South Africa’s MTN has paid $53 million to settle a money transfer dispute with Nigeria’s central bank and the matter has been withdrawn from court, Governor Godwin Emefiele said on Tuesday.



The central bank had ordered MTN and its lenders to bring back a total of $8.1 billion it alleged the company had illegally repatriated using improperly issued paperwork between 2007 and 2008.



Emefiele said the money paid by MTN was a notional sum and that the company has been absolved from any wrongdoing, he said during a monetary policy meeting at which the bank left interest rates on hold at 14 percent.



&#8211; Paul Carsten

RC1840C18730

MTN Has Paid $53 Million to Settle Nigeria Dispute: Central Bank

The political atmosphere in Nigeria leading up to the February polls is tense. Challenging the status quo are new and younger contenders promising hope and change.



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As the 2019 elections draw close in February in Africa’s most populous country, Atiku Abubakar has emerged the presidential candidate of the People’s Democratic Party (PDP) while President Muhammadu Buhari has been affirmed for the ruling All Progressive Congress (APC) ticket. 



Abubakar, a former vice president of Nigeria, has begun his campaign against president Buhari by highlighting the popular frustration of Nigerians over the rise in unemployment and poverty (two of the biggest voter concerns) on Buhari’s watch,as well as growing insecurity in central Nigeria. 



Nigeria was recently voted the world’s poverty capital by the Brookings Institution. Consequently, the handling of the economy has already emerged as a major issue at the start of the election cycle.



In 2016, the country entered its first recession in 25 years due to a slump in oil prices and attacks in the Niger Delta oil-producing region. Although emerging out of recession in 2017, growth still remains tardy and inflation is just above the central bank’s single-digit target range. 



Investor sentiment in the country is also low especially with leading telco giant MTN Nigeria being ordered by the Central Bank of Nigeria (CBN) to return $8.1 billion to the country claiming it was illegally repatriated from Nigeria.



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1024" height="683" src="https://www.forbesafrica.com/wp-content/uploads/2018/12/GettyImages-460291600-1024x683.jpg" alt="" class="wp-image-38074" srcset="https://cms.forbesafrica.com/wp-content/uploads/2018/12/GettyImages-460291600-1024x683.jpg 1024w, https://cms.forbesafrica.com/wp-content/uploads/2018/12/GettyImages-460291600-300x200.jpg 300w, https://cms.forbesafrica.com/wp-content/uploads/2018/12/GettyImages-460291600-600x400.jpg 600w, https://cms.forbesafrica.com/wp-content/uploads/2018/12/GettyImages-460291600-768x512.jpg 768w, https://cms.forbesafrica.com/wp-content/uploads/2018/12/GettyImages-460291600.jpg 2048w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption> Atiku Abubakar.  Picture: Pius Utomi/ AFP/Getty Images</figcaption></figure>



“If the fine is found to be unjustly imposed, it would have a negative implication on the image of Nigeria as a destination for foreign investors. Investors only invest in environments that have laws that protect them. If people are punished when they have not done anything wrong, that destroys investor confidence,” says Bismarck Rewane, CEO of Financial Derivatives, an economic think tank in Lagos.



This will be the fourth attempt by Abubakar to win a presidential election mirroring Buhari’s 2015 elections win. He defected from the ruling APC party and re-joined PDP to win the presidential ticket. In a speech in London, Abubakar unveiled his plans to offer a matching grant of $250 million each to the 36 states of the federation to challenge them to enhance their internally generated revenue (IGR).



Meanwhile,just as the election was shaping up to be a contest between two male political veterans, Obiageli Ezekwesili, a woman with a strong track record in economic leadership has announced her presidential candidacy for the Allied Congress Party of Nigeria (ACPN). 



Ezekwesili,who is the co-founder of the #bringbackourgirls movement, is perhaps the most prominent woman to challenge for the top job. 



Her campaign for the return of the 276 Chibok girls kidnapped in northern Nigeriain 2014 by Boko Haram sparked worldwide support and led to the return of more than 100 girls to their families. 



Ezekwesili also served as the country’s education minister and Vice-President of the World Bank. In a speech to her party, Ezekwesili said the two men she faces represent a “mediocre political class that bumbles from one crisis to another”. Her campaign strategy is to position herself as the candidate bringing hope back to Nigeria by challenging the status quo.



