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Crazy Days Of Cash And Chaos

You are three men far from home in a place where corruption and guns lurk. You are down to your last $100 at the beginning of a story of frustration and angst in post-war Angola.

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Sitting down to white wine and a breath of fresh air during sunset at one of Luanda’s newest and finest seaside restaurants, Miles October, the managing director of Internet Technologies Angola (ITA), harks back to the dark days of 2003.

Miles October and Rolf Mednelsohn in Luanda

That was the year he moved to Luanda with his friend, Rolf Mendelsohn—a Namibian who is now ITA’s technical director—to start a company from scratch amid the chaos of post-war Angola. Mendelsohn was just 20 years old.

“We knew there were lots of opportunities in Angola right after its civil war, but none of us had been to Angola before,” he says.

The biggest problem was they didn’t have any money.

Times were tough, Angola lay in ruins and business was difficult. The two friends, who were joined by another Namibian, Barney Harmse, almost gave up, but fate took a hand at the end of another frustrating week.

With a smile and a twinkle in his eye, October recalls their judgment day.

“Three months after our arrival in Angola, we were down to our last $100.

Rolf and I looked at each other that Friday night and said: ‘Are we going to party tonight, or try and prolong our stay for another week?’ We decided to go and party. That Monday, we got our first deal, with an NGO called Intersos… We got our next deal, and the next, and the next. It was mostly work in the NGO sector; setting up networks, fixing PCs and reselling other ISPs’ (internet service providers’) connectivity.”

Economic progress in post-war Luanda lumbered like an old Russian tank. It took a year for the company to employ someone and move to a bigger house.

“Behind it was one of the biggest and most dangerous favelas (slums) in Luanda,” says October.

“You won’t believe how many visitors got mugged at gunpoint at our doorstep. We also discovered years later that we had been providing electricity to the entire favela.”

The company employed more people and grew rapidly as word spread.

“From there on things just got crazy,” says October.

It was still tough. The partners couldn’t afford to pay themselves a salary for the first three years.

In these early crazy days there were also problems in the boardroom. ITA began as a partnership with an Angolan company, but it didn’t work out. The three founders then registered ITA as their own company in 2005. By that time they had a new German shareholder.

That year, the four men set up an ISP, MaxNet, a joint venture with two Angolan companies.

“That partnership didn’t work out either,” says October.

“So in 2008, we got out and started running the ISP business on our own. We now operate independently and provide Internet and data services to all our customers via wireless and satellite technology, 80% of whom are in Luanda and 20% in a few large provincial towns. We now have more than 60 staff.”

It was a tough nut to crack. The Internet is incredibly expensive in Angola. Clients wanting the same internet speed as in Europe can pay up to 200 times more. Despite the fact ITA’s services are more expensive than its many competitors it has won business with large clients including BPC Bank; BP Angola; Trafigura Group (Pumangol); GA Angola Seguros; Casa dos Frescos and Shoprite.

“Banks and oil companies require a 24/7 availability and superior quality of service. We have very, very skilled technicians, 90% of whom are Angolan.”

ITA’s annual turnover, in US dollars, is now in the seven figure range.

For October, it has been a meandering path to the helm of an IT company in Angola via dance floors and ball parks.

As a 19-year-old, back home in South Africa, October was scouted by professional American baseball club, Vero Beach Dodgers, and moved to the United States. He doubted he would make it to the major leagues and returned to South Africa after a year to study psychology and earn money as a DJ.

With his Bachelor’s degree in his pocket, he kept spinning the discs in dance clubs from Johannesburg to Germany to pay his way through more studies. By 2002, he had earned an IT degree and worked for an internet company before accepting a job with Worldcom.

“In 2002, Worldcom filed for Chapter 11 bankruptcy protection in the USA. That’s when Rolf, Barney and I decided to quit our jobs and start our own company in Angola.”

It means every year October studies keenly the World Bank’s Ease of Doing Business report. The 2011 report ranks Angola 163 out of 183 countries—another headache for fledgling companies like ITA.

“For us, the biggest obstacles have been the volatility of the kwanza-dollar exchange rate, major problems with paying our suppliers outside of the country due to the Central Bank’s increasing red tape, and also finding skilled labor… The last few years we’ve seen a clear increase in Angolan returnees, who have studied abroad, which makes finding skilled Angolan employees much easier. The Angolan education system has also improved significantly since the end of the war.”

In Transparency International’s Corruption Perception Index 2011, Angola ranks among the world’s 15 most corrupt countries—168 out of 183.

“But I think the Angolan government is doing a lot to minimize corruption,” October says.

Roger Ballard-Tremeer, the former South African ambassador to Angola and now the CEO of the South African-Angolan Chamber of Commerce, agrees.

“Angolan society at large has, especially since 2010, reflected on the profound damage inflicted by the civil war on the social and moral values of the nation and has launched a quite remarkable pro-ethics movement aimed at rescuing the nation’s societal values from the abyss into which they had plunged. Today better and more transparent governance is a very obvious feature, not only of the way in which the public sector generally conducts its activities, but also, specifically, of the manner in which a new generation of Angolan businesspeople seek sustainability over short-term profitability. Sound business ethics are now taught very effectively at tertiary level,” he says.

October says then there was the global financial crisis. “It started filtering through to Angola in 2009. As a result, we no longer see the phenomenal growth of the first few years. A few clients called it quits and left Angola. But we are still a healthy and growing company, and I expect next year to be better.”

Well, if you’ve been down to your last 100 bucks and survived, surely there is always hope.

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