Chief Twit, as Elon calls himself, started with the solution - Pay for Twitter Blue and get the blue tick; and tried to walk back to a problem that never existed - Everyone wants the blue tick. It became clear after the launch that not everyone who wants Twitter Blue wants the blue tick. Again, two different user needs.

The Verification Problem

It was clear that Twitter verification was broken. In fact, the previous Twitter team acknowledged the problem and tried to improve the process to no avail. Elon’s concerns were valid. The verification system was not equitable. The process was vague, and sometimes, people who are notable in their rights cannot get through the verification process. There were reports that some people got the verification because they knew a Twitter employee.

However, throwing the whole process away and verifying anyone willing to pay $8 with no questions asked creates other problems. As a proponent of first principles, it was a miss that Elon and his team didn’t spend enough time to understand the why’s before going all out to launch.

• Why does verification exist? To reduce the risk of impersonation by authenticating the identity of high-profile accounts.

• Why is it limited to high-profile people and organizations? Verification is a high-effort implementation and is hard to implement at the scale of Twitter. However, high-profile accounts are more at risk of impersonation and are the minority, making it a no-brainer to tackle the group.

• Why did it become a status symbol? High-profile accounts usually belong to people who have a certain social status that can often translate to social networks.

To address the verification problem, it is important to solve equity and scale without compromising on authenticity, which was the whole point. 

How would I address this?

• Streamline the verification process - Crypto and fintech companies do this well with their KYC process. For instance, some require you to take a picture using their app with your government-issued ID held beside your face.

• Invest in more human verifiers - As a fallback when tech fails or when wrongful rejection is appealed, a human can verify. This pool needs to be increased because opening the doors of verification to everyone will dramatically increase requests.

• Charge a fee - This should be separate from the Twitter Blue offering and should probably be more than $8. The right pricing should be determined by factoring in the increased resources required for verification and to disincentivize bad actors.

This approach allows people who don’t mind paying for verification to do so while achieving the actual objective of the blue tick, which is to authenticate a Twitter account. It also creates the right balance between the resources needed for verification and the value for the users. For some people, they get the functional value of preventing impersonation of their accounts. For others, they get the emotional value of the social status it comes with.

The Twitter Blue Problem

Twitter Blue started as an early adopter product. It was cheap to buy at $3.99 and came with unpolished features: “Undo Tweet” that delayed sending your tweet, “Bookmark Folders” that wasn’t intuitive to use, and a broken “Reader Mode.” I remember tweeting through my experience of the service when I subscribed. Yes, I was one of the earliest Twitter Blue subscribers. I was eager to try out the new features, and the price didn’t really stick out to me. They went on to add more features like custom icons, NFT avatars, and edit tweets before the Elon acquisition.

Twitter Blue was a no-brainer subscription mostly because of the price; to increase the price, it needs to offer more concrete value. Increasing the price based on “coming soon” features is like putting the cart before the horse. What does “seeing half the ads” even mean? And do I really care about being at the top of the replies? I say this as a recently-unsubscribed Twitter Blue user. I unsubscribed after trying out the new pricing for a month.

How would I address this?

• Focus on building the product - Functional features that Twitter should have had since, like editing tweets and a slightly longer character limit (not 4000 lol), can be built as Twitter Blue exclusive features.

• Build the community - Cultivate a growing community of loyal Twitter Blue users who will help get the word out and grow usage. You can also build emotional value into the product, like the NFT avatar. I wish I could change the shape of my profile picture as a Twitter Blue user without going through the Web 3 UX of getting an NFT.

• Relaunch product with new pricing - Then, increase the price reasonably or create another tier pricing that would have even more exclusive features.

With this approach, you are building the value before charging for it, not the other way around. You also get a way to gain momentum with the community before your relaunch.

In summary,

Combining two different problems into one solution has turned out to be… interesting. Now, there are multiple colors of the verification badge, and the blue tick’s value is further diluted. Some Twitter Blue users don’t want the blue tick, and Twitter is considering offering an option to disable the tick. But they still want to charge $8 for everything.

Taking a step back and evaluating things might be a slower approach, but it certainly helps to see that these are clearly different problems that require different approaches. With the suggestions above, users who want the blue tick will be happy to pay for it, and Twitter Blue will be more focused on delivering premium value to the subscribers, so they stay happy.

