enter the middle class, generate income, and even contribute to government policies. The long-term impact of an educated population extends beyond individual success to national progress.

What’s Africa waiting for?

Credit is a powerful tool that leaders can utilize to transform their countries. It sometimes can even supersede the impact of political leadership – no matter how good a leader is, without credit, the desired progress is impossible to achieve but even with a bad leader, the availability of credit can still make great things happen. 

Perhaps for African leaders who are genuinely trying to transform their country’s economy, the oppressive thought that the government would have to provide the money for credit makes them get stuck with inaction. However, this is far from what is actually required of them. All they need to do is enact laws and policies that remove friction and aid the emergence of credit, and watch things take shape.

The ideal direction would be policies that allow lenders to access capital, reinforce fraud prevention structures and provide a legal process that protects lenders and allows them get their money back from bad borrowers without hassle.

In addition to these, lenders operating in Africa also need a framework for easier reporting of credit and access to cheap but quality data for credit scoring to significantly lower underwriting costs. 

Borrower education and protection are also equally important for this to work as intended. Consequently, the law must provide a strong framework to guard against predatory lending, and also create a process that addresses financial education for people to understand how to handle money, especially when borrowed.

A good example of leadership’s advocacy for credit  is the structure for student loans in Nigeria, created by the current President of Nigeria, Bola Ahmed Tinubu’s administration. The student loan scheme officially launched in Nigeria this month.

On the businesses’ side of things in Africa, we also have companies like Fiducia and Bridgement, making credit available to companies through invoice financing.This is proof that growth we need and desire in Africa is possible.

Let’s stop looking for external aid, grants, or handouts, African nations should focus on securing proper loans and promoting accountability. While credit comes with challenges, it is a potent force for building a better life.

This is a  call to action for leaders at every level, from local to national, across the 54 African countries. By addressing the credit problem and empowering individuals to build businesses, pursue education, and create generational wealth, Africa can break free from the cycle of poverty and usher in an era of sustained prosperity. 

When our people are engaged in building something meaningful, they are more likely to contribute positively to society and turn away from crime when they have a sense of ownership and responsibility.

It’s no secret that startups are weathering the harsh winter. It’s not an African problem but a global one. Funding has dried up and left many out in the cold to meet whatever end awaits them. While some companies were going to die anyway because their business models were flawed from the jump, others with potential for survival, who had previously been told the only way to grow is to throw money at their problems, are now forced to navigate this turbulent weather.

The mantra for all startups in these times is clear: be frugal or die. Now that the money has stopped flowing, the only way to grow is to first survive. 

The reality is that survival has always been the bedrock but it might have been all too easy to temporarily lose sight of that when the money was flowing freely. 

But not to worry, I’ll share some of the most essential strategies any startup needs to run a cost-efficient shop; most, if not all, of which I’ve been operating with in my LaaS startup, Lendsqr. 

Let’s get right into it:

#1 Infrastructure: Optimize cloud resources

Every startup probably runs their shop in the cloud with most on AWS, Google, and to a small extent, Azure.The most significant drain on a startup’s budget is unnecessary spending on cloud infrastructure. 

Many startups lack competent engineers. Truly great engineers are hard to come by and with the number of startups we have around, let’s face it, someone definitely drew the short straw on talent. What happens is these engineers overspend by spinning off more services than required at that moment, which is the fundamental sin against the ethos of elastic cloud. I’ve seen engineers spin off servers that can carry as much as 1 million customers doing 100 requests per second for a company that’s just starting out. Absolutely unnecessary.

The key is to use the lowest configuration that serves the purpose and then scale resources as the startup grows. Avoid unnecessary features like Multi-AZ (multiple availability zones); unless you’re operating at a scale comparable to Netflix and co, you don’t need it.

At a certain scale, you might even be better off having your own server instead of using costly services that don’t scale. I once helped  a tiny startup crash their infrastructure costs from about $3,000/month to about $250/month from just shutting down redundant services.

#2 People: Hire and manage people resources ruthlessly efficiently 

A common mistake startups make is hiring expensive resources just because they can. Don’t hire anyone unless you absolutely need them to survive. This ensures you remain agile and efficient. You’d be surprised to find out that you don’t actually need so many people to survive. 

