Episode Transcript
[00:00:00] Speaker A: Hello there. Welcome to the Techpoint Africa podcast. My name is Tim Godream and I am your host for the day on the podcast. Today I have with me Bolu Abiodun and a guest, Rosemonphil Otuhiwa and she's going to be joining us to speak about a lot of topics.
Our first conversation would be around an update on the peers shutdown.
We have some updates on that. We are also going to be talking about South Africa granting licenses to crypto startups. Finally, we will be looking at Nigeria's plans for artificial intelligence under Ebu minister Botson Tijani. So stay tuned and don't go away. So welcome Rosemond.
[00:00:46] Speaker B: Thank you very much.
[00:00:47] Speaker A: Let's get to meet you.
[00:00:48] Speaker B: Thank you very much. My name is Rosemond Fiyul Utihwa. I am a copy corporate commercial of and startup attorney. I am very very passionate about businesses succeeding and which is why I have played in the corporate, commercial and tech space for close to a decade.
I am passionate about corporate governance. I feel like corporate governance is the foundation for any businesses sustainability and I feel that being a very interesting continent, we are best poised to have the new generation of business. And so I find myself playing lots of roles in between offering legal and regulatory compliance. I offer corporate governance services and I also act as a legal consultant for different accelerator and tech incubator boot camps as well. I currently run a firm, a consultancy practice and I mentor right now with Google startups Africa in its accelerator program. So yeah, there's a lot of things.
[00:01:48] Speaker A: That you're doing and we are going to be discussing a lot of things as well. So first would be updates on the pair. So a couple of years ago and what looks like an April Fujoc was posted and the startup said it would be shutting down after struggling to find product market fits or basically struggling to gain any traction with users and also had some troubles with compliance. And then we also had some reports that they would be returning some of the funds to investors.
So the update we have on that is yes, they would be returning some money, nearly $400,000. Exact figures were not given, but nearly $400,000. And we are also aware that some investors are calling for an audit into the startups finances. So we are going to be looking at that and a couple of other questions. So first is yes, the company has shut down and founders want to return some money, but this is probably the first time that we are getting sort of a look into the bar into what happens after a startup says they are shutting down what is the right way for a startup to close shop?
[00:03:03] Speaker B: Okay. All right. So I'm going to speak to this answer because one of the biggest problems that I see permits our business landscape is really a lack of knowledge.
I always say that for every business, understand that you are playing in a regulatory landscape, which simply means that if you find yourself doing business in an economy, that economy has regulations for almost everything, including shutdowns. Right. In saner and better clients, for example, in the UK, we have administrative and insolvency practice laws that actually govern how companies are formally shut down. Right, I understand I'm speaking to startups as a unique organization, but I will speak a bit generally so that viewers that are listening to this can understand that we actually do have a company regulation in Nigeria that governs the art of shutdowns. We don't wake up one morning and say you're shutting down. There are regulations that guard shutdown. And under corporate practice it's called insolvency practice. So you have companies where they file for bankruptcy, you have what is called a creditors wind up. That is when the investors see that the company is not breaking even or reaching its target and is into a lot of debt, they can go to court and file a petition and say this company should be shut down for ABCD reasons. The company itself can say, oh, we want to wind down for ABCD reasons. And what happens after is that the investors who come in, who are seen as preferred shareholders, get the their capital or get whatever amounts in terms of, by the time sales of assets are done and in terms of how the company begins to offset its debts and its liabilities, they get their payments first. Right? So let's come a little into the startup world and how it actually functions. There are negative liquidation events and there are positive liquidation events. And it is important that as business founders and as builders, right, you need to have an understanding about the corporate structure of your company. By structure, I simply mean what does an exit look like in the event that there is not a successful exit or there is an exit that turns out to not be very good. What should happen? Because all these balls under what is called corporate governance. Because corporate governance establishes what happens in the event of possibly an insolvency situation, where there is inability for the company to remain operational or effective, where there's an inability to be able to provide business objectives and is unable to meet set targets, there are rules that are already established that define this. And the responsibility to do this is actually the boards of these organizations, because there has to be an internal process. So I would say that I sense, based on what I have read, I wouldn't know more details, but based on some of the internal information I've also gotten, is that I feel like there was no firm grasp on what internal process for exit should look like. Which is why we are having issues that are contending against investors rightfully demanding for an audit of a company's bank accounts. Because one of the things that happened in a post liquidation event is that there's an audit. In fact, audits are not meant to even be done at the end. They should be consistent in terms of maybe once a quarter. Right. So I have questions, which is, is it that the company was not aware of inflows and outflows within their operational life cycle? And why are we having issues as regards founders not responding to emails by investors who are seeking to get accountability from the monies that they put into the company? So it definitely shows that there's a lot of miss, there's a lot of operational efficiency that I can see and a complete disregard or non obesience of corporate governance principles. Right. So what the proper way, and I'll finalize with this, a company should be sure, that is, you bring all your creditors to the table, your creditors include your investors, they include your shareholders, and let the books of the company be spread apart and let there be a forensic analysis as regards inflows and outflows, identifying assets, identifying liabilities, and say, you know what, over the course of this amount of period, this is how much we are going to be giving back and basically come to some sort of voluntary arrangement. Because voluntary arrangement is also a way companies are also properly and legally shut down. So there's a lot of responsibility and I see a lot of knowledge gap, maybe, I sincerely think maybe because the founders are really not conversant with what these things look like and are not able to act in accordance. If that being the case, the investors obviously have a responsibility and right to ensure and insist and enforce that proper things are done. So they are well within their rights to ask for whatever reports or records that they actually need to be able to justify that their funds were properly spent, and if not, the law should take its due course.