The case of Nigeria’s Government vs. Twitter et al.

Before the government decided to put a muzzle on the social media platform, there have been interests from the political class to regulate social media. The social media bill, which was introduced on the floor of the national parliament in 2019, received a lot of backlashes and has been moving slowly since it was first introduced. The government believes that social media is facilitating unrest in the country and thus should be curbed. The sheer scale of how Twitter conversations aid organizing is one of the greatest fears of a not-so-democratic government. That said, the implementation of this ban is an interesting one. First, the order to ban Twitter came from the Minister of Information and Culture. In his press release, he directed the Nigerian Broadcasting Corporation (NBC), the same agency regulating traditional media houses, to begin work on licensing social media companies operating in Nigeria. There’s a lot to unpack here.

Let’s take a look at an excerpt from Akinola’s article in The Conversation:

It is possible for the Twitter ban to be pressed into one or two of the permissible grounds of limitation under section 45 of the Nigerian constitution. However, examination of the facts surrounding the ban show that, at the very least, the ban fails the test of legality. For one, it was announced by the country’s Minister of Information at a press conference rather than being effected through a law of general application as required by Section 45 of the 1999 Constitution.

I will not focus on the legality for this piece, but you can read more about Akinola’s argument to get a sense of it. It is simply not constitutional. And even more interesting is how the telcos executed the ban without a court order. But then, it is Nigeria.

The grass in the elephants’ duel

There are three participants in this face-off - the Nigerian people, the people in government, and Twitter. I will assume that the ban intends to serve as a punishment to Twitter. The government is pissed - whether for the right reasons or not - at Jack and his company. They believe that banning Twitter will be very bad for the social media company. And they are not going to stop there. I hate to burst the bubble of Lai and his cohorts, but Twitter is very much not affected. Let’s do a “back of the envelope” math to unpack this.

Several reports have alluded that Nigeria has 40 million people on Twitter and that Nigeria is a massive market for Twitter. This number suggests that Nigeria contributes to 12% of Twitter’s users globally. That’s preposterous, for the lack of another big English word. Statista shows an estimate of 4.1 million Twitter users in Nigeria. However, not all Twitter users are monetizable. Statista shows that only about 3 million of them can be reached by Twitter’s advertising. With an estimated 33 million social media users in Nigeria, this puts Twitter at about 9% of monetizable social media users in Nigeria (this doesn’t account for double-counting and other discrepancies). Per PwC, display advertising revenue in Nigeria is projected to be $31 million by 2021. Let’s say social media is 70% of display advertising in the country, which puts the number at $21.7 million. Coupled with the Statista data, this shows that revenue per user for social media in Nigeria is 65 cents. Multiplying that by the number of monetizable Twitter users gives $2 million (1 billion naira). If we adjust this for errors and maybe want to be more realistic, we can’t possibly stretch it past $10 million. To put that in perspective, Twitter’s annual revenue in 2020 was $3.7 billion. Obviously, this ban is not making a dent in Twitter’s revenue.

On a macro level, this doesn’t affect the people in government either. The tax revenue from Twitter or the lack thereof is a drop in the ocean for the government. The economic implications of this for the Nigerian government will be negligible in the short term. The problem for the government will stem from the indirect impact of the ban. As it affects small businesses in the economy, this might cascade into a bigger problem if the ban is upheld for a long time or extended to other platforms.

Zainab wrote for Foreign Policy:

With its ban on Twitter, Nigeria joins China, Iran, and North Korea. China can afford to shut out foreign services thanks to the scale of its own domestic internet. North Korea is an economic disaster zone, and Iran is deeply unstable. Wanting to get on that list, as a mid-sized developing economy, is a disastrous move.

“Nigeria’s ban on Twitter fails to appreciate its current economic situation,” says Odoemenam. “With the state of its economy, Nigeria should be prioritizing policies that would drive economic recovery and not on internet firewalls to stifle free speech. We are a third-world economy battling with high levels of insecurity, youth unemployment, a dwindling economy, and political instability. Our realities are completely different from a country like China.”