Also as part of her strategy, Ezekwesili, 55, is trying to appeal to Nigeria’s youth by highlighting the lack of understanding of technological advances happening in the country by her challengers, Buhari, 75, and Abubakar, 71. 



However, in spite of her immense appeal, perhaps the youth might just need a candidate of their own who understands their needs and can speak for a nation where more than 50% are under the age of 30.



They may just have their wish. A welcome development to this election is the reduction of the age by which Nigerians can contest the election for public office. 



The bill, popularly referred to as the Not-Too-Young-To-Run Bill, reduces the age qualification for president from 40 to 35; governor from 35 to 30; senator from 35 to 30; House of Representatives membership from 30 to 25 and State House of Assembly membership from 30 to 25.



Bukunyi Olateru-Olagbegi, a 27-year-old entrepreneur and an up-and-coming political leader, has taken advantage of this new window to register his own political party, Modern Democratic Party. The party is putting education at the top of its agenda and calling for the youth of Nigeria to stand together and have a unified voice.



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="828" height="596" src="https://www.forbesafrica.com/wp-content/uploads/2018/12/bukunyi.png" alt="" class="wp-image-38073" srcset="https://cms.forbesafrica.com/wp-content/uploads/2018/12/bukunyi.png 828w, https://cms.forbesafrica.com/wp-content/uploads/2018/12/bukunyi-300x216.png 300w, https://cms.forbesafrica.com/wp-content/uploads/2018/12/bukunyi-600x432.png 600w, https://cms.forbesafrica.com/wp-content/uploads/2018/12/bukunyi-768x553.png 768w" sizes="(max-width: 828px) 100vw, 828px" /><figcaption> Bukunyi Olateru-Olagbegi. Picture: Supplied</figcaption></figure>



“We offer hope. Ours is a generation that is young, bold and open to possibilities. We believe that if hope can be returned to the heart of the common man/woman, they may once again start to believe in things becoming better. Right now, a lot of parties sing the word ‘hope’ and yet their internal democracy itself is hopeless,” he says.



“The masses are not blind. They see the internal wrangling in these political parties on the pages of newspapers. How then can they truly believe in a message of hope by these same people? Our youthfulness and firm grasp of the complexities and blistering pace of the world we live in today, easily make us,in our opinion, fit to lead. We understand the power of flexibility and we understand what ‘change’ really means. The world needs the youth right now, and we are finally ready to step up.”



He says his party is committed to building a structure capable of winning elections across all political spheres and levels with a resolution to put a spotlight on the downtrodden in society, a society that, according to Olateru-Olagbeji, is in critical need of deliverance from bad leadership.



“As a party, we hope to correct the present for the sake of the future; we hope to harness the mental and resources of my generation with fresh ideas and innovation because this generation is not tied to the prejudices and biases of the ones before us, we don’t see tribe, religion and even gender; we are united in our hunger for success. We hope to inspire a generation of young Nigerians and Africans to work at building our nation and continent, community by community, till we become the leading and ruling party,” he says.



The political atmosphere leading up to February is extremely tense. 



No matter who is contending for the top job, one thing is certain,Nigerians need a new economy, one that provides them with opportunities for growth and prosperity, and they need that, yesterday.

Ezekwesli

Twists And Turns Of Nigeria’s Election Campaign Trail

Two of the largest banking and financial services institutions in the world, HSBC and UBS, have&nbsp;recently closed their local representative offices&nbsp;in Nigeria.



There’s also trouble brewing elsewhere in Nigeria’s business world that’s prompted fears about the climate for foreign direct investment in the country. Foreign direct investment is an investment made by a firm or individual in one country into business interests located in another country.



For instance, Nigeria’s government in September&nbsp;accused HSBC of money laundering&nbsp;after an analyst working for the lender said a second term for President Muhammadu Buhari&nbsp;may stall economic recovery &nbsp;in Africa’s biggest oil producer.