[00:07:43] Speaker A: Great. We have established that there's a process for shutting down because, and this is why I think it's important, we've seen quite a number of startups shut down, but we haven't. This is the first time we'd be getting a look into any, on several details coming up after that decision has been taken. And this is, I mean, for a lot of founders, like you mentioned, they are probably unaware that there's a right way to do this. And maybe some investors have let founders just shut down or startups shut down without enforcing these things. So I think it's really important to point out that you do not just wake up one morning and you shut down the business. There's a process that you must follow. But I guess my next question would be, is there, are there like repercussions in cases where founders do not take the right steps to either shut down the business or to give some accountability, to give some updates during the life cycle of the business? Are there some steps that investors can take to ensure that they get what they should get?
[00:08:49] Speaker B: Okay, so this is even full flowing from my question, so I will not be, I won't spend too long here. So let's look at a very popular example. We've seen that SamBank FriedmAn has been arrested and has been imprisoned and jailed, right, of the FTX crypto exchange. Those are some of that is why I said thinner and better climbs, because when you have a regulatory environment that is well equipped to handle situations like this, even if they'll say every day for the thief, one day for the words for the owner. Right. So I feel that we are getting to a point, these shutdowns have become almost a trend now. We're getting to a point where I sense that the government is going to do some serious clamp down as regards focusing on startups that do not actually go through the right procedure in terms of shutdowns. I see. Even if creditors do not come before the courts, because litigation is a role, is a tool, is a roadmap to go and say you want to file for bankruptcy or depending on the company's jurisdiction, I'm assuming that Thepa in this case possibly may have a nigerian registered entity and possibly a foreign registered entity. It will be the responsibility of the investors to look at the laws that govern that jurisdiction and possibly take a litigation based approach. If they can settle out of court. Great. One of the things they can also do is to file for, of course, of course the company will file for bankruptcy. Right. But there has to be some sort of creditors arrangement which has to be enforced and people have to be brought to book whether by any, by penalties or by imprisonment or whatever. Right. So I would say that, you know, if we, there is a true evidence of mismanagement or fraud, then it's something that the investors do have a right to go to court and to say, you know what, we need to see evidence and the law that basically has to take its full course. You can't just say, we are not doing business again and everybody goes to bed. It doesn't work that way.
[00:10:44] Speaker C: So you said it's almost becoming a trend, right? So, which means that I feel that on the side of the investors, right?
Do they have responsibilities towards, because if you say it's becoming, you know, we've seen a lot of short terms, right. So our investors, are there responsibilities or things that they should take into account before actually investing in these companies? Are there things that they should even do after investments, things that they should follow up on, things that could have prevented, you know, all these shutdowns due to whatever reasons that it might have happened.