I agree with this submission. While the government has referred to China many times when talking about the ban, we don’t have the economic autonomy of China to walk out of this completely unscathed. From the Ministry of Information memos, it seems as though this battle intends to force social media companies to incorporate a Nigerian entity and be regulated. If these companies decide not to follow through and get banned for it, it will be more disastrous for the Nigerian government than for them. The reason? We are not China.

More specifically, the people that are feeling the impact of this ban are the Nigerian people. A small business owner told CNN she was selling more than $1200 worth of goods on Twitter per week. Her audience will be hard to recreate on other platforms immediately, and her income will take a hit for some time. Nigerians like her are the ones at the brunt of this ban.

A Yoruba adage says, “When two elephants fight, the grass gets trampled.” It begs the question: Whose side are the people in government on?

How food e-commerce works

To understand how food e-commerce works, we need to understand how e-commerce works as a business model. E-commerce allows buyers to get access to the products they want from the comfort of their devices - smartphones, laptops, or anything with access to the internet. What the user sees is a website with a ton of products they are able to choose from. Once they complete checkout, they are expecting the product to arrive at their doorstep on the agreed date. To make that “simple” process happen, there are a lot of things going on in the background that the buyer is not privy to. This includes but not limited to: tech infrastructure (hosting, payments, etc.), stocking, warehousing, last-mile delivery logistics.

Food e-commerce is not so different. The main difference? In other types of e-commerce, same-day delivery is a privilege. Amazon charges a premium through Prime to provide that. With food e-commerce, same-day delivery is too late. Your consumer wants their food in the next hour or less. Even though there are smaller food vendors who do next-day delivery to manage expectations, people order food when they are hungry ideally. This singular fact changes the dynamic with food e-commerce when you compare it with other e-commerce types. Food e-commerce comes in different forms. A big part of this is their fulfillment models and how they mirror other e-commerce models.

The food ecosystem, simplified

Who are the players?

To make the explanation easier, we can identify the key players in the food e-commerce ecosystem as: the vendors, the enablers and the consumers

• The vendors are the backbone of the food business at large. They make the food. Largely, there are two types of vendors - the brick-and-mortar restaurants and the online vendors. For brick-and-mortar restaurants, online selling is a backup plan and not the main driver of their businesses. In fact, most of them did not have an option for online delivery until the pandemic hit. Online vendors live and breathe the internet. That is their major only source of revenue. While restaurants can get away with logistics mishaps, for online vendors that is their bread and butter. They have to get it right and that is increasingly hard in a country like Nigeria or even a state like Lagos.

• The enablers on the other hand are the backbone of food e-commerce. They make the engine that is online delivery run smoothly. In this category, you have tech infrastructure like Buyfood.Africa. Recently launched, Buyfood provides a platform for food vendors and restaurants alike to build their own food ordering website. Ni fries was built on the Buyfood platform. Think Shopify but for food vendors. We also have marketplaces like Jumia Food. Marketplaces allow food vendors to reach consumers. They list the products on their website/app and coordinate the logistics, payments, etc. Think Uber but for food vendors (sounds like Uber Eats :D). A key part of all of these is the last-mile logistics firms like Gokada helping food vendors reach their customers in time. Social media also falls in the enabler category allowing some food vendors to set up shop and reach customers without necessarily using building out their own infrastructure or working with a marketplace.

• The consumers are us. We eat the food.

The rise of food e-commerce in Nigeria

When the lockdowns came looming, everyone rushed to buy toilet papers. Why? Because they need to prepare for the consequences of eating different kinds of food that won’t necessarily be homemade. Okay. I kid. I kid. Toilet paper shortage at the start of the pandemic is not in any way linked to food e-commerce.

With stay-at-home orders across the world, many started turning to food delivery services to feed their stomachs. This has given rise to a number of food e-commerce companies. Even on social media, we see an uptick in the number of food vendors advertising their services. Let’s take a step back. We can trace the history of this industry back to 2012 when e-commerce started in Nigeria. Konga and Jumia came into the market to set the stage for what will be the next tech revolution in the country. They came at a time when there was no structure in place for these kinds of businesses. They had to figure out their own payment infrastructure (KongaPay, JumiaPay), logistics (KOS delivery etc.) amongst other things. There was basically nothing for e-commerce to thrive upon in Nigeria back then. Zilch!