It’s also important to let go of people who aren’t aligned with your goals as a startup trying to survive by all means. People who aren’t in it for the long haul and care more about work-life balance and having a soft life, need to go. It’s not a matter of being mean, you’re simply fighting for your life and you need only those willing to fight with you, come whatever may. If your startup dies, everyone goes away anyway.

Contract-based arrangements are also a way to go, however, I recommend that they be tied to output rather than a fixed monthly payment. For instance, with some of the external engineers I work with, I apply a pay structure of a base pay plus sprints delivered. If there’s no work done, no one gets paid. So no one earns off you unless they work for it. There’s no need to fund people irresponsibly. 

At Lendsqr, some of my content writers are on pay for content delivered. If there’s a mental block, we both “pay” for it.

Additionally, for founders operating in Africa, stop looking for fancy engineers outside of Africa; it would do nothing but destroy your startup faster than you can whistle. Hire locally and save money on what foreign engineers will charge you.

#3 Marketing: Focus on tracking metrics and organic growth

In challenging times, you can’t do without reevaluating your marketing activities. Stop spending unnecessarily on events and sponsorships; most don’t yield any substantial value. At Lendsqr, we tried sponsorships last year and only found out they didn’t work because we were tracking everything. 

Channel your efforts into metrics-driven marketing and you can still create the buzz you need by  leveraging the expertise of senior team members like founders, CMOs, and CTOs and encouraging them to blog and engage in relevant spaces online. This performs much better for driving sustainable organic growth.

#4 Software: Go cheap when you need to

Most people believe the most expensive option is the best way to go. Maybe. But have you considered if it’s best for you? Stop using expensive software especially for support functions that deviate from your core business. For instance, my company switched from Camtasia ($179.88 / year) to CapCut ($0 / year) to save money and since we’re not planning on becoming a movie production house anytime soon, I’d say we’re good.

The same logic applies to our other tools like Figma and Postman where only those who need it have access so we don’t rack up license costs. The only tool we splurge on is Github where we use the Enterprise plan because cutting costs without compromising productivity is key. So don’t skim on what’s crucial. 

Some of the other great but affordable tools we use include Metabase for analytics, Google Workspace and Google chat (goodbye Slack); Typesense for our search engine – which is just as good as Algolia – and Sentry for code quality. Opting for open-source solutions and selecting tools based on necessity rather than popularity can significantly reduce software expenses.

#5 Haggle: Negotiate the services you use like pepper and tomatoes

Don’t be quick to take pricing at face value. Sometimes you could just call the vendor and haggle your pricing. I have saved as much as 50% on some critical software or services just by haggling with the provider. There’s no shame here. 

And if you can get a significant discount by going for a yearly contract instead of monthly, bite the bullet and pay up. Sometimes, you can get as much as 40% on some software and services (AWS for example) if you have a multi-year commitment. 

#6 Operating costs: Embrace remote work if you can

In the era of remote work, startups can forgo the need for fancy hardware and expensive office spaces. Adopting a remote work model not only aligns with the current trend but also allows you to save significantly on office-related expenses. 

In my company, we work remotely; my employees love it and so does my pocket. Although we do hybrid once in a while; rent a place, have everyone come around, we get a ton of work done and everyone has a great time.

Another great benefit of remote is that you can employ great people from all over the world (please, be aware of time zones) who would do great work at a significantly lower cost of employment. You aren’t cheating anyone; you are giving opportunities. Brownie points for you!

#Bonus tip: Audit. Audit! AUDIT!!

Listen, I cannot stress this enough: audit as often as you can. Sit down with your finance people and audit your infrastructure bills monthly. If you have services no one uses running at night e.g test environment and the likes; get your engineers to write a script that shuts all these things down automatically whenever they’re not in use and they can bring them back up again when needed. Query extensively and strip what you need to without compromising on quality.

Review salary costs, bonuses, allowances and other operating costs and adjust where you find you’re spending on things you shouldn’t be spending on. Everyone has to be prepared to make sacrifices and if they’re not then let them go; they’re not for you.