There are also tensions between Nigeria’s central bank and the South African telecom company MTN. In 2015, MTN was&nbsp;fined about $5bn&nbsp;for failing to cut off unregistered SIM cards. This was later reduced to $1.7 billion after a long legal dispute and the intervention of South Africa’s then President Jacob Zuma.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow"> Recently, the central bank has&nbsp;ordered MTN to repatriate $8 billion&nbsp;it said has been taken out of the country illegally.</blockquote>



Analysts are&nbsp;concerned&nbsp;that the Nigerian government’s attitude towards MTN and the two banks may erode the confidence of foreign direct investors. Their fears seem to be well founded: foreign direct investment in Nigeria&nbsp;fell to&nbsp;$1 billion in the first half of 2018, from $1.48 billion in the first half of 2017.



Foreign direct investment is crucial for any economy. So how can Nigeria attract and keep the right kind of investment from global companies? Compromise will be key, both for the government and foreign firms.



<h4 class="wp-block-heading">Why foreign direct investment?</h4>



Foreign direct investment is often preferred to exporting. That’s because while exports merely involve moving goods from one country to another, foreign direct investment actually involves an investor establishing foreign business operations or acquiring foreign business assets.



This often includes establishing ownership or controlling interest in a foreign country (for instance an American business establishing a physical business presence in Nigeria). Many emerging economies like China, Brazil, Vietnam and India have&nbsp;built their growth on FDI flows.



The trick is to attract “quality foreign direct investment” that links foreign investors into the local host country economy. The International Growth Centre, a&nbsp;British-funded&nbsp;research centre that aims to promote sustainable growth in developing countries,&nbsp;characterises&nbsp;“quality” here as contributing to:



<ul><li>decent and value-adding jobs and enhancing the skill base of host economies;</li><li>transfer of technology, knowledge and know-how;</li><li>boosting competitiveness of domestic firms and enabling their access to markets.</li></ul>



<h4 class="wp-block-heading">What Nigeria can do</h4>



There are a few things Nigeria can do to boost foreign direct investment. For starters, it must play fair. Foreign and domestic businesses should be treated equally. They should be open, transparent and dependable conditions for all kinds of firms.



Another area that needs attention is infrastructure. Businesses need easy access to ports, an adequate and reliable supply of energy and relative certainty that the country will be good to invest in. 



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow"> Good institutions&nbsp;also promote FDI.</blockquote>



The government should encourage partnerships between foreign and local businesses. Foreign firms might be familiar with global good business practices, but local firms will be more familiar with the indigenous context. This synergy could be very beneficial.



It’s also critical that Nigeria gets its regional governments involved: there are many regions in Nigeria, and these regions all have unique opportunities and challenges.&nbsp;



Our latest research&nbsp;shows that when the central government of Nigeria ran out of ideas and foreigners wanted to exit the agricultural sector, the regional government of Kwara state stepped in to create a positive business climate based on the cooperation of local banks, community members, and the foreigners themselves culminating in the&nbsp;Shonga farms&nbsp;public-private venture. 



This has kept the firm in Nigeria. It’s also brought private investors to the table, bolstering the firm and the local economy.



Nigeria should also tap into its huge&nbsp;diaspora. There are many Nigerians living outside the country who understand its challenges. They should be encouraged to help, or asked to work with their networks to invest in the country.



<h4 class="wp-block-heading">What foreign firms can do</h4>



Foreign firms also have a role to play. They can enhance their success in Nigeria (and elsewhere on the African continent) in several ways.



First, they need a long term strategic plan. This means thinking carefully about what sectors or activities to target. Many foreign firms come to developing countries when things are rosy but leave when conditions change. They don’t properly consider that solving such problems will gain them a competitive advantage in the long run.



If they stay and follow a learning curve, foreign firms will better understand the local business context. They’ll also gain credibility among ordinary people and possibly get more customers and support that way.



In the same vein, foreign businesses should create local solutions that meet ordinary people’s needs. The banks leaving Nigeria have&nbsp;been accused&nbsp;of only catering to the needs of wealthy Nigerians, who are&nbsp;perceived as corrupt. A more diverse portfolio that catered to the needs of ordinary Nigerians would have nullified this claim.



Foreign firms must also work closely with credible and strategic local firms, and be willing to enter into dialogue with the Nigerian government where necessary. This is crucial especially as administrations may change or government policy may evolve. Dialogue could ensure that all parties are on the same page.



<h4 class="wp-block-heading">Act local, think global</h4>



It’s unfortunate that these banking institutions have decided to leave Nigeria. Hopefully both the Nigerian government and other foreign investors can learn from this.