Logistics as a service didn’t quite pick up immediately. Even though it was the backbone of these businesses, it still stood in the shadows while things like payments (read: Fintech!) shone. However, at the beginning of 2020, we saw a rise in the number of dispatch riders on the roads. The Lagos State government had just banned passenger motorcycles and most of the businesses in this industry pivoted to last-mile logistics. Food logistics was one of the key drivers of growth in this area. Gokada, one of the prominent ride-hailing startups in Lagos, partnered with Jumia Food to facilitate food delivery in February of 2020. They also provided logistics service to a number of food vendors, including a food subscription service (Eden). This switch in business model happened just before the pandemic which accelerated food delivery services even further. Gokada later went on to launch its own food e-commerce product (GShop) in September.

The pandemic did not just change the way people buy food online, it also affected how vendors like restaurants operate. We saw droves of restaurants that didn’t offer online delivery in the past setting up shop on Jumia Food or starting their own online delivery structure.

How can we tell food is big? New players are coming into the market. Bolt recently indicated that Bolt Food is coming to Nigeria. They see an opportunity and they are coming for it. In October of last year, Gokada also launched GShop - a food marketplace that runs on their last-mile logistics service. They could’ve launched a shoe delivery service but must have seen how big food delivery is as a part of their logistics business. Even some businesses that do more than food are paying closer attention to food. Eden was created to help people automate chores including cooking. However, in the past year, they have consistently focused on the food side of the business. Scroll through their Twitter TL for instance and give yourself a dollar for every time you see something about laundry or house cleaning. How much do you have now? From rolling out a new package to introducing more flexible meal plans, they continue to show that the food part of their business is a huge part of it.

Future outlook

The pandemic will not be on forever. With vaccination on the horizon, we are already looking at an end in sight. The question, as with other things the pandemic has accelerated is: what happens after?

Food e-commerce in Nigeria is still in its infancy. It is still a huge opportunity that has not been fully tapped into in this part of the world. Even around the world, many players are still figuring out how to make profits from the food delivery business. There are different ways to approach it. Eden is approaching food e-commerce in a very unique way - a food subscription that is tailored to the user. We are going to see players come in and address it in other unconventional ways. New businesses, especially startups, will move away from the marketplace model of the likes of Jumia. If anything, it is ridiculously complex to execute. Even so in a market like Nigeria.

Remember the infrastructure problem of 2012? Some businesses have risen to solve different parts of it. We have the likes of Paystack solving payments for e-commerce and Gokada solving last-mile logistics. More of these businesses will take interest in the movers of their services. In cases where this is food, they may tend to create products to cater to their users in the category. Gokada has led the way with a marketplace that relies on its existing infrastructure. I see more businesses going this route as well.

Food e-commerce goes beyond food. There are other parts of this booming ecosystem that need to be improved. I see businesses rising to the challenge to fix these underlying problems. We have seen the likes of BuyFood and how they are laser-focused on helping food vendors come online. That is just one example of the many things that are possible.

Before I go further, let me break down the crypto exchange ecosystem as it works and why it is important that they are provided financial services.

Overview of Crypto Exchange Transactions

A cryptocurrency exchange is a marketplace where crypto-assets can be bought and sold. Crypto traders can come into the system and use the tools available to long or short different cryptocurrencies. Beyond futures, there are other forms of trading available to them, including spot trading. In this system, there are a lot of players. However, I will explain those players that are key to this piece - crypto exchanges, traders (buyers and sellers), payment processors, and banks.

• Crypto Exchanges: Crypto exchanges are the mediators of the transactions in the crypto world. They allow for easy movement of the currencies from one part of their world to another. They also facilitate the relationship between fiat and cryptocurrencies. For an average person to get into the crypto game, they need to figure out how to acquire the asset using their existing fiat currency (Naira, USD, or whatever they spend). Other crypto dealers can acquire the assets using other means like mining. Fiat doesn’t just turn into crypto; the cryptocurrency needs to be bought. This instance is where the crypto exchanges come in. Examples of crypto exchanges include Binance, Quidax, etc.  

• Traders: These are buyers and sellers who are dealing in the crypto economy. Sellers are those who are selling their crypto assets. This may be in exchange for another crypto asset or fiat. For this piece's purpose, we are going to regard sellers as those who are selling in exchange for fiat currencies. Buyers, on the other hand, want to acquire crypto assets. We will assume they want to exchange fiat for crypto. When buyers interact directly with sellers, this is called peer-to-peer exchange (P2P). However, this is not always the case. Sellers can interact with the crypto exchange without ready buyers, and buyers can do the same without willing sellers.