Auditing bills and removing redundancies can lead to substantial cost savings. Run numbers on these costs every single month and never stop asking, “how low can this number go?” 

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For startups looking for funding, these are challenging times and the only way to survive and ultimately thrive is to tighten our belts and adopt a frugal mindset. 
With these strategies, based on lessons I’ve learnt firsthand from running a startup, you can optimize your infrastructure, manage your resources better and save about 60-70% on redundant costs to significantly extend your runway and increase your likelihood of long-term success. It’s not just about how rapidly you can grow when you’re flush with cash, it’s about setting yourself up for sustainable growth and like it or not, frugality is a necessary evil.

Two years ago, I hung my tailored jackets and fancy pants for good and left my cozy corporate gig to fully devote myself to building Lendsqr. I knew it was going to be rough for a white bearded baba agba to run a startup but I never knew that in 2 years, I would learn so much as to upend many of the hardcoded corporate knowledge I had used two decades to amass. 

Let’s just say there have been moments I think we founders definitely need our own exclusive support group. 

The lessons I’ve picked, some of the most important ones that I would share here, are things I wish I knew in my previous careers, especially when I got to the top. Things are definitely wild in the startup land.

#1 Overplanning does nothing but slow you down

Don’t overplan. When reality hits, the elaborate decks and models won’t survive the first contact with realities. Just have a few good North stars that keep you focused when things go off-book, because they definitely will. Reality has a knack for ignoring the script and humbling even the best-laid plans. So McKinsey and KPMG, I won’t be calling on you guys any time soon 😎.

#2 Partner with caution

I always knew partnerships are a delicate dance. But what I didn’t know is how fickle partners could be especially when you are the smaller fry. Please, don’t build your entire plan around them. Most of them don’t have the same urgency you most likely do and will just suck you into their morass and corporate spuddle. 

#3 There’s only one right reason to hire anyone

Hiring isn’t charity work. Don’t ever let your personal biases anywhere near your hiring decisions. Don’t hire out of pity or with the hope that they’ll miraculously improve. But what if they do? Good for them but I don’t care. As a startup, you can’t afford to give chances. It’s a cold truth, I know; but the truth nonetheless. These are adults. They either show you they can do the job from day one or you show them the door.

#4 Keep the nonsense away

Unless you run a garbage collection service, there should be no room for rubbish. Maintain a zero-tolerance policy for toxicity, especially from those who preach about work-life balance. Those guys don’t want to win as badly as you do. The best course of action is to send them away. Fast. Such attitudes can derail the entire team; swift action is your best defense. 

I don’t have a problem with work life-balance. But right now, I’m working so I can afford to balance later. For those who want the balance now, my door is the wrong one to knock.

#5 Social media is a lie

Social media is hype. Everything you see there is 50x less impressive in real life. Keep your expectations grounded or get swept away at your own peril. Whatever is trending now, for good or for bad, won’t be remembered in 2 days time. Keep your peace! ✌️

#6 Be f*ck-shit prudent

You’ve to be financially prudent. Don’t spend unless someone will die if you don’t. Cash you’ve saved can be a lifeline someday but cash you’ve wasted is gone and will be a pain to replace.

We all know that this is a turbulent time for startups trying to raise money. Lendsqr was lucky to have raised funds just weeks before the storm hit but best believe that doesn’t mean I intend to rest on my oars. We could all use some sense.

#7 Measure only the metrics that matter

Beware of fake marketing metrics. Downloads and views are vanity metrics; they don’t mean sh*t. Track the metrics that matter and actually create value for you. For instance, depending on your niche, this could be transfer amount, fees charged, loans booked, order paid, deliveries,etc. Focus on activities that impact these, everything else is just pretty numbers not worth a dime.

#8 The customer is king 👑

Support your customers like your life depends on it because, in the startup world, it often does. Go to the end of the world to make them happy. Listen to them. Be their friends. Even when they have issues beyond what your company is set out to do, help them. Customers will remember you when the going is good and they would be your best sales rep. 

Make sure you are always in contact with them even if they aren’t doing any business with you. Emails and SMS are the cheapest means to remain in your customers’ lives. They are not paying attention to what you’re saying but they sure as know you’re alive and kicking. Top of mind awareness is key!