[00:11:25] Speaker B: I love that question. And it's because I've found myself in that context sitting on the aspect or the angle of an investor before you decide to make an investment decision. We all know how the private equity space works. You possibly have 5000 applications. You narrow it down to 1000, narrow it down to 200, narrow it down to 100, and you pick maybe your top three or top one, right. That means that for you to go through that funnel, there's a certain level of due diligence that has to be conducted. You are paying attention to their records, the financial records, whatever that may be. You're paying attention to the experience of the founders and the founding team. You are going beyond what they say on paper as regards what their milestones have been. And you fact check not just against what they present to you, but they are possible. If they have regulators, if they say, oh, we are governed by this. Okay, is this organization registered under this? If you say you have 10,000 customers, can we have a list of all these customers? Can we place calls to them? I'm not trying to say quarter on top, but it's, it's due diligence. It's hard work. You can't run away from it. Right. You know, and I feel that sometimes we gloss over these things as investors because once we see a, let me, for example, a Y combinator coming on your cap table and saying, oh yes, these people are bought, say, oh, yes, they've done all the work. We don't have to do anything as well. You know, when you say somebody is leading around and they see a huge name that is leading that round, they're like, oh, let's go to bed. Let the smaller guys that are playing at the table just piggyback on what the lead investor has done. I think that should not be right. We have an example of. I was talking about JP Morgan arresting Frank, the startup for falsifying over 3 million customers that never existed. A whole JP Morgan fell into that trap. Who are you not to do so? Right? That's one. Now he said something about what are some of the things you need to do in terms of checkmating against your investment decision? When you get a presentation and you are trying to have conversation as to amounts to put in, there are some things you ask for beyond just your financial model and your financial analysis and your valuation report. You need to ask for what the fund use plan is.
That fund use plan acts as a benchmark towards assessing what the company is doing vis a vis what it does. So that fund use plan is not just in Q one, acquire 40,000 customers. It has to be detailed. Do you understand? How do you intend to get to point a, to point b? And it can be a very gruesome process, but it allows the founders to think that, okay, if I am pegging a thousand customers against receipts of maybe $50,000, what's my marketing spend? I need to see those details so that I know what to track.
So it's called a fund use plan for a reason. I get the monies in and I'm able to say, you know what you are promising me ABC by the end of the day, break it down into a chronological roadmap so that if this quarter happens and I do not see this milestone, I know who is at fault here. It is not me, it's you. Or vice versa. Right. So there's a fund use plan, there's a fund use analysis, and then they are basically KPI's that you measure and track your funding against, and you don't release additional funding until those milestones are met. That is how you monitor as an investor, that's how you play a role as an investor, that's how you. I wouldn't use the word micromanage, but that's how you become responsible for your monies that you've put into these companies. There are so many examples that I could give, but this is one of them, a quick one. If you're listening to us on Spotify or Apple Podcasts, please leave us a review.
[00:14:48] Speaker A: Okay, so zooming out of this, right, we are having a discussion a couple of weeks in the office and mentioned that within the office and the house, I can't remember, but one of the things you're discussing was the effectiveness of the National Industrial Court, which sort of focuses on just employee employment matters, employment matters. And I don't know if I, that was when I had thoughts, but yeah, I'm now thinking, right, we are trying to do, we are trying to treat status as special in Nigeria. Whether they are or not is a matter for another day, but we are trying to do that for them.
Should we also have like a specific justice mechanism that focuses on them? And the reason I ask is one of the reasons why I think an investor may probably not want to seek redress in Nigeria is our justice systems can be really slow. I mean, I do not want to be tied up in court for the next few years just because I want to know how you spent $100,000 or 200,000, whatever it may be. Right. So should, do you think we should be looking at specific justice mechanisms that just focus on startups? I mean there are probably like 5000, 6000 startups in Nigeria. So if you had just a section of the judiciary focused on them, perhaps that could speed up the dispensation of justice.
[00:16:08] Speaker B: I love that and I feel like where we are going right now, it's something we can no longer avoid. I'll give you an example of an innovation that happened in the justice sector because I did practice in litigation for a couple of years and what happened is that there began to be so much backlog on company cases that happened because we realized that cases were not being called fast, there was a lot of delays. So what the judiciary did at the time was to create what they call specialized courts, which they called small claims courts. So for monies that were between a million and 5 million, there was a special court that we treated and there was a regulation that said you have to finish your case end to end in 60 days. So from the hearing to the trial to the submission of your, of your final address and all that. Right. And I'm speaking from a litigation aspect, but for startups, yes, I believe strongly if we need to establish a unique system to handle the very nature of this ecosystem, it's something that we have to consider. Right. Although right now they would still fall under the basic companies because they're registered in Nigeria. If you're a registered company, you can sue and be sued. So you are under the general perspective. But maybe because of our unique situation, getting funds from investors in USD and the fact that we do not sort of have a developed Delaware system as exist in other foreign jurisdictions, we may have to have something that is unique to our ecosystem, but we still fall under the challenge of bureaucracy and of course speed and all that. So I would say it's a good proposition, but I am more interested in the effectiveness than just the establishment of it.