The main takeaway for both foreign investors and governments involved in foreign direct investment is that it would be prudent for all parties to act locally but think globally.



<ul><li><a href="https://theconversation.com/profiles/tolu-olarewaju-405190">Tolu Olarewaju</a>: Lecturer in Economics, Staffordshire University</li></ul>



READ MORE |&nbsp;<a href="https://www.forbesafrica.com/investment-guide/2012/11/01/nigeria-invest-not-invest-question/">Nigeria: To Invest Or Not To Invest? That Is The Question</a>



READ MORE |&nbsp;<a href="https://www.forbesafrica.com/focus/2018/06/05/investment-marketplace-coming-to-africa/">Investment Marketplace Coming To Africa</a>

Key Speakers At The U.S.-Africa Business Forum

How Nigeria Can Attract And Keep The Right Kind Of Foreign Direct Investment

He grew up in grinding poverty; his mother went hungry to feed the family. At university he was so hungry that he disguised himself as a lecturer just for a free lunch. Years later, his determination and curiosity turned him into a genius in the world of innovative disruption; this is the life and story of Griffiths Sibeko, an app developer from Duduza, one of South Africa’s poorest shanty towns.
“I remember one day attending an inauguration of a professor and when I heard there was lunch and dinner I had to rush to the student residence to change into formal clothes so I look qualified to be in the meeting. This would become my lifestyle until I dropped out of school,” Sibeko says of the hungry road he has walked.
“I grew up in a one-bedroom house with three other family members. We were so poor that some days my mother would give us food while she went hungry,” he says during a break at the Riversands Incubation Hub Innovation Conference. At this conference, he was a delegate with an assured free lunch.
<img loading="lazy" decoding="async" class="alignleft size-medium wp-image-5316" src="/wp-content/uploads/2017/05/WP_20160725_16_06_42_Rich_LI-2-169x300.jpg" alt="" width="169" height="300" />
Sibeko’s inspiration in developing apps comes from the challenges his country is facing. He built an app for public transport users that gives information on routes, times, distance, fares, stops, stations and where tickets can be bought.
“I am working on building apps that bring calm when there is chaos, like in South Africa’s taxi industry. This field requires passion, if you are in it for money then you will struggle and will not last long,” he says.
But where did Sibeko’s love for apps come from?
“I was 11 years old when my curiosity for computers started. I would go the Zakheni Primary School every day after school to observe people using computers. On my third visit, the instructor called me and gave me access to a computer that would become the path to my new life.”
His mother did not allow him to spend time with his neighbors.
“She feared they would spoil the character she was developing in me. It is these moments I spent alone and in the library that I came across a book called Mistakes That Worked. This book inspired me to explore more,” says Sibeko.
The man from Duduza felt he should share some of his knowledge to the next generation of computer wizards and enrolled for a degree in education at the University of Johannesburg.
“After a year, I realized it was not my thing and I dropped out,” he says. But, it was not over for Sibeko.
“I enrolled the following year for a degree in information management. I realized through this course I would get access to do courses in informatics and programming. After a year, I could not sustain studying as I was struggling financially,” says Sibeko.
As the year wound down, Sibeko left university. Through a hackathon challenge, organized at an aeroplane hangar, Sibeko would soon start solving problems he thought were within human reach. It was here where he developed the Rea Vaya app.
“Microsoft had advertised some fellowship towards the end of the year. I was told I had been accepted. I had to choose between continuing with school and working my way out of poverty.”
After this, Sibeko was set. He went on to win the MTN Apps Challenge in 2014. He says innovation should respond to the needs of the community.
“It is important for African app developers to devise solutions for people in their communities. I am working on developing apps for low-income earners,” he says.
Sibeko is working on yet another project.
“An app that seeks to expand how individuals can make new discoveries based on their environments. Finding hidden gems in familiar or unfamiliar places,” he says.
To achieve his dreams, Sibeko says he will have to put in a lot of hard work with many sleepless nights.
It is true; there is no such thing as a free lunch.

The Steve Jobs  of Duduza?