#9 The customer is often wrong

We’re already thinking about it, might as well say it. Customers don’t know jack-sh*t. Half of the time, customers are driven by vibes, emotions, and FOMO. They ask for things they don’t know anything about. I’ve had tons of customers pay for expensive features and never used them. Well, some of those features helped snag other customers down the line.

You don’t have to do everything a customer wants, no questions asked, just to satisfy them. Ask tons of questions, understand the answers, guide your customers to think the right way when they’re wrong, but of course, the trick is to do it without them ever feeling wrong.

#10 Make sure the price is right

Don’t undervalue your product and make it too cheap. While a free trial might attract attention, the real deal should reflect its true value. Customers willing to pay for value are your tribe. The onus is on you to make sure the value is there and worth every penny.

Beware of customers who don’t want to spend anything to run their businesses; if they really value that business and they honestly think it would succeed, they would spend to bring their dreams alive.

#11 Sharpen your bullshit antenna 

Develop a finely tuned antenna to detect bullshit customers and partners. If they demand the world before committing, they might be on a joy ride at your expense. Cut them loose. The worst thing that can happen is to spend quality time on customers who drain your morale. 

#12 Spying is not only allowed, it’s compulsory

Spy on your competition. You need to know what your customers know. So when a customer claims your rival is better than you, you can call their bluff by showing them exactly why you’re their best bet. I won’t mention names here but I know what you do 😜

#13 Respect the competition

It’s one thing to research your competitors  to gain an advantage but don’t badmouth or demarket the competition. Never ever do it no matter how tempted you are. Defend them if you can because when you do, your customers, staff and the industry actually respect you even much more. 

Your competitors are in the business just like you and if they thrive, the entire market benefits, including you.

#14 Do tons of mystery shopping

Invest time in mystery shopping. Your customer support team might be messing with your customers and causing havoc. Go undercover and find out if you’ve unintentionally hired clowns. 

Do it often and be decisive about actions; if anyone in your company is consistently screwing customers over; cut them loose like a bad habit. Let your team also know that mystery shoppers come around; it keeps them on their toes.

#15 Discipline isn’t negotiable

Don’t play with discipline. Small lapses often lead to big problems. If anyone in your team can’t do the little things right, they will fumble the big things. Are they worth the chance that you might lose everything? Set a standard and a red-line that can’t be crossed – the life of your business depends on it.

#16 Collaborate with the right people

Don’t work with anyone or company lacking ambition, taste, or integrity. They can’t give you what they don’t have so don’t bother asking. These qualities directly influence the success of your startup so stay focused.

And of course, loyalty is a big deal too. You always need someone in your corner when sh*t hits the fan. This can make all the difference.

#17 People will come, people will go then more people will come again

Don’t feel too bad when your staff leave you hanging and can’t stay the course. It’s tough initially but if the success of your business depends on one person, you’re not building a business, you’re building a house of cards. 

But at the same time, you must know why people leave you; is it because you’re toxic or demanding. If toxic, fix your ways. If too demanding; well, nothing you can do about that.

#18 Loyalty is king

People join your team for various reasons; some just want a job and are happy to move on when they smell greener grass. Some want to build a career. Some care about your vision and what the company is doing. But for those who are loyal to you; treat them like royalty because when you are backed to a corner and vulnerable, you want nothing but the assurance that you ain’t alone in the deep trenches. 

And please, repay the loyalty in full and even with some extra toppings on top. And for those who aren’t loyal; don’t hold anything against them; as long as they do their jobs, everyone is fine and dandy.

Lastly, be that person that it’s worth being loyal to.

#19 Experience is not always an advantage

Experienced staff are good on paper but often carry baggage. Be prepared for the weight, and manage expectations accordingly. While some are great, you might be better off with green hires in some cases.

#20 10x employees aren’t a myth

True gems, these 10x individuals are serious, don’t come with bad attitudes and are curious and ready to work. Cherish them; success is made sweeter with them by your side.

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And there you have it folks, two years in the business and it already has me just shy of attaining sage status. Running a startup is a wild ride but I’m hanging on with everything I’ve got because success is the only option. 

