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An anticlimactic end

And there we have it, after weeks of reporting on the Nigerian fintech unicorn Flutterwave, it strangely feels like it all ends with a dull thud. The perfect word for it is anticlimactic. If there was any hope that one of Nigeria’s biggest and most visible startups would give a robust response to the allegations that it has faced since 2020, it was dashed with a hint of finality this week.

Let’s back up a little; a Flutterwave scandal has felt long in the coming. Anyone who’s remotely plugged into the Nigerian tech ecosystem has heard the rumblings. In 2020, an ‘Eko Minaj’ twitter handle that threatened to name some Flutterwave execs in sexual harassment allegations was the first sign. This year, there were also tales of “insider trading” relating to the startup’s stock. Despite these hush hush tales, it felt like these rumors would eventually become the sort of story that tech insiders like to guard jealously.

No one could have predicted a topsy turvy couple of weeks that would force the founder of Bento out after accusations of workplace harassment. That story put employers on the spot and Flutterwave found itself under scrutiny again.

What was the substance in these smoky stories? Allegations of sexual harassment once again. Claims that Flutterwave’s founder, Olugbenga Agboola, was self-dealing the shares of ex-employees and allegedly cheating them of what could have been meaningful rewards for being early employees. The first report by David Hundeyin started the conversation, and for weeks, an eager public waited for more disclosures.

Meanwhile, everyone outside of tech wondered what all of the fuss was about—there seems to be a working assumption in many industries that success also involves a fair bit of cheating.

Two weeks after the first article, a new report by Rest of World, which may not have generated as much of a splash, did a good job of connecting some of the dots. It names Ifeoluwa Orioke, Gbenga Agboola’s brother-in-law as one of several executives who reportedly pursued sexual relationships with other junior staff. It also touches on another contentious issue: the management of employees’ stock option benefit plan.

Before now, there have been rumours that a few of Flutterwave’s ex-employees were either unable to sell their stock or were forced to sell it below fair market value. One theory is that these ex-employees felt like they were cheated out of a big payday. This could also explain the deluge of screenshots and private correspondence shared in Hundeyin’s report.

“Instead, they [ex-employees] were encouraged to sell to a company called Berrywood Capital, an early-stage investment company. Two sources in the Nigerian investment community confirmed to Rest of World that Berrywood Capital is Agboola’s vehicle for investing in startups.
This has raised questions among investors of whether shares were purchased below their true value, which two investors who spoke to Rest of World referred to as a conflict of interest, also called self-dealing. “If they don’t disclose that the buyer of secondaries is an entity controlled by Agboola, it’s a problem,” one of the people said.”

There’s no sign that this entire incident will force anything other than the singular bland response from Flutterwave. Some will argue that in the end, tackling this incident with silence was a PR masterstroke, others say that for a company of this importance, there’s a moral responsibility to be transparent. In the end, it’s neither here nor there.

For now, Flutterwave has won this round, depending on how loosely you define winning. Yet, as Jumia taught us so many years ago, anything that’s kicked right under the carpet often comes calling when it’s time for an IPO.

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Death, taxes, and Nigeria’s Central Bank blaming everyone in sight for FX pressures

This week, a Central Bank of Nigeria’s report showed that FX inflows into the country fell by 31.7 per cent in Q4 2021. FX inflows, which Nigeria desperately needs, were $20.62bn in Q4 compared to $30.2bn for the same period in 2020. In the same week, the CBN shared the FX inflows report, it also found time to blame the pressures on the Naira, not on weak inflows, but on the country’s “import dependency.”

CBN’s director of communications was quoted as saying: “No successful economy thrives on the promotion of imported products over the exportation of locally manufactured products. During the COVID-19 pandemic, rice was the most single popular component of our palliatives. This is a result of the CBN’s Anchor Borrower’s programme for rice farmers.”

It’s an interesting quote, given that this sort of thinking—demonising imports in order to spur local production—led to the decision to close Nigeria’s borders for months. This week, the last of that disastrous policy was rolled back with the reopening of the remaining four land borders at Idiroko, Jibia, Kamba and Ikom. The two years of border closure led to predictable outcomes: it incentivised smuggling, made customs officers richer and made food more expensive.

“Federal government has refused to tell us what they have achieved from the closure of the borders these years. If there has not been any achievement, then the closure was a disaster. As the government re-opens the border, they should be able to tell us what they have achieved within the period and what measures have been put in place to ensure that we don’t expect a closure again.” - Segun Musa (Freight forwarder).

While we’re still on the topic of Nigeria’s revenues, a recent World Bank report on commodity markets shows that among OPEC members, Nigeria has the biggest shortfall in its production quota. While OPEC members have generally struggled with meeting their production quota, Nigeria’s shortfall of 500,000 barrels per day is worrying. The World Bank also states in the report that Nigeria’s inability to meet its production shortfall is a result of sabotage.

The report comes in the same week that Total announced that it is pulling out of a Joint Venture with the NNPC and the Shell because of security reasons. Earlier in the year, ExxonMobil sold its shallow water business to Seplat, showing the reluctance of oil majors to continue to operate offshore where security and theft remain big concerns.

It begs the question: what can the Nigerian government guarantee at this point? It is failing at securing lives and property. And it is currently looking the other way as oil thieves steal a revenue-generating resource. The cherry on top is that its policies are also making Nigeria unattractive for any kind of investments and FX inflows. What it means in real-time is that while the official bank and I&E rate for the Dollar is N415, you’re more likely to make any dollar transaction today at N594 (a price at which I transacted on Wednesday). It leaves an insane arbitrage opportunity for anyone who gets FX at the official rates. Why produce anything when I can sell said $$ to the black market for a cool profit of over N100 million?

Yet, the CBN insists that we must not forget that Nigeria and our dependence on imports, not poor fiscal management or ridiculous FX policies are why we’re here. In any case, say a prayer for Godwin Emefiele, who will need some type of miracle to keep propping up the $1 - N415 artificial rate in the coming weeks.

What I’ve been reading:

G/O Media, owner of Gizmodo and Deadspin, buys business site, Quartz

A guide to renting your first apartment in the U.K

By far the best thing I read this week is this compelling essay on the art of dying

I also recommend this smashing essay titled, Invitation

Dating while abroad: We’re all Emily in Paris

See you on Sunday and enjoy the long weekend!

Notadeepdive

A dull thud ends the Flutterwave affair