Accra’s central business district, located at Ring Road, is popular with start-ups because everyone walks past it, from tourists to townsfolk. This doesn’t count for much if Ghana’s economy continues to stumble.
Felix Oppong runs a small printing business in this bustling area. He has a staff of five who serve around 10 companies, mainly from the telecommunications and financial sectors.
The company prints posters, fliers, banners and office documents. In the past year, Oppong has lost two of his biggest clients, telecoms giant, MTN, and Fidelity Bank, due to power cuts, known here as dumsor. He has also had to increase his prices to break even.
“Our business has really taken a hit, the dumsor situation right now means we cannot service a lot of the orders we get from clients. We are relying on the generator every day to make sure we can meet demands and the cost of petrol is very high as well,” says Oppong.
“We cannot continue running the business like this. Our clients are complaining about the increase in prices and I had to sack three staff, there have been at least two petrol shortages last year which meant we had to close our business for a week and that is when we lost MTN.”
Ahead of elections on November 7, the Ghanaian economy is facing several challenges. Once a shining light of economic prosperity, the country, according to the International Monetary Fund (IMF), is now experiencing a decline in growth from 8% in 2012 to 3.5% in 2015. The current woes are largely due to the protracted energy dilemma and what many industry experts believe to be poor macro-economic management.
With elections coming, a restrictive IMF program has been implemented to prevent previous bouts of excessive spending. The organization has disbursed a third installment of $116 million, which amount to a total of $900 million over three years, to aid economic recovery in the West African country. Consequently, Consumer Price Index (CPI) inflation is forecast to rise to 8.7% in 2016, up from 8.3% in 2015.
Franklin Cudjoe, the Founder and CEO of IMANI Center for Policy and Education, a leading think-tank in Ghana, says the plight of the Ghanaian economy is not specific to one sector.
“I would say all the industries in the country are having some challenges, all emanating from production costs that have gone high over the last couple of years. One of the sources of the high production cost for almost all the industries is because of the energy challenge that we have,” he says.
“If you take it on a per capita basis, the cost of energy, for instance, has tripled over the past few years alone and that significantly affects the budget for food. The disposable income for the household has significantly been reduced. The Ghanaian economy has also suffered from the global shocks because most of our products depend on them and there has been plummeting oil prices. Cocoa production also hasn’t quite matched this, not to mention a decline in gold as well.”
Cudjoe says the country’s woes are also self-inflicted. Ghana is borrowing more money but, according to some experts, these funds are not utilized well. The currency, according to Reuters estimates, has plummeted by around 20%, with a corresponding total external debt of $24.3 billion in 2015.
“Austerity measures being used at the moment are all fiscal and based on levying tax on everything. The government has incurred so much debt and the only way it can service those debts is to increase taxes. There is no sensible government that will be seen introducing taxes in an election year, but it seems the only way the economy can sustain itself… because, quite frankly, the coffers are empty,” says Cudjoe.
Nigeria’s fiscal challenges have also led to the country banning some imports, which significantly affected Ghana’s agricultural sector. Farming contributes around 19.9% to the economy, according to the Ghana Statistical Service (GSS).
“This also has a way of affecting our balances. It is similar to 2005 where Nigeria banned close to 93 products from Ghana and I think we are seeing echoes of that sentiment again. I don’t think it is right to erect barriers, especially with both countries belonging to the Economic Community of West African States (ECOWAS) which is supposed to lead to deeper economic integration,” says Cudjoe.
He, however, believes that the services sector, together with technology, will drive growth in Ghana. According to GSS figures, the sector contributes a whopping 50.2% to the economy.
“Ghana at the moment is doing $900 million a month, that is 24 million transactions, in mobile money. Ninety nine percent of these transactions are peer to peer, which simply means one takes and transfers money to the other. We are so far away from creating a cash-lite economy in Ghana, which is what mobile money is supposed to do. So we sat down and looked at how to create a platform that enables us to use the mobile money for retail payments. Zeepay’s idea is to be able to move from predominantly peer-to-peer transactions into retail payments as well,” says Andrew Takyi-Appiah, Co-founder of Zeepay, a mobile payments company.
He has, so far, invested just over $500,000 in his new venture and is hoping the growth in the Ghanaian services sector will help boost his mobile app service. Takyi-Appiah’s major challenge in scaling his business is the lack of funds. Financial institutions, who are traditionally apprehensive about lending to start-ups, have taken an even tougher approach to mitigate risk against bad debts. The government, however, has set up the Ghana Infrastructure Investment Fund (GIIF), to provide resources and attract investment. But Cudjoe says the approach of the government in implementing this leaves little to be desired.
“I know for a fact that the Ghana infrastructure fund that is being set up is being funded by the country’s oil money as seed capital, instead of using private funding from abroad. You ask yourself if this is the most prudent way of utilizing resources in an austere economy. I don’t really believe that austerity measures are the [solution] but I think the way we are going about it is to use the tax to solve it, and I think taxation is the last measure you want to resort to in a time like this,” he says.
As voters prepare to make their mark, the Ghanaian economy is on shaky ground. Business in the country is still firmly in the grips of the energy crisis, which has reduced output from the manufacturing and agricultural sectors, while increasing production costs.
The recent growth in the economy has achieved certain goals – such as reducing poverty – but ballooning costs and debt has left many wondering if Ghana’s progress is about to be stunted.

