Shaman

No one in their right senses bets against Alhaji Aliko Dangote. But for sheer love of modelling, we are going to do just that! Well, only on one small matter: his prediction of 10 million unique subscribers buying into the IPO of his giant Lagos refinery, which was extended from closing today to 27th Oct. Our unproven model suggests that it would be hard to get past 2.8 million unique, valid retail subscribers, with an 80% range of 2.1 - 4.4 million. That would still be roughly twenty times Nigeria's previous retail record (MTN Nigeria's 126,720 in 2022), a little over half of Saudi Aramco's 5.06 million, but well under a third of the 10 million Dangote is expecting. - Chance of matching Aramco (4.9m real people): about 5%. - Chance of 10 million real, unique Nigerian and African subscribers: effectively nil in this model. - Chance that a headline of 10 million or more is announced anyway: very high. (And this is where the fun part is!) The IPO managers may have a trick up their sleeve (wink). The 10 million subscriber count can be reached by counting applications rather than people, or by counting pension contributors whose funds bought shares. How do we know that? MTN did the latter in 2022, turning 126,720 retail buyers into "6.6 million *indirect* Nigerian shareholders". Using that approach, it should be very easy for Dangote to break even the “10 million subscribers” threshold without breaking a sweat, just by adding "indirect". The offer will almost certainly be oversubscribed by value, but that has little to do with mass participation. Nigerian Pension funds (₦31.3 trillion in assets, with a regulatory waiver to buy), a $400 million pan-African SPV, and high-net-worth investors can fill ₦2.15 trillion on their own. On valuation, the ₦525 IPO share price asks buyers to assume that todays war-inflated margins become normal. As many analysts have pointed out, the price needs a through-cycle gross refining margin of $28 - 34 a barrel (about $32 in the central case) on a refinery doubled to 1.4 million barrels a day. The company's 2026 guidance is $24.2. At that guidance, fair value is closer to ₦310 - 450 a share, depending on discount rate and cost assumptions. But none of this kinda math really matters when it comes to the IPO demand. The real issues are disposable income, national levels of financial literacy, trust in capital markets, and various hygiene factors. The Aramco IPO was the world’s largest recent IPO on subscriber numbers. Unsurprisingly, it is the one Alhaji, ever the impossibility transcender, wants to beat. Unfortunately, Aramco is the wrong yardstick. It is true that every Dangote IPO design choice has aimed at maximising headcount rather than capital (only 3.3% of the enlarged company is on offer). $4 minimum ticket, 55 approved e-channels, no upfront CSCS account, bonus shares and a promise of priority for small investors, etc. All this rewards breadth. But there are gaps. Aramco's 5 million+ subscribers were produced by a rich state with a mass-retail market, bank credit and political pressure. Dangote does have a populous market, but it is not captive enough. Nor is there any equivalent of Tadawul’s decades of mass retail trading in Nigeria. Of the 6 million CSCS accounts in Nigeria, about 10% are active. Unlike in Saudi, Nigerian banks aren’t lending into the frenzy either. At any rate, outside India, I struggle to find a retail play that has drawn more than 6 million people. Yes, Safaricom hit 4.5% of the Kenyan adult population so 8% of Nigeria’s for Dangote shouldn’t be too crazy. Except that you are not considering the economic pressures in today’s Nigeria. Moreover, “mass equity ownership” is built over years. One mega-offer however magical its issuer can only climb so much of the distance. Britain went from 3 million individual shareholders in 1979 to 8 million in 1987 through a string of privatisations. Like I said at the very start, no sane person bets against the Alhaji, but he is asking the system to do several years of onboarding in four weeks. Hence my reckless wager. Wish me luck!

1. Readers of this page know by now that JoyNews held a forum on Ghana's AI strategy and prospects. And the Digital Minister and I got into a serious debate about his Ministry's plan to build Ghana's competitor to Gemini, Kimi, ChatGPT, Qwen, Claude, etc. 2. Ghana's competitor to these global AI platforms is called GhanaChat. 3. It will be trained and hosted in a brand new AI datacenter. 4. 48 registries pooling data from across the public sector will make this AI smarter about Ghana than the foreign ones. 5. The AI datacenter and the "AI Fund" will cost about $270 million. Expect more to be spent on the registries and the apps. A lot of contracts. You can bet that a lot of ICT contractors are very happy. 6. The question is, if we have a couple of hundred million dollars to spend on making AI deliver great benefits for Ghana, should we spend it on GhanaChat, a top-tier AI data center, and the data-pooling system? And should we do it according to the strategy the Ministry has devised? 7. Or could we do much better by more critically assessing all our strategic options and comparing them to the Ministry's? 8. My argument on the show was that I am not convinced about GhanaChat offering the best value for our money. 9. It would take many pages to explain my position fully. But in this post I will highlight just the most important points. 10. Attached are extracts from page 13, 50, and 68 of Ghana's AI strategy. 11. If you have even the barest exposure to AI, you can see a massive error. Can you? 12. The target for how much computing capacity the country needs for next year (2027) is indicated as "1021 FLOPS" and the 2035 target as "1025 FLOPS". 13. If this was indeed correct, it would mean that the Ministry would like the entire computing capacity of the country in 2027 to be equivalent to a 1970s desktop computer. Or 2% of the capacity of the 1980 Intel math chip. 14. Howzat? 