[00:17:39] Speaker A: Yeah, very important because we are very good at setting up committees in Nigeria without actually having those committees. Well, one more question on that on this story would be there are reports that some investors or some shareholders did not get updates on what was going on in the company. And this is, I mean, it's usually a conversation on Twitter once in a while and then some founders talk about it, some VC's joke about it. But how often should I as a founder, give updates to my investors? And now this is, of course, stage specific. So I guess we can start with pre seed or early stage. So how, how frequently should I give updates and what should be contained in those updates?
[00:18:24] Speaker B: Lovely, lovely, lovely, lovely question.
So I would say that we, so going back to this knowledge gap we have, and I think this is something that I need to mention. Everyone who is listening to this podcast right now needs to understand, that Nigeria as itself has a regulation that governs things like we have the Financial Reporting Council of Nigeria that released what is called the code of the Nigerian Code of Corporate Governance, 2018. That code has about twelve principles that talk about issues as regards composition of your board, that has to do with transparency, remuneration, reporting, internal controls, risk management, and gives you very specific recommendations that you can implement today that can solve these issues that you've asked. Right. But from experience for pre seed, early stage, we're not saying that you have to bombard your investors every week, but at least in a quarter cent something. Right. We need to. That's why I talked about the fund use plan, because before you sign any contract, because what usually happens in a funding phase is that there will be a term sheet, there will be an exchange of a term sheet. The term sheet is going to contain what the company's valuation is, what they intend to give as employee stock options, what they are trying to get, what they are trying to use the monies for, basically, if they are going to be, what's their exit plan going to look like? Right. And those are some of the things that you look at now you have to track.
I always advise a situation from investors that by the time you put in monies, don't put in everything at once, give in tranches, and let those tranches be pegged against specific KPI's.
And one of the things I read in that report was that I think they were supposed to be, is it an inflow of two point something million dollars?
[00:20:09] Speaker A: 2.1 million, 2.1.
[00:20:11] Speaker B: And I think they only had, they said they were only going to give back 300 and something. And somebody, one of investors, one of somebody was saying about $750,000 did not come in. And I'm saying, where is all this, where this contradiction information comes from? That means that there is no clear reporting system. One of the principles of corporate governance, that there has to be clear reporting structure, especially when it comes to financial reporting. There is supposed to be a bank account somewhere. Now it's not in the air. There's a track record, right? There are inflows, there are outflows. If it didn't come in, it didn't come in. If it went out, it went out. So if investors are asking that, oh, you said you made this announcement and this money isn't coming. Why? What's the reason? There has to be a forensic investigation into those accounts and I think it's something that the investors should insist happen. Right. So early stages, the duration as regards the submission of reports and records can be mutually decided. But our advice, a quarter should not pass without at least two updates.
[00:21:12] Speaker A: Okay. All right. I mean, we've spent quite some time on this, but I think one key takeaway here would be the fact that there's like a knowledge gap, but either maybe from the investors or from the founders, but it's looking more like on the founder side. So whatever you need to do as a founder, like just go get information. If you need to hire a professional to do that, if you need to maybe get someone, a consultant, to just walk you through what you need to do, I think it's very important to fill that gap because stories like this, of course, you always say, oh, the founders will come back better, but it also sends a signal if we continue to see that startups do not have proper governance structures. In a country that is not exactly very famous for having wonderful legal systems, then it kind of dampens investor confidence and it's really important that we kind of fix this gap. I mean, whether you want to pay yourself 15k or not, but if you are, please, if you're a leader and you can pay yourself 15k, you know where to find me. So, wow.
Moving on to our next story, let's blog.
I mean, yes, so moving on to the next story, which is South Africa's crypto asset provider licenses. So give us low down on that, alright?
[00:22:31] Speaker C: Yes. So it's just like what you said.
South Africa has granted licenses to crypto service providers or crypto companies, whatever you want to call them. Nigeria calls them virtual asset service providers. So in South Africa, these companies have been, 75 of them have been granted crypto licenses. Right. Which is interesting because if you look at the crypto regulatory landscape, a lot of things, there has always been issues with governments and crypto companies, government and cryptocurrencies itself. So I think what makes this story interesting is because of that history that we know that governments have had with anything called crypto. So it's kind of like a step in the right direction.
It's kind of like as if this seems like there's some regulatory oversight, proper regulatory oversight coming to crypto finally. Right. And it's not just South Africa. Kenya is also making some progress.
In Nigeria, it seems like we're making progress. But I don't know what your next question is. But I don't want to preempt.