The Coffers Are Empty

Is there still easy money to be made in South Africa’s cellular industry? For more than 15 years, the sun shone on the country’s two big mobile operators, Vodacom and MTN. The companies enjoyed an effective duopoly – despite the launch in 2001 of Cell C. Their shareholders reaped the dividends.
But about five years ago, the market began changing. Consumers started using their phones more to access the internet and data services, and proportionally less for making calls. Smartphone sales began to boom, and a new breed of over the top (OTT) providers – companies like Skype, owned by Microsoft, and WhatsApp, owned by Facebook – began providing (often free) alternatives to the network operators’ historic profit centers of voice telephony and text messaging.
They did this by leveraging the operators’ data networks. WhatsApp has decimated person-to-person SMS messaging; Skype, Viber and similar voice dialing services that route calls over the mobile operators’ data networks promise to do the same as next-generation 4G/LTE networks expand and as supported handsets proliferate.
The operators have found themselves in a quandary. By building these next-generation, high-speed data networks, they are effectively erecting the infrastructure on top of which the dreaded OTT providers can compete with them head-on in their most profitable business areas.
Industry bosses, like MTN South Africa CEO Ahmad Farroukh – who has warned that operators and OTT providers have to reach some sort of agreement if the former are to continue investing billions each year in network infrastructure – are adamant they won’t become ‘dumb pipes’. This is industry jargon for operators that provide low-margin telecommunications infrastructure in a utility-type model without profiting from the value-added services that flow across this infrastructure.
Operators want to retain their historically high profit margins by tapping into this value-added services business as voice margins decline. They’re looking to provide services like streaming media and mobile banking and e-commerce – taking them into competition with media companies and financial services institutions.
Both MTN and Vodacom have launched mobile banking solutions – the former recently concluded a deal with Pick n Pay, while the latter has relaunched M-Pesa – and both are looking at video-on-demand (VOD) services similar to America’s Netflix. But neither company has experience in the media industry or financial services and profitable success is far from guaranteed.
While all this has been happening, competition from more traditional competitors — the smaller network operators — has hotted up dramatically.
Cell C has taken advantage of falling termination rates — the fees the operators charge each other to carry calls between their networks — to slash call prices. Vodacom has been quick to respond to the challenge; MTN followed later, but only after it lost significant market share to its smaller rival.
Voice tariffs have probably now fallen as far as they will. Cell C, the instigator of the price war in mobile voice, seems to be back-pedaling a little on previous aggressive price cuts, especially in data, where it’s recently hiked out-of-bundle charges. Vodacom, although reacting to Cell C’s aggressive moves, has been able to hang on to higher prices than its rivals in voice and data services, perhaps because it has a superior network.
Cell C, burdened by debt that some industry insiders say runs into well over $850 million, is in a difficult position. Although it’s won market share in recent years, it is still short of the 25% target its former CEO, Alan Knott-Craig, said it needed to ensure its future success.
Telkom, meanwhile, has effectively given up on the idea of being an infrastructure competitor in the mobile market, with its plans to outsource management of its radio access network to MTN. Unless something spectacular goes wrong, that deal should be wrapped in early 2015.
The future of Cell C is what will determine the shape of the industry for the rest of the decade. Are its shareholders prepared to continue fighting a war of attrition against Vodacom and MTN? Or will they look to sell the business? And who would buy it? France’s Orange, perhaps? Or India’s Bharti Airtel? A sale to a well-funded foreign investor keen to shake up the South African market could up the stakes dramatically.