• Payment Processors and Banks: Banks are who they are: banks. However, payment processors are slightly different from banks. They manage the credit and debit transactions by moving money from one point to another as needed. They help facilitate the relationship between fiat and crypto in this ecosystem through the help of the banks. Examples of payment processors include Flutterwave, Paystack, etc.

To explain the relationship between all these players, let me set an instance. If a buyer wants to buy 0.004BTC* (crypto) on Binance using ₦100,000 (fiat) from their Wema bank account and wants to interact with the exchange (not a particular seller). They would send the ₦100,000 from their Wema Bank account to Binance through Flutterwave and then be able to use the funds to buy the bitcoin.

Implications of CBN’s actions and workarounds

Following the Central Bank of Nigeria’s decision/letter, everyone in the crypto ecosystem has been scrambling for alternatives. It affects all the players differently. In the plainest terms, this directive forbids banks and financial institutions from dealing with crypto exchanges. It simply affects the relationship between fiat (in this case, naira) and cryptocurrencies. Banks and payment processors are no longer able to help users process naira deposits to crypto exchanges and withdrawals from crypto exchanges.

For consumers, they can still trade in cryptocurrencies. They can use their existing crypto assets to continue their trading business. However, moving funds from fiat (naira) to crypto and vice versa has been affected by the directive. They can no longer send money into the crypto exchanges using the usual payment methods like cards or bank transfers. The past week has seen a rise in P2P crypto transactions on various platforms to solve users’ problems. Consumers are leveraging other traders to get in and out of the crypto game. With P2P, you can connect with someone who has crypto value and is willing to sell that in exchange for naira. The seller and trader can connect on any platform, exchange bank, and crypto wallet details, and get the transaction done. This way, the buyer can use the crypto value that he just gained to continue trading on any crypto exchange. This fix cuts out the middlemen - crypto exchanges and payment processors. However, due to the incessant fraud associated with this method, there is an opportunity for crypto exchanges to serve as escrow and provide value for the consumer.

Hence, crypto exchanges have also adopted P2P as their solution to the CBN directive. As a marketplace, exchanges are able to attract both supply (sellers) and demand (buyers). They connect both sides and also serve as the mediator between them. When a seller indicates that they want to sell crypto, the value goes into an escrow within the crypto exchange, and buyers can see their account details to transfer the naira value to the seller. Then, the crypto exchange can release the value to the buyer once payment has been confirmed. As brilliant as this is, its scalability hinges on the amount of crypto in the system that is readily available on the supply side to meet appropriate demand. For smaller crypto platforms, this might pose some issues. With this solution, new money is not entering the system, just a re-circulation of existing value. This fix cuts out the payment processors, and there will be no transaction fees outside of the regular bank transfer fee. However, crypto exchanges can charge escrow fees as this is a value they are currently providing to shield their users from fraud. We see crypto exchanges like Binance use this solution by automating the P2P process without charging any extra fee yet. We are in a learning curve phase where users are still getting used to the new system.

In the payment processor world, it’s tough to make anything out of the current situation. All processors have responded to the direction by shutting down crypto merchants within their services. However, there is a workaround they can be able to provide, albeit expensive and tricky. They can partner with an international payment processor to use their service to help crypto merchants receive money from their customers. However, this will be expensive in terms of charges and limiting for customers that use naira debit cards. Before now, most banks have placed a monthly limit of about $100 - $200 on international transactions. This restriction will hold if a platform is collecting funds using a foreign payment processor. For foreign currency accounts, there is no limit. However, this shrinks the target audience as only a small percentage of Nigerians have domiciliary accounts, as they are called. Also, this workaround is tricky as CBN can directly revoke a payment processor’s license. This fix may be possible for the crypto exchanges where they will work directly with the international payment processor that is not liable to CBN rules.