[00:23:45] Speaker A: Okay. So I don't know what kind of value can this unlock for South Africa?
[00:23:52] Speaker C: Okay, so like I said, the first thing is now there will be proper regulatory oversight. Right. Because if, so if you give someone license, it's expected that there are things they are supposed to do. There are ways they are supposed to operate. There are reports they are supposed to give. Right. They cannot do, like, partition, do whatever they want, shut down. So we have proper, like you are holding. You have licenses. Right. There are things you are doing. You are holding people's money, or you're helping them trade, you're helping them do this. So now I think there'll be more trust within the crypto ecosystem. Users can trust better.
Also, I think there's revenue generation for the government. Right. Because now that you have oversight over them, tax them properly, you know how much they're making, you know how they're operating, then you can make some money from them. Right. So I think those are some of the values that South Africa can capture from this. And it also helps when new crypto innovations come up. Yeah. So you now know, because you already have like a regulatory framework. So now you can now, if new things come up, whether it's NFT, whether it is, whether it's that, you now know, okay, for this. So this is how you should do it. If you are going to offer these services, this is how you should go about it. So I think those are some values that they can unlock from it.
[00:25:21] Speaker A: All right, so Rosemont, earlier we were talking about recognition versus acceptance.
Let's talk about that. Does the fact that there's now a regulatory oversight for crypto startups in South Africa, does it automatically translate to acceptance by the government?
[00:25:39] Speaker B: Honestly, the very big answer is no, it does not.
What has happened is there's been a meet in the middle situation here. The government, definitely, as many governments have realized that this is something that has come to stay. Really, the best you can do is to ensure that you don't just keep canceling. Nigerian situation where we just got a regular. What they noticed that banks should clamp down. You know, thankfully, that has been overrun now by what's happening now is even more. But the challenge that I see is that, yes, you have these regulations, which is good, but the truth is that it doesn't translate to. Because even the Financial Services Control authority in South Africa did make a public announcement to the fact that as much as it is a regulation, it does not officially recognize cryptocurrency as a legal tender.
[00:26:28] Speaker C: Exactly.
[00:26:29] Speaker B: And even the South African Reserve bank also, they actually did also make a statement that it doesn't recognize as official legal. So there have been arguments that the regulation itself justifies it to be used as tender. They are direct. There's the announcement. But as long as the government has said, we don't see this thing as more. You can't come and pay your Nepa dues. I don't know if they call it NEPA, dear crypto, or you cannot pay your taxes in crypto and things like that. You know, it is what it is. But the good thing I will just finalize here is that at least they've recognized the fact that there are virtual asset service providers, the ones that act as exchange platforms, the ones that can advise, that can offer advisory. And of course, there's the. I think there are about two categories of licenses. License one and two. One is just advisory and management. The other one is advisory, management and investor. What's the word? Investor? Acceleration. Basically, you can invest in all those things. So I think it's good. It's a good step in the right direction. Whether it's going to be recognized as. As legal time or not is something that I cannot say at this moment.
[00:27:35] Speaker A: Okay, so that was a very short one. But, I mean, there isn't so much to say for crypto.
[00:27:43] Speaker C: There's one more thing to say, actually. So the thing is, South Africa is making progress when it comes to, you know, actually bringing these people together. Say, okay, take your license. Take your license. Take your license. Right. Um, like we said, better regulatory oversight. Right. Doesn't mean acceptance, but means, okay, we see you. Right. We see you. Let's work together. Right. Um, but then I think, uh, one. One very key thing about this is, um, you know, South Africa is one of the.
Is one of the major countries when it comes to, like, crypto acceptance. And. But then I think Nigeria is, like, in Africa. I think Nigeria is, like, one of the leading countries when it comes to crypto acceptance and adoption. And it's funny that while South Africa is making progress in this space, Nigeria doesn't seem to. In 2022, we had our own guidelines that, okay, these are the guidelines to get your own licenses. Right. But you, today we do, I don't know any confirmed, any company that has been confirmed, any crypto company that has been confirmed to have a license in Nigeria. And one of the reasons, you know, I've seen a lot of people mention is the amount it takes, you know, to get a license in Nigeria. The registration fee alone is $93,000. Right. Paid up capital of about 1 billion naira. But then, I'm not sure what the figures are exactly in South Africa, but one of the articles I saw showed that it ranges from about $300 to, at most, $3,000. Right. To pay for those registrations. So I think maybe our own regulators will probably take a cue from. Because you need oversight on these people, you need to be able to control them, right. Even if you will not accept them, because these people are holding citizens money. People are investing a lot in these things, so maybe they should take some cue, maybe bring their money down a little, because, again, you chase a lot of players out. You chase them away.