Is There A Future In Cellphones?

Growing up in Apartheid South Africa, examples of bravery, heroism and inspirational humanity were all around me. Some of my heroes were personal; ordinary people working quietly to overcome injustice and keep their dignity, while trying to escape poverty.
Other heroes I share with the world: Nelson Mandela, Oliver Tambo, JB Marks, Walter and Albertina Sisulu.
But my greatest hero of all was my mother – widowed with three children, living in a poor Cape Flats community. She showed me every day that our circumstances need not define us, and how important it is to balance strength and determination with love, kindness and humanity. My mother showed me how to be brave.
My heroes shaped the value system that defines who I am today – values such as equality and equity, diversity and inclusivity, freedom and responsibility, hope and faith for the future.
I believe that social and economic justice must prevail. I believe in the importance of remaining grounded and humble. And I believe in my ability to achieve anything I set my mind to.
My first chance to test these values came when I was thrust into the minefield of labor negotiations at the National Union of Mineworkers (NUM).
As a union, we had to succeed, because the work we were doing impacted on the lives of hundreds of thousands of black mineworkers. And they were depending on us to safeguard their livelihoods and improve their lives.
Working at the NUM taught me a great deal and laid the foundation for my future in the corporate world. In order to do my job – negotiating increased wages and improved conditions of employment – I had to master all of the issues, irrespective of their complexity.
I learnt that success lies in finding the balance between legitimate business imperatives and our broader, human responsibility to make a positive, sustainable contribution to society.
Naturally, the issues we dealt with were emotionally charged. We had to negotiate professionally and responsibly, navigating the inevitable trade-offs, to ensure that mineworkers’ lives improved while the company made money. Afterwards, we needed to explain the issues and solutions to our members in an accessible way.
The nature of the challenge led to three important lessons.
First, learn fearlessly. Follow that old piece of advice: when others sleep, you read. Secondly, never think that you know everything; have the humility and courage to keep asking until you understand. Do not be afraid to make mistakes.
And thirdly, you only really understand something when you can explain it, in simple terms, in less than three minutes.
These lessons guided me when I moved from the negotiating table to the boardroom table. As an executive director at Johnnic, which at the time was an industrial conglomerate, I represented the unions and the black business consortium.
I also had the opportunity to play a leading role in the negotiation of a number of transactions that ultimately led to Johnnic’s makeover as a focused media, entertainment and telecommunications group. One of these contracts resulted in the reverse-listing of MTN Holdings through M-Cell Limited, and the subsequent transformation of the mobile operator into one of the pre-eminent black-empowered companies on the Johannesburg Stock Exchange.
At MTN, I became aware of the inc-
redible impact that information and communications technology can have on people’s lives. Access to information and the ability to communicate makes us masters of our own destinies, empowered to uplift families, communities, businesses, and ultim-ately, the societies in which we live.
The statistics speak for themselves. According to the World Bank, for every 10% increase in broadband penetration, there is a 2-3% increase in employment and a 1.38 percentage point increase in gross domestic product.
This realization, and the freedom that I felt after achieving my objectives at MTN, inspired me to establish Smile Communications.
An African telecommunications operator, Smile has a presence in Tanzania, Uganda, the DRC and Nigeria.
Our mission is testimony to what I have learnt: To deliver affordable, high-quality and easy-to-use broadband access and communication services across Africa, using low-cost, innovative business models and technologies.
Although my journey is – hopefully – nowhere near its end, I suspect that some of the most important lessons still lie ahead. Every day, when I step into the office, I feel that in some small way I am making a contribution to changing the world for the better. That sense of mission makes every problem surmountable and every victory more meaningful.