15. I'm sure you can agree that this would be totally ridiculous if that was the Ministry's intent. So, what happened? 16. Somebody who didn't fully understand how FLOPS work must have been involved in the drafting. What was meant to be 10 raised to the power 21 operations per second (10²¹ operations a second) was written out as "1021". Same for "1025". 17. Why wasn't the error caught? Because in Ghana when doing "consultations", governments rarely engage independent and critical voices who will point out absurdities without fear of offending big men and women. 18. I am not being petty. There is a serious strategic confusion beyond mere typos. 19. Read properly as 10²¹ FLOPS, the Ministry is telling us that by next year it will have some 200,000 of Nvidia's newest chips in use in Ghana, 500 MW of power devoted to AI, all costing about US$24 billion (close to the Ghanaian government's entire programmed spending for 2026). 20. The US$250 million AI datacenter now being procured supplies about 1% of this 2027 target. 21. Howzat? 22. Clearly, no serious critique of the plan would have okayed such a vision. Throughout the ministry's own review, cabinet approval, and a high-profile media launch, it is absolutely clear that not one critical reviewer was engaged. 23. My first major point here is that this is classic KATANOMICS: the lack of critical policy audiences. This is exactly how a sugar factory that was "designed from the start to fail" was allowed to be built. Many programs and initiatives in Ghana fail for precisely this absence of critical review. 24. In the strategy, you find statements like: "government aggressively building AI compute clusters" and by courting hyperscalers, "to leverage the scaling laws towards building general purpose AI and AGI". Then: "drastically increase Ghana's energy capacity 0.5 to 1 OOM per year". "OOM" means "order of magnitude". 25. When I challenged the Minister on TV, he confidently rebutted by claiming that the Energy Minister/Ministry has assured him of feasibility. Ghana's energy Ministry is committing to increase Ghana's power output by 3x to 10x EVERY YEAR so that the Digital Minister can deliver his AI strategy? Did anyone in Cabinet not protest that this projection in 8 years would mean expanding Ghana's electricity output by 10,000x? 26. I can bet you any amount that the Energy Minister will deny making any such commitments in Cabinet. Can we have clarity? Can JoyNews check? 27. Page 68 of the strategy defines an "Artificial General Intelligence Lab" as "an AI lab with access to more than 1010 compute". No unit is given at all. In fact, as written it is totally meaningless. What they likely mean is that Ghana will support the establishment of a lab with computing capacity of 10¹⁰ FLOPS (10 gigaFLOPS). 28. The problem is that such a lab would be totally useless. To give you perspective, an iPhone 7 has about 350 gigaFLOPS of capacity. 29. What would be required to meet the Ministry's 2027 AI target? If for frontier model development, then the following spec would be reasonable: 400,000 16-bit Nvidia B300 GPU units, 1,114 MW of dedicated power (which is 26% of Ghana's peak demand). And the budget could easily hit US$47.2bn. For less frontier use, we can halve these numbers. 30. Counted in the 64-bit arithmetic that scientific supercomputers are ranked by, Ghana's 2027 target is 455 times the world's fastest machine, China's LineShine at 2.2 exaflops, and 53 times all 500 machines on the list combined. 31. Anyone with the barest exposure to Ghana's fiscal context can tell the Minister for free that this won't happen next year. 32. Ghana's 2035 target of 10²⁵ is 160 times the entire global stock of AI compute today. Even if chips grow 1.4 times more energy-efficient every year, it would draw about 377 GW, 65 times Ghana's current installed generating capacity. 33. I will be charitable and propose that the strategy's drafters may have been thinking about training FLOP (note: without the "per second" at the end). For example, GPT-4's training run used about 2.1×10²⁵ FLOP, the same order of magnitude as Ghana's 2035 endpoint. 34. Unfortunately, that doesn't save the strategy. Recast this way, the target collapses the other way. 10²¹ FLOP is about 12 days' work for one H100 chip at 16-bit precision. 10²⁵ FLOP is one GPT-4-sized training run, which the US$250 million centre could finish in about four months. On that reading the centre meets the 2035 target before its first anniversary. Not meaningful. 35. Given how confusing the overall strategic plan is, would you bank on the first AI compute center and GhanaChat product already being procured at about $270 million? 36. Here are some bare numbers: the budget, per our modelling, maps to about 2,100 GPUs and 4.3 MW of IT load. That alone adds the equivalent of 90% of Ghana's entire commercial data-centre load in 2024 (4.8 MW). Running it costs about US$76 million a year, which is about six times the revenue of the whole commercial industry. 37. A utilised GPU-hour costs about US$22 at base-case demand, against a market rate of US$6.71 today and roughly US$4.50 averaged over the hardware's life. The base case thus implies a subsidy of about US$61 million a year. 38. If the concern is about Ministers and their Directors uploading sensitive documents into Gemini or Kimi, then why not a simpler sovereign AI assistant for the civil service first? 39. That would need roughly 144 GPUs: about 7×10¹⁷ operations a second at 8-bit, US$13 million up front and US$6.7 million a year. That is under a thousandth of the 2027 target, and a far more realistic initial-term strategy. Does Ghana really need to train its base model when orchestrators now allow one to host their own data and switch across multiple advanced open-weight models to serve an Assistant or Agentic system? 40. Howzat?