[00:29:50] Speaker A: I mean, to be fair, that's actually what I think. I mean, if I don't want you to come to my house, all I need to do is give you vague address and you keep on roaming around the street. So I believe.
So I just believe that putting that there's a reason for that, it's. It's to ensure that the barrier to entry is very high, because, I don't.
[00:30:11] Speaker C: Know, people will enter anyway.
[00:30:13] Speaker A: Yes, people.
[00:30:15] Speaker B: From a legal perspective. Right. The barrier to entry is really high, I can tell you, because when I was looking through the proposed amendment, speaking to Nigeria now. Yeah, right. Um, even though you are going to have capital market operators, if you are going to have a VSP service of some sorts, right. You have to re register it as a subsidiary. You can't, you can't collapse your traditional financial services with your crypto services at the same time. That's one of the changes that were made. The second thing also was the increase, like you mentioned. Like it was. There was a serious increase, right. 400% increase. And I think it's something that is being done intentionally. I would. I wouldn't say with bad mind, but it is that anybody that's going to play in this space is going to be serious enough to put their money where their mouth is and it's actually paid capital. So the money must be in the bank or it must be in assets. Do you understand? It cannot, it's not in the air. Just put it on the document. So it's a lot for. Yeah, that's where we are. It is what it is.
[00:31:10] Speaker A: Well, yeah. So that's it for South Africa. Crypto license. Nigeria.
I don't know who wants to take a cue from who, but we are going to find out in a couple of weeks or months. So moving on to our last story. You are back to Nigeria now. I mean, we've been Nigeria, but back to Nigeria. And your minister or ministry? Our Minister, Communications Digital Innovation has launched a large language model. So first of all, language learning model. Large language learning model. Yes.
We've established on the podcast that AI, electricity, we can all work towards making sure all of them are successful here. So we are not going to have that conversation. But what we are going to have is looking at first. 1st, why was this announced so earlier we were talking about it and.
Okay, so let it not be like hunting the government, right? Okay, but it looks like this is still in developmental phases. Nothing much has been done. It's basically a proposal. You've told me you want to get married to me and that's just it. You haven't come to see my parents. You haven't done any serious thing, right? You've not set a date to see my parents. It's just as someone said, it's word of knowledge. You've told me that this is what you want to do, right? So Nigeria has launched it. But I guess first question would be, what does this mean for Nigeria?
Why should we?
I mean, why is this worth celebrating by those who are celebrating it, first of all? So Rosemond, do you want to take a shot?
[00:32:53] Speaker B: I will, I will. Very interesting. So first of all, as much as I would like to tally with you in relation to Norwich hunting, the truth is artificial intelligence is something that no continent can escape. And what we are trying to do, or what I see the minister trying to do is to put Nigeria on the map when it comes to our own thing. The essence of the LLM, in quotes, is because of the need for more indigenous representation of language. Because language is a tool for. To communicate is where you can encapsulate history. It's how you can teach and all that, right?
Looking through some of the things that was shared, the vision and everything behind it, it's the fact that the objective in itself is to allow for more representation of Nigeria's indigenous tribes, languages and cultures in building artificial intelligence based products, right? So even though they call it a launch, you know, you say usually the word launch happens when something is finished.
[00:33:56] Speaker A: Exactly.
[00:33:56] Speaker B: But what we have here is a launch for something that is just starting or that is in the pipeline or is ongoing. Right. Because what we can see is that the LLM model is actually supposed to be a couple of people, as many people as possible come in there putting their words, their language in different translations into different languages, which I believe will be mined and used as a large data repository using machine learning, deep learning and the likes to now create whatever services that needs to be done. Let me give a. And I'm not a core, core tech code developer. I can say the reason why Google Maps can have our tone in talking to us in direct, giving us directions is because somebody took that data, used our tone of words and used that to be able to give us the same instructions that a Caucasian is saying behind Google map. I'm saying, so Nigeria is just trying to do its own thing, which I would say is a good step in right direction, but we need to not place the card before the horse. Well, we have legislations to think about, we have AI policies to think about what we have data protection and a couple of things that go around using AI in an ethical and sustainable to think about. But for me it's a good one. And I just feel that we can be a bit more strategic about it.
