Jack Ma has risen from being an English teacher to being the Executive Chairman of Alibaba, China’s largest online commerce company. This, however, has not only been beneficial to Ma, but it has blown a fresh breath of life to the Chinese economy.
Today, on the ICT Radio Show, Prof. Pat Utomi spoke with CFA on the making of the next Alibaba; Africa in perspective.
Below are some of the points raised by Prof. Pat Utomi.
In the 90’s, Africa came very close to having its own version of Alibaba. At the time, E-africacommerce.com initiative was set up to sell African products to the entire world. The project was to operate from Africa with a hub in Houston, Texas, USA, and warehouses would be set up in Lagos, Johannesburg, Nairobi and Tunisia. Somewhere along the line, however, it fell apart, and investors withdrew, thus, Africa’s “Alibaba” miscarried.
Progress towards online commerce initiatives for Africa, however, faces one major hurdle; lack of funding.
In the book, Saving Capitalism For Capitalists, institutional arrangements are crucial in building or destroying investments. In the US, for instance, the Vulture Fund has helped young investors get funding for their ventures.
In Nigeria, however venture capital is deficient. Private equity companies such as Capital Alliance that assess and fund existing venture rather than provide a venture capital for new ventures. Various factors additionally limit the extents to which insurance companies can invest their money. This means that an insurance company will be inclined more towards investing in safe areas like the stock market rather than in risky ventures.
When SMEs gets funding, there are two things that must be involved:
- The value of delayed or deferred gratification ought to be practiced to stop the investor from getting too excited to eat into the venture capital.
- The growth company mindset must be embraced. Having a SME mindset prevents growth in such a way that the SME will remain an SME forever. The investor, instead, should have a dream to make the SME grow into a big corporation in the world.
We have much more interesting topics lined up. Our future guest too are iconic, intriguing and educative. You can catch all the action on Nigeria Info Fm 99.3 Nigeria every Tuesday at 1:30pm and also on learn.ictwithcfa.com.
