Nigeria is often referred to as the “Giant of Africa”, owing to its large population and economy. A federal republic in West Africa with 188 million inhabitants, it is the most populous country in Africa and the seventh-most populous country in the world.
Nigeria is divided roughly in half between Christians, who live mostly in the southern part of the country, and Muslims in the northern part. The official language is English, but there are over 300 local languages. As of 2015, Nigeria is the world’s 20th largest economy and considered to be an emerging global power.
According to Google Trends, Nigeria is the country where the most searches for “network marketing” take place—five times more than in the US. In other words, for every 20 Americans who type “network marketing” in the search box, there are 100 Nigerians searching for network marketing related information, education, companies and opportunities.
One reason Nigerians are wanting to learn about the network marketing business model and eager to get involved is that they love to sell by referral and earn commissions based on performance. It took some time, but Africa has fully embraced multilevel marketing as an efficient form of affiliate marketing.
Our spokesperson in this article is David Olowe, cofounder, master distributor, and corporate trainer for a one-year-old network marketing company in Nigeria’s capital, Lagos. In this interview David explains why most US-based companies fail when coming to Africa, and what they can do differently to thrive in this wide open and growing marketplace.
David also shows how the network marketing business model is permeating different business sectors and industries. He believes that 10 years from now 75 percent of Africans will be involved in some form of multilevel marketing. He sees the business model as the perfect vehicle for alleviating poverty and self-actualization.—J.G.
Nigerians are hungrier for network marketing opportunities than any other nation in the world. Yet most direct selling companies fail in your country. Can you enlighten us on this paradox?
Network marketing companies opening in Nigeria typically come either from the West or from the East. They are based in the US, China, or Malaysia.
These company generally bring a unique product or service designed to work mostly in the country where they were founded. For instance, American companies design products that solve a problem the American people are having—because every business is supposed to solve a problem.
When a business meets the need of a society, it makes sense to say, “Let’s export this opportunity to the rest of the world so more people can benefit from this life-changing product or service, or business idea.”
However, there are some factors that come into play in regions like Africa. Number one is the purchasing culture, meaning people’s purchasing ability and consumer orientation.
Let me give you an example. The American society is built upon credit facility and a credit system. Even when you don’t work or you don’t have a good job, you can still eat and stay healthy. You can get food stamps, Medicaid, and Medicare. These are support systems the Founding Fathers put in place.
In Africa, we don’t have any of this. What are considered rights in America are not rights in Africa. You have to fight for things yourself.
When designing a network marketing opportunity for America, companies require distributors to buy $100 or $200 of product every month, depending on the company. It’s called “automatic shipment” in the West.
Here in Africa, our purchasing culture is vastly different. The majority of Africans who are candidates for network marketing cannot afford to pay $100 to $200 a month, as this is the equivalent of the average salary in most African countries.
Africans like to buy things in small quantities. Even if an African “entrepreneur” decides to invest $100, it’s more convenient in his mind to be able to spend less than a dollar, consume the product or sell it to the end user, then buy more product for less than a dollar, and reinvest the one dollar over and over. Before you know it, the person can do it 500 times a month, far surpassing the dollar amount required for auto-ship.
When network marketing companies come to Africa, they don’t always give people the opportunity to buy in small quantities and spend less than a dollar. In most African countries, when you change a dollar to the local currency, it’s a significant amount of money for people. This is number one—the principle of one dollar.
Number two is that when companies come to Africa, they come with many requirements and restrictions built into the compensation plan—“If you don’t do this, you don’t get paid.” This scares a lot of Africans away from joining.
Network marketing in Nigeria presently moves about $100 million in yearly sales, but the market potential is huge. We have not really tapped into it, because we haven’t been able to customize a system that people can call their own and run with.
What we’ve been able to do with our company is create a business around people’s lifestyle. Most of the opportunities that have come before, like companies selling juices, capsules, coffee, or cosmetics, are selling things that people in Africa don’t need. Instead of being based on need, the products are based on want, so they become more difficult to sell.
Let’s look at the example of anti-aging skincare. It has been proven that African or black people’s skin naturally does not age fast. We have anti-aging resistance in our body. So when it comes to selling skincare products, it’s a luxury most Africans are not willing to pay for.
Only about 0.1 percent of Africans are extremely wealthy. They are sitting on the wealth of 99.9% of the population. This “elite of the society” can afford to buy network marketing products, but doesn’t want the opportunity. They already have money, so they don’t want to work and build a business.
When we founded our company, we asked ourselves, “What if we could offer an opportunity where people don’t actually have to buy what they don’t need? Where they don’t need to stockpile the product—product they can’t even sell, because most of the time it is overpriced?”
In the developing world, network marketing products can’t compete on price, which makes it difficult to do business.