A trip back to the past

What we are seeing with P2P now is like a time travel to the past. Cryptocurrency started in Nigeria mainly through P2P services. Crypto trading did not pick up until recently. Some years ago, we had vendors like Patricia sell bitcoin to users in exchange for naira. This process was pretty manual as they had users ask for the amount of BTC they want through social platforms like WhatsApp and send the naira equivalent to the vendor’s bank account. Once payment is confirmed, the vendor would use P2P services like Paxful to send the bitcoin from the wallet to the buyer’s wallet. Patricia has since automated some of these services using payment processors and their tech. This directive seems like a trip back to when P2P was done in a very manual way, thereby undercutting payment processors and making the process less efficient.

Future of crypto in Nigeria

As we can see, the CBN directive does not spell doom for the Nigerian crypto market. It’s not even a setback, as trading is still ongoing without many restrictions. What this has affected is access to the crypto market. By cutting the payment processors, the average Nigerian cannot easily get into the game as they would have been able to. The entry barrier is higher, which means you have to really want to be in the crypto world to get in. Unlike before now where you can easily “test the waters”. Restrictions are getting stricter as banks are now closing down individual accounts suspected to be involved in crypto-related transactions. This move is to crack down on P2P as an alternative. As these restrictions go deeper, it will force traders to find less-than-straightforward options. This means people would have to jump through hoops like getting a domiciliary account, funding it with USD (likely through the black market rate), and using the cards with exchanges to be able to trade in crypto. This will indeed not for the fainthearted.

There are two possible outcomes:

• CBN keeps cracking down on crypto: Consumers will continue to find alternatives because crypto is here to stay.

• CBN backs down: Merchants are able to innovate to make life easier for consumers and advance the crypto game in Nigeria

In either case, I don’t see a future where crypto is dead in Nigeria. People will keep iterating until they can trade in the crypto economy freely.

*Used Paxful’s exchange rate as at 0144hrs WAT 02.15.2021

It may seem flimsy when we talk about Giveaway, but no one has fully tapped into this niche. Before the launch of Abeg, you’d see account details everywhere on social media. People did not have (or see) a way to request money or participate in money-giving competitions online without posting their account details publicly. This problem seems like a very straightforward one to solve. However, other P2P payment services have not been at the center of the problem. Then, Abeg came along. But this is not the only way to give. Let’s explore the whole concept of giving through a product like Abeg for a moment.

Giveaway-as-a-Service (GaaS)

The SaaS business model has gained a lot of popularity for its lucrative nature. It’s simply making your software available using subscription-based licensing. In this sense, let's think about a giveaway engine - a product that provides the ability for other businesses to integrate it and execute their "giveaway" needs. To fully understand this, let’s step away from the crude meaning of giveaway and take a look at a few ways giving can be facilitated with an app like Abeg (or its B2B version).

• Payroll is a mess for most businesses. Employees typically use various banks, making it hard to automate such payments. Some companies solve this by mandating employees to open a new bank account or pay more enormous fees to use a SaaS product that automates payroll. There is an opportunity for an Abeg API that could allow businesses to send money to their Abeg-using employees easily and reduce the cost to zilch or charge way cheaper fees at a higher ROI.

• Donations come in various forms - from tithe to zakat to random acts of kindness. This is another form of giving that businesses have not solved for the Nigerian market. Using GoFundMe is almost impossible, and people continue to need help. There is an opportunity for Abeg to be able to connect their users with nonprofits they can donate to, including religious institutions.

• It's almost Valentine's, and an activity that booms at every similar occasion is gifting. It's that time of the year when vendors come with many packages to sell. There is an opportunity to help lovers find and pay for gifts for their loved ones. There is a store feature that is coming soon on Abeg. However, it's unlikely that they will open it to third-party vendors to list their items and get Abeg users to pay quickly for what they want.

Value beyond the mode of payment

One thing that resonates across the instances given above is that Abeg needs to go beyond just being a mode of payment to building more value into their offerings. If we look at the examples above, Abeg technically can service them all. However, they do not have any relevant value built into the app in a way that it can genuinely facilitate them. As I continue to use Abeg, there's always the why question. And with a growing user base comes a growing why. The differentiator is not only in the ease of payment but the holistic value that the user is getting consistently.

Giving is actually a great business model for a fintech company. It means transactions are being facilitated, and that is a window of revenue opportunity in the future. Build your volume and charge a shikini percentage on top of every transaction. Viola! Revenue model sorted.