[00:35:11] Speaker A: I mean, that's a diplomatic way to say that you should not be launching something that you've not finished. But we are going to come back to data privacy because we're talking about data privacy and this whole AI llm earlier, I guess. Buddhu, why is the government spreading the building of a large language learning model for the country and not a, not a startup or maybe any technology company or.
[00:35:41] Speaker C: Okay, so yeah, one of the reasons why, you know, they recently, they just concluded the AI workshop in Abuja. And one of the reasons why our bosuns journey has been very hard on AI is because there's a gap. There's a huge gap when it comes to AI in Nigeria and Africa generally, which means, one, we don't even have enough AI startups to begin with. Two, we don't have enough AI professionals, people who are trained to actually build these products.
It is expected that the government will play a part in creating this LLM. Right. But then there's also, they are actually private, they've partnered with some private companies to do this.
There's a company called, they've partnered with, to, you know, for data collection, basically. So there's a platform where you go, record your voice, you record your local language, translate to English, write text, do all those things. Right? So I get why we are doing this in partnership with the government, because we don't have those startups that are there yet that can just do this on our, if it's, for example, something fintech related.
[00:37:06] Speaker A: Let me, let me interrupt you.
Yes, we do not have a lot of startups doing this, but it's not like your government itself has this 20 year old AI research center that they've been running. We do not have something like that. So I am still not sold on why the government is involved. So here's the thing, right? Okay, we are, we hear that some money has been like, they've gotten some funding for this, about $3.5 million, if I'm not mistaken. Yes. In funding for this, you could have directed that funding to another, to a startup or to a company where you have some oversight. You could be one of the investors, you could sit on the board and have them give you periodic updates on what's happening. And the reason I say this is governments are not exactly innovators. In fact, they're not even, I mean, all right, I'm being nice by saying that they are not exactly, they are not innovators, right. And I see a situation where two years from now we are still going to be struggling with, in short, we will not have moved the needle because it's not, there's no profit incentive really for the government. And once there's no profit incentive, the only thing that governments are very good at is taxation, to be honest. Right. And without that profit incentive, why should they bother? How do they even convince users, for example, to submit their data, which is the next thing we will talk about, like how do you convince a user to submit your data? How do you ensure that you're getting the best hands, which is very important here. How do you ensure that you're getting the best hands for this? Because like you mentioned, there's a death of AI professionals in Nigeria, and now you, a government that does not exactly have an AI footprint is leading this kidney. And yes, of course we have some partners, UNESCO, Meta, Google, Microsoft. But for some reason, there's just a whole lot of one foreign involvement. For a country that wants to build their indigenous AI language model, you have a lot of foreign investment. And I don't know, there are so many questions that the government probably needs to answer or reconsider. But let's talk about data privacy. Earlier, we were trying to log into the system and Rosemond has refused to impute our details.
So there's, there are a lot of lapses. So first of all, when you look at the, when you try to log in, just. Or when you try to sign up, just click on the terms and conditions or service policy. Click on it and you see some very, very interesting things. It just looks like the terms was probably generated by chat, GPT, or copied from an existing company. I don't know. I probably would run it on the Internet and see if I get a match, but it looks like it was copied from one place and just pasted.
I don't know how that makes me feel, because first of all, it makes me feel like you're an unstressed person, because if you just duplicate Spotify's terms and conditions and you put it. So some of the things you see. Let me open that thing.
[00:40:28] Speaker B: Oh, my God.
[00:40:29] Speaker A: So don't worry, they won't, they won't, they won't show it on the screen, but I'll just show you some of the things you would see. So terms of use, look at under privacy. Okay? That's how it's intellectual property. All content, including, but not limited to, text, images, all of that is a property of company name or its license. When I look at the website, there's something called lang easy here, powered by our. So why is lang easy or worry not here? Privacy. Company name respects the privacy of its users. Who in the world is company name? When you come to governing law, these terms of use shall be governed by and construed in accordance with the laws of jurisdiction without regard to its conflict of law provisions. Who is jurisdiction? Contact information.
You get the point. Now, the last time I know we had a conversation like this was the, the coup. Is it cool that they call themselves that upstart that said it wanted to take on Twitter? Yes, it was a similar situation. They had shitty terms of use on their website. But that aside, why, what are your thoughts on the lack of appropriate or the lack of attention being paid to data privacy? Because this is just what it shows me, that you're not very serious about data privacy.
[00:41:55] Speaker C: Putting on my data.
[00:41:57] Speaker A: Putting. Oh, you put your data.
[00:41:59] Speaker C: Well, I mean, to register.