After looking at many companies, we realized we had to create something new. We started looking for an opportunity that has a low startup cost and where people are not forced to buy what they don’t need. Ideally, you don’t want to force people to buy anything before they earn commission, because most Africans live in poverty and want to improve their lifestyle.
The number one reason why we need network marketing in Africa is to reduce the poverty rate, to give people hope, education, and the lifestyle they desire. This is why we need an opportunity where many people can participate.
The biggest asset we have in Africa is the size of its population—over a billion people. The majority of these people don’t create products but consume products that are imported from outside Africa. Statistics show that 90 to 95 percent of the African consumption comes from China and the West. If we can offer our people an opportunity that does not create products, they will be able to embrace it. This is exactly what we have done with our company.
Our product is based on services people are already using, like telecommunication. We are tapping into existing industries, such as transportation. You will always have to move from your house to your work. You will always have to take your kids to school, and so on. What if there is a system that enabled people to get paid as people move from one place to another? I will explain further in a minute.
The biggest addiction we have in the 21st Century is the mobile phone. Almost everybody in Africa has a mobile phone. Even when people don’t have food, they can’t afford not to feed their mobile phone, because it is their lifeline to the world. So we asked, “What is the strength of the mobile phone?” The most liquid aspect of telecommunication is the air time that’s in the phone, and the data.
Every day people buy air time and data services. What if we could partner with telecommunication companies—we have over 600 of them globally—to retail these data services? As people buy air time, we get commissions, which we share among our distributors, also called affiliates.
The opportunity is simple: people tell their neighbor to go to the local market and buy the recharge card—the “scratch card” as we call it. Or they can tell their neighbor to go to a website and buy air time, or pay their phone bill digitally. As they pay their bill or buy air time and data services, the telecommunication company takes their money and gives a percentage to the network marketing company, which then pays out a commission to the person who brought in the sale.
That is what our company offers. We help people to pay their bills and buy things online, instead of the conventional way, so our affiliates can get paid.
You are empowering African people with an economic opportunity.
In Africa we have waited too long for a “savior” to come, and most of the time we’ve believed that the people who were going to save Africa would come from the West.
A couple of years ago, I started to change my thinking. Now I believe that the people who are going to change Africa and uplift its citizens are going to come from among the people—those like me who go study what’s happening in the West and bring it back home. That’s exactly how we founded our company, partnering with the best brains from different parts of the world.
I like to look ahead. Right now in America the FTC is making network marketing companies revise their customer programs. The company I joined and became a cofounder in is all about customers. Our distributors don’t need to order or reorder anything.
The job of a distributor is simple: get at least one customer a day. Our business pays out daily, not weekly or monthly, because people here need to be able to buy things and feed their family. They can’t wait till the end of the month to get paid.
If you get one customer a day, by the end of the month you have 30 customers. We don’t have a problem finding customers. We keep customer acquisition and retention at the center of what we do by promoting the products and services of our partners into the marketplace.
A lot of American companies have come to Nigeria in the past decade. Some have done well, but most have struggled by not understanding the terrain and failing to partner with local leaders who do understand the terrain.
My previous network marketing company tried to enter the Nigerian market five times, but never got the desired results. The last time they came, I was in Ghana and met Clay Jackson, the director for the African operation. We decided to partner and in no time the business exploded. We built the fastest growing team in the company at that time. What was the magic? Here is what we did differently.
1. Focus on Customers
Number one, we looked at our auto-ship program. Having to buy two cases is too much for Africans. Let them buy small quantities if you make it compulsory.
Number two, design the system around finding customers. Let the distributor walk out and get somebody else to buy product. Distributors think, “I don’t have to buy product, but if I get somebody to buy, it will cover my product cost.”
The ultimate goal of somebody who joins the business in Africa, most of the time, is not to consume or use the product. They see the product as a means to an end. Remember, the number one problem we have in Africa is poverty and hunger. If selling product is what we need to do to alleviate our poverty, we’re happy to do it.
Companies that want to do business here need to adopt that mindset and know that people are willing to do whatever it takes to move product. So give people a task that’s achievable and that many can participate in. That’s another factor we need to take into account.
2. Currency Exchange Rate
Another challenge is the payment structure. Companies from the West need to comply with the payment system that’s operative in Africa. Companies need to find a way to get registered with the government, so they can open a local bank account. Africans want to pay in their local currency, because of the fluctuation of African currencies. Especially here in Nigeria, our currency is never stable, so distributors need a system where they can go out and tell their customers exactly how much the product will cost.
Prospects may or may not be able to come up with the money to join the program, but if the program is not maintaining an exchange rate that is stable in the market, it’s going to make the distributor’s job even more difficult. To be able to perform better in the African marketplace, companies need to have a fixed exchange rate between the local currency and the US dollar.