Unbundling & Rebundling Banking

The Bank is a behemoth of a financial institution. It services all kinds of financial needs from savings to loans to investments. In fact, some bank institutions have a holdco structure that allows them to engage in non-banking services like insurance. The way it currently operates is not just inefficient, it’s become a dinosaur to the internet generation of today. And fintech companies are racing to solve this problem. Some are banking the unbanked while others are unbanking the banked. In fact, there are fintechs who are rebanking the already banked. We have neobanks like Kuda Bank that are creating a new channel for banking while we have P2P payments like Barter that allows you to send money but complements your bank account. In fact, one of the key value prop of these complementary products is free transfer to your bank account. They rely on Bank Verification Number (BVN) – Nigeria’s national banking identity code. You cannot have a BVN without a bank account, which means that these apps are really catering for the already banked.

I digress. Talking about unbundling, fintech apps start by helping you with one or two financial (read: bank) services. PiggyBank (now PiggyVest), for instance, started with helping you save. The value prop was sweet and straight to the point – we will help you keep and multiply your money. Savings in a traditional bank is broken. You save ₦500 in a bank for a month and get an interest of ₦1.20. Shortly after this credit alert, you’d get a debit alert of ₦10.50 for your SMS charges. Of course, these are placeholder numbers but literally every Nigerian complains about this. PiggyVest came to solve that. Just like Paylater (now Carbon) came to solve the access to credit problem. When they started, they only provided fast loans, of course with high interest rates but the mandate was clear. These companies have gone to add on more services. PiggyVest now does investment while Carbon now does savings and investment as well.

Looking at these examples, it may seem like it’s normal. This is literally what Minimum Viable Product means in tech – you start small with a working version of your idea and work your way up. However, it is also valid that these companies started with unbundling the bank to provide you these services in a better, focused way but on the long run may end up like the bank after rebundling what they sought out to unbundle.

“There are only two ways to make money in business: One is to bundle; the other is unbundle” – Jim Barksdale

Source: Harvard Business Review

Abeg: P2P or Giveaway?

When I described Abeg as a peer-to-peer (P2P) payment service earlier, that was because we don’t have “Giveaway” as an official category of fintech just yet. If anyone knows anyone at the fintech taxonomy office, I’d love to have a chat. Allow me to paint a scenario for you: say your friend (a fellow Abeg user) asks you for a soft loan of 100k. Would you automatically think, let me send it to them via Abeg? Most likely not.  What if it’s 10k? Probably not. For most P2P use cases, Abeg doesn’t come to mind. We don’t think of Abeg when we want to pay cake vendors or when we are expecting a large sum. However, it’s the first thing that comes to mind when we want to gift. Say you want to surprise your friend, you might think of sending them some cash on Abeg, or if you want to do some giveaway online.

In fact, Abeg originated from the idea that begging on social media is a thing that a fintech could get behind. Victor had noticed a giving spree on Twitter through cash app and that gave the idea that begging could be facilitated and maybe commercialized. Hence, Abeg. What does this mean for Abeg? Its brand is locked in the giveaway segment. When a brand is locked into a particular niche, it’s hard to break out of it. 

Case in point, Flutterwave’s Barter. When Iyin’s Flutterwave started Barter, the goal was simple – help Nigerians pay for items in USD. Our banks were already stifling our necks with limits in USD transactions from a Naira debit card. Barter helps you to bypass this by offering you a virtual dollar card that you can load with your Naira debit card. Over time, Barter grew and started offering P2P payment services amongst other things. You can even pay your bills using Barter. But does anyone care? Most of the complaints on Barter’s twitter is about the virtual dollar card service which means that’s what majority of their users still use them for. They’ve not been able to break out of that virtual dollar card niche. In fact, it was easy for Abeg to steal their P2P lunch.

Same for Carbon which started as a loan service. The name was Paylater. They rebranded and included other services like savings and investment. I’m still not sure if I’d save on Carbon but they are ever reliable for my short-term loans.

From Abeg’s interface, it shows they have their eyes on more fintech services. They have “Ajo” as an upcoming feature. This would allow people to save in groups. They have also spoken about their roadmap a number of times to show that they are working on more use cases in the near future.

The big question is: Should Abeg bother breaking away from the Giveaway niche or just double down on it?

Read Part 2 here