[00:42:01] Speaker A: I know that's not serious. You register on things every day.
[00:42:04] Speaker B: So this is, to be honest, it's. It's really like I have no words, right? Because if you are doing something, and honestly, I really want to be on. I really want to be the good person here. And I'm. And I'm being this because.
[00:42:17] Speaker A: No, you're free to be the bad person.
[00:42:19] Speaker B: No, no, honestly, because it takes a lot to even get here, right? It takes a lot, especially for a regulator to get here. Now, what we can do, and I think what we are really, really doing as a private sector, is to put a lot of pressure for data privacy. This is a very important part, because people are going to be putting their voices on this platform. It's possibly going to be reposited somewhere, in some cloud somewhere.
I need to know where my data is being stored. I need to have the ability to have access to recollection or deletion if there's going to be some sort of measures as regards data anonymization or pseudonization, whatever it is, right. I need to be confident enough that my voice is not going to be used one day, right, to call my uncle to say that I need money for $1 million in surgery. And I know that my voice is not going to be you because it's voice. Right. You know, and because AI is evolving so rapidly, I sense that this is the time where regulators have to run to catch up. Right. And I can say for a fact that some ethical considerations also will be in terms of the capacity to even use this. Do we have, do we have age limits here? Do we have restrictions as regards the terms of use? Do we have the data portability? What does it look like? We need to understand what the end to end use of this data looks like from the government's perspective. And it's even sad that we have the NITDA, which is actually a regulator on this, and we are seeing some of these lapses. So I believe that if they are listening to this, it's something that they have to keep looking at, because this is the essence. This is the output or the fruit of the data workshop, the AI workshop, right?
[00:44:05] Speaker C: I believe so.
[00:44:06] Speaker B: And there was an inauguration of the National center for Artificial Intelligence and Robotics. We just launched. So while I commend greatly that it is a good start, we need to do something well. Anything we're doing is worth doing well. And if we are playing in such an interesting field like artificial intelligence, we have to bring our best mind. We cannot be. What's the word? We cannot be flippant about some very critical things so that we don't allow our good spoken of.
[00:44:33] Speaker C: Exactly.
[00:44:34] Speaker B: That's what I was saying.
[00:44:35] Speaker C: Someone said concerning that audio and video stuff, someone said it's all fun and games. Right. Do you stand in a court and they play. Yeah. Of your voice, you know, I mean.
[00:44:47] Speaker A: So you tell me this.
So just yesterday, like there was this, I saw this ad of a customer service AI products. Right now it's, it can do a lot of things, customer service, sales, I think, and few other things. That's to show you how rapidly this thing is evolving. And if you do not, which is why I get why.
Yeah, why he's bullish on all of this. But you also need to have like guardrails, proper guardrails. And now considering that Nidida is involved in this and this turned out this way, I'm just wondering, how is our data managed, like for either startups, for example, that have to collect data, businesses that have to collect data. Right. How is our data, like, what's needed doing to ensure that these businesses are actually collecting, storing and using the data within the confines of what they've stated that they'll be doing? Because until trouble starts, we probably would never find out. So it's one more reason for us to question neat data handling of that ministry, really. But yeah, we've had a very interesting conversation today, as you are probably aware for older listeners, we have a new segment on the podcast, which is insight of the week. And for today or for this week, that would be funding for fintech startups in Nigeria. So since we started collecting data, and that goes back to about ten years now, it's only once in 2021 that nigerian startups, nigerian fintech startups raised more than a billion dollars.
Of course, 2021 was like the boom. I think startups did about four to 5 billion, depending on who you're asking. So that was like a good year for them. So that's the only time it dropped to 850 million the next year and it's been sliding down. My prediction is going to be way worse this year, but do not take my word for it. So yeah, thank you so much for joining us on the podcast. We've had a very lengthy, interesting discussion and we would love to hear your feedback. If you're watching on YouTube, you could drop us a message, you could drop us a comment. Please do. It helps with the algorithm, I believe, and makes more people to see this. You could also share on your social media channels if you are joining us on or if you're listening to this on audio platforms, Spotify, I heart radio, YouTube, wherever it is. You could also share, drop a like. And if you would rather send us an email, you could do that at podcastechpoint Dot Africa. B o d c a t eggpoint Africa. Once again, thank you so much, Rosemont, for joining us. And thank you, Bolu, for you're absolutely being on the podcast. I mean, it sounds like you had a choice, but yeah, thank you for being on the podcast. And.
[00:47:52] Speaker B: Time for picture.
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