The company also needs to look into leadership. Don’t just go into the African market thinking you understand what’s going on. Find some leaders who understand the terrain and partner with them. African government policies are unstable, so hire people who understand the political terrain, because everything in Africa is political. If you can find someone who understands the political atmosphere, that person will be able to make the right decisions.
Partner with local leaders, make whatever agreement you can make, and reward them based on performance. They will do all the work, navigate the market for you, and bring in results.
Car and Travel Programs
What drives Africans is the fantasy of what we see as luxury. They want to acquire things like cars. Car programs are a big attractor for Africans to join network marketing, because many people believe that if they join, the company is going to give them a car.
The way car programs work in US companies is that when you hit a certain rank, the company pays $500 or $700 each month towards your car allowance. This can never work in Africa, except in South Africa, which is more westernized.
In Africa, nobody can walk into a car dealership without having cash and get a car. It’s not possible. You must pay the car in full before you can drive it off the lot.
Yet the ability to earn a car is a must for the African market. As is the ability to earn free trips and vacations. In our company we clearly tell people, “If you reach this rank, you get a car. If you achieve this rank, you earn a vacation.”
When they achieve the rank, don’t say, “Go get the car, and we’ll pay you $500.” This can never work; it has to be a real car. Set your target as high as you want it to be. Africans will work for it, and they are going to bring in the volume, as long as they know that there is a car attached to the task. Those are just a few tips I can give for now.
How is network marketing being received culturally?
It’s a new concept in Africa, but it’s one Africa has embraced. Network marketing has come here to stay. Almost every sector in Africa right now is driven by our business model. Things take time here. New ideas can take 10 years, 20 years, before we embrace them, but once we do, we get fired up about them.
Selling by referral and earning commissions based on performance is in every fiber of our being. Let’s talk about network marketing specifically. Everyone agrees this business is a stairway to wealth, because it gives the average player a chance to become an extraordinary human being. You can live your dream. There is no glass ceiling. There are no boundaries to what you can do, if you follow the system and apply the business model correctly.
Everything in Africa right now, including religious organizations, is going multilevel. In my church we have a program that rewards you for inviting your friends to join the church. If you can invite your friend to come and attend three consecutive services, you get a gift from church. This idea was borrowed from MLM.
The church asks the congregation to bring in new members to increase its growth. In Africa now it’s acceptable for everyone to use this marketing strategy. Companies tell you, “If you can refer others, we’ll give you a commission.” They use their customers, the people who are already buying, to bring in more customers.
This is happening in every industry, including the financial sector, and everybody is becoming a player.
What’s your vision for the future?
I believe over the next 10 years, 75 percent of our working population, especially in Nigeria, is going to be involved in multilevel marketing, directly or indirectly. Africa is going to be the largest and fastest growing network marketing community in the world.
According to Google Trends, Nigeria is the #1 nation of people starting to learn about MLM every day. Even though it’s a new concept, they are seeing the business is transforming lives. Every day more people are researching our business model, and over the next years we will see more network marketing companies coming out of Africa.
When Africans see what’s happening in our company, it gives them the experience of what can happen when we combine American technology—because ours is a technology-driven business—with the human energy that drives it, which in our case is Africa.
As I said, every sector in Africa now is trying to use multilevel marketing. So whether you have a full-time or part-time job, or you are a businessperson, you’re going to be involved in MLM.
For instance, a friend of mine who owns a private elementary school tells the parents, “If you tell your neighbors about my school and you convince them to bring their kids here, you will get a commission on the school fees they pay.”
I’ve consulted for a lot of companies in Africa, and all of them are looking to apply the network marketing model to their business. They are getting people to market and earn commissions by referring people, without necessarily calling it MLM.
They tell everyone, “If you bring people, if you tell your neighbor, we’ll give you a commission. When your neighbor also tells somebody, we again give you a commission—up to three, four, five levels.”
They don’t want to call themselves network marketing companies, because presently they still believe Africa cannot produce network marketing companies that are viable.
But the business sector is growing. Currently Nigeria has $100 million of recorded sales, but I believe we have a lot more. We have many companies that come from China and aren’t documented. Most of the products are even smuggled in without proper documentation, so the sales are not included in the $100 million dollars. For every one American company you see in Nigeria, there must be 10 or 15 undocumented Asian companies.
Here is the good news. The education and training that come with our business, and the belief that we can do it, are going to trigger a lot of growth. People are going to go back to their dream boards. Entrepreneurs are going to research and come out with new opportunities that are specifically designed for Africans. That is what I am called to do-develop entrepreneurs here in Africa, so that Africa can also start exporting opportunity.