These are lessons I’ve learnt from my own experience, and they’ve made the journey not only survivable but potentially enjoyable. As a startup, you either adapt or die; there’s nothing in between. 

As for me and mine, F*CK death, we’re in it to win; BIG!

After my last article about the hushed rape of the Nigerian financial ecosystem, which some call fraud, quite a number of people reached out to share their horror stories hoping I could step in and solve their problems and it got me thinking.

I started asking myself – what’s the foundation of this horrible thing called fraud?

I worked in banking for 16 years before they kicked me out and I remember the quick and decisive ways we dealt with fraud in those days. And I keep asking myself – what happened to the good old days when we tackled fraud without mercy? What changed?

I hate to break it to you, but it’s the people. It’s the people who have changed.

The machine is fine, the man is not

I recently started working with banks again and I’ve found myself comparing the quality of people I knew and left in banking with those I meet with now. Sadly, the latter have come up short. 

Most of my colleagues back then are now Executive Directors and Managing Directors in the banks and I still engage with them often. Their quality remains undisputed; they’re still as sharp as ever, driven and want to get things done. This is a far cry from my experience working with the middle managers who are charged with running these banks. The difference is clear as day. The sad reality is that the incompetence, apathy and poor outcomes from the financial sector are because there are no good hands to manage things effectively anymore.

We’re all busy crying that the working class are leaving the country in droves but that’s not the real problem. The main issue is not that people are japa-ing, it’s that the BEST brains are the ones leaving. Those who successfully migrate to Canada or the UK, especially via the education pathway, are not your average guys. These are the brainy bunch who passed the IELTS, got top grades and paved the way with their competence. Let’s be serious, not many people fall into this category. 

The truth is that only the best brains can go, at least the right way. I’ll save my ink and not bother diving into the other ridiculous pathways.

Banking’s greatest hits are throwbacks

Think about this: what hit product has come out of banking in the past five years during this latest wave of brain drain?

Nothing.

Bank Verification Number (BVN), Interbank transfers, mobile money and all the other cool stuff that have transformed the Nigerian finance space over the last few years? Those either started a long time ago or are the latest innovations of fintechs founded by people who bailed on traditional banking.

The best guys are long gone and there’s no covering up anymore; it’s showing, especially in the fight against fraud. Those with the intelligence and competence to deal with the fraud pandemic aren’t around anymore.

The two major impacts of the best brains leaving is that they’re no longer here to teach the rookies and even more importantly, they are not around to dilute the influence of the poor talent. And now the whole nation is suffering for it.

Today, customers of every bank complain about unauthorized transactions on their account and what do we hear in response? Crickets. The ease with which fraudsters are taking the money shows zero competence from those in charge of stopping this. And don’t even get me started on the Know Your Customer (KYC) process from the stone age the banks still use. 

Lack of tech is not the problem so more tech is not the solution

Some people have come around to suggest the use of Machine Learning (ML) and Artificial Intelligence (AI) etc. But the use of ML and AI only makes sense if the banks acknowledge they have a problem in the first place. If you report fraud to your bank today, the response will most likely lack the urgency that shows an understanding of the seriousness of the issue from the jump. So is it really the tech that’s lacking? 

Artificial Intelligence (AI) is only as good as the Human Intelligence (HI) using it.

The tools the banks need to tackle fraud are gathering dust in their already existing arsenal. They’re not being used. Technology is not the problem.

Why won’t the banks come together to solve the problem and create an effective deterrent to fraud? Because it requires competence and discipline. And those two guys seem to have colluded and left the building. 😔

What’s the plan?

We’re in a serious crisis, and I don’t have the answer, but brain drain is the root of this problem. I cannot be convinced otherwise. But you are welcome to try. Let’s lay it all on the table and look at it together.

The leadership in the banks is still pretty impressive but they need to address this problem urgently. It’s time to either upskill their current talent or bring some of those who have japa’d to come back to help. It goes without saying that they will pay through their noses for this; especially for those who’ve gotten their papers and aren’t hungry anymore.

Because if this continues, contrary to what we like to tell ourselves, we will not be alright, and nothing will be okay.