Steve Babaeko, President of the Association of Advertising Agencies of Nigeria, AAAN and Group CEO of X3M Ideas group with offices in Lagos, South Africa and Kenya. In this interview sees a positive business outlook for 2023. He touches on the effects of the 2023 elections, the Nigerian economy and the delayed impact of the African Continental Free Trade Area (AfCFTA) agreement. He offers his company’s voracious expansion policy even beyond Africa as a learning curve to African entrepreneurs looking to take the AfCFTA advantage.
How would you describe last year’s economy especially as it affected advertising and business in general?
Last year was very tough because if you look at the country’s macro economy, you will realise that we face many challenges. One example is our experience with oil production which is supposed to be the biggest source of foreign exchange. You could see that for the first time, we went down sometimes just barely over a million barrels per day. We couldn’t even meet our OPEC quota for a long time. Production level dwindled, and even though the price of oil had gone up a little in the international market, we could not even take advantage of that situation. As that lingers, the nation at a point went into recession though we came out of it, that development also affected everyone. And last year we were still feeling the hangover of COVID-19 that was still lingering in the air, it dealt a blow to businesses and the economy. Hence, for the better part of 2022, the greatest numbers of clients were merely trying to rebuild the distribution channels that COVID had disrupted. Why these challenges were inexhaustible, one cannot ignore flip-flop monetary policy. The apex bank, the Central Bank of Nigeria (CBN) went back and forth so many times that there was no consistency, and no stability and the volatile situation made business all the more difficult.
Generally, it was a very challenging period for business and advertising was no exception. However, at the end of the day, we are still here, we are alive; we are grateful for the opportunity to still continue to do business and support the clients that we love and work for.
Despite these challenges, what are those particular developments that allowed for the relative successes recorded especially in your industry?
The determination of various clients to build on the existing structure and the desire to move forward despite the post-COVID challenges helped. The clients focused on trying to retool and build their businesses. This decision challenged agencies to venture out and support these clients as well. Added to this, is the firmer control and regulation brought about by the new Advertising Regulatory Council of Nigeria (ARCON) laws last year. The laws may be controversial sometimes, but I think it helped to create sanity within the industry. For the first time in a long time, impunity is no longer the order of the day within the ecosystem. The good thing is that if there were areas people disagree with ARCON, the Director-General, Dr. Olalekan Fadolapo is open for conversations on some of those areas of disagreement. I feel we must give credit to the ARCON DG for helping to sanitize and stabilize the ecosystem.
X3M Ideas has been implementing a voracious expansion policy across the African continent and beyond, what has been your experience and how has the global economy affected that move?
I think mostly very good because right now we have a presence in Lusaka, Zambia; we have a presence in Johannesburg, South Africa. We are in Congo Brazzaville. We recently set up our Nairobi Kenya and United Arab Emirates operations as well.
So it’s been really good. If you consider the economies of some of these countries on the continent where have presence, you will realize they are relatively doing well. In Zambia for instance, they have a new president and his Excellency is doing fantastically well. He’s a thoroughbred businessman anyway, so he’s done very well in trying to stabilize the economy of Zambia. Today, on the African continent, the Zambia Kwacha, which is their local currency, is the most improved African currency against the United States’ Dollar as of last year. The Zambian economy is pretty stable. Similarly, the Kenyan economy is growing. This year, the economy will most likely record 6% or 7% GDP growth projected for 2023. So Kenya too is looking really optimistic. The optimism is supported by the fact that the country has a new president, President William Ruto is reputed to be the most influential African president on social media. That’s how fantastic he has been.
So I think overall, the challenges are there in Africa but what we must do as businesses is we must find a way to trade, to do more of an intra-continental trade with each other as Africans. If we don’t do it, nobody is going to do it for us. For us, it is beyond the profit or the monetary gain, it is knowing that we must continue to push the frontier for more Africans to trade with Africans.
If the immediate financial reward isn’t the core motivation for expansion, why display so much optimism and belief in intra-African trade? What is the effect of the yet-to-be-implemented AfCFTA agreement, has it in any way impacted X3M group’s expansion policy?
Some of our clients, who are like continental powerhouse brands, are moving in that direction. They motivate us. Yes, the continent is really waiting for the final ratification and take-off of the African Continental Free Trade Area (AfCFTA), it is hoped that the wait will be worth the while. As an entrepreneur, you have to be really slow and laid back not to know that you have to be strategically positioned to take advantage of the impending AfCFTA ratification. The reason for this is that if all of the barriers to intra-Africa trade are removed by the final ratification of the AfCFTA, then there will be free movement of talents and resources, both human and material across the continent.
As a business that is future-ready, you have to take those massive steps to be there when it happens. So we are going out to establish some of those outposts in readiness for some of our clients that are already making those kinds of moves. When they get to Kenya for instance, our agency is on the ground to render the same top-notch service that we are already known to provide in Nigeria, where we have 10 years of experience under our belt. Also important is the fact that we know that as Africans unless we open up those channels, we cannot give other African brothers the same opportunities we have gained over the years. These include some of the best practices X3M Ideas has established in Nigeria. By this, companies in our mold would be doing great service to the continent.
As Africans, we have to build Africa. Waiting for some foreigners to come and help us build our continent, is to wait forever. History has taught us that they will come here as usual, they will exploit our resources to their advantage. But are they ready to really build Africa? The answer is an emphatic ‘NO’. So we must stand up and build this continent ourselves. Though, this is hard work and a tough job for that matter, somebody has to do it. We are glad to be counted among the key players in this regard.