Making a difference: Irene Charnley’s journey in the corporate world

Celestin Rwabukumba is the fresh-faced father of the Rwanda Stock Exchange. Every morning he breezes into work in Kigali with business in his head and the fragile future of one of Africa’s newest stock exchanges in his hands.
“As a country, the sky is the limit,” he says.
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At the age of 39, Rwabukumba must be one of the youngest stock exchange leaders in the world.  Despite his tender years, in business at least, Rwabukumba has every justification to call himself the sage of stock trading in Rwanda. His story is as remarkable as that of the tiny exchange.
Rwabukumba is a survivor of the genocide in Rwanda in 1994. He lost most of his family, including his father, who died in the 100 days of madness that claimed more than 800,000 lives. Like many in Rwanda, he is reluctant to dwell on the horrors that visited upon his family and I do not have the heart to ask him.
What is clear is that Rwabukumba fled his country to the United States where he studied at the University of Buffalo, near New York, and earned a degree in economics. He became a stockbroker in New York and worked on Wall Street.
In 2004, came the call from home and Rwabukumba returned to Rwanda to work on a project to set up capital markets. It bore fruit in 2008, when Rwanda set up a rudimentary over-the-counter exchange, with a whiteboard and marker pens that you only see in schools these days.
On January 3, 2011, the Rwanda Stock Exchange was born in the brand new high-rise building that towers over Kigali. The building itself, is a symbol of the triumph of capital over disaster.
“For many Rwandans, like me, it has made us stronger as a nation. We are a resilient people ready to fight for a better future,” says Rwabukumba.
The RSE may be a speck on the African capital landscape, but it is growing in strength. It must be one of the few exchanges on earth where you can list the listings in one short sentence: NMG, a cross listing from Kenya; KCB, a Kenyan bank; Bralirwa, a brewery in Rwanda and the Bank of Kigali.
Trading is growing slowly; the marker pens are still there. The exchange plans to go electronic in December.
Every day the traders, in their bright red jackets, write out trades that it would take merely seconds for other African exchanges to notch up. In 2011, the RSE traded an average of $131,000 a day; in 2013 this has more than doubled to $292,000.
“My dream is for a big telecommunications company, like MTN, to list here. That would bring more capital and confidence to our market here,” Rwabukumba says.
Rwanda appears far from short of confidence as it emerges from the kind of hell that it has taken other countries in Africa decades to recover from. For the last 10 years, a time when the economies of the world struggled, Rwanda’s economy has grown by an average of 8.2%, according to finance minister Claver Gatete.
“This year, we are predicting 7.5% at the very minimum,” says Gatete.
Gatete, a former ambassador to London and head of the National Bank of Rwanda, took the job of guiding his country’s economy in February.  He says the key to success is the country’s stability and its prudent economic policy that has made it the third easiest place to do business in Africa. The country has fast internet and a will to do business. Credit card giant Visa gave Rwanda a vote of confidence by choosing the country for one of its credit card programs.
“We have come a long way, we have reached the bottom, the only way to go up is to make sure we take ownership of the growth of our economy and sustain it,” says Gatete.
You can register a company in Kigali in six hours and move your money in and out freely. Inflation, in the years after the genocide, was as high as 65%, now it is down to single figures.
Rwanda is also pushing forward the East Africa Community, the trading bloc of one of the fastest growing regions in the world. It has helped speed up trade across it by removing cloying weighbridges and bureaucracy; at the same time bringing in ICT to reduce clearing times.
Corruption is low and the country’s president Paul Kagame has built strong institutions in Rwanda to ensure it doesn’t get a foothold. In many ways the erudite and pragmatic Kagame, who talks like a CEO, has worked hard to shape the country into Rwanda Inc. It was he who encouraged many skilled Rwandans to return home and it is he who sees toughness as the only way to run his country. Legend has it that Kagame has appeared in person in government offices to fire corrupt officials.
“I don’t know about that, but he can fire you across the table in a meeting,” chuckles one of the Kigali inner circle.
When Rwanda struggled to sell its low quality coffee, Kagame brought in a team of United States agronomists to work out how the country could turn it into super-premium grade for export. Commodities, including tea and coffee, now make up more than three quarters of export earnings.
The streets of Kigali are clean and without potholes. Every month, Rwandans, including the president, take a few hours out of their day to clean and repair their neighborhood. Crime is also low among a people who appear exceedingly weary of conflict.
This dedication to order and business reflects on the Kigali skyline. The so-called land of a thousand hills is well on the way to becoming the land of a thousand cranes. The capital, once smashed and littered with dead, is rebuilding from the ground floor upwards. I have been traveling to Kigali since 2005 and was heartened to see new hotels, a sign that strong investment is on the way and accommodation prices could soon be on the way down.  I also saw one of the hotels had a lucky red Chinese lantern hanging from the scaffolding.
The rise from the ashes by the economy of Rwanda has been a remarkable story, but there are problems too. There is a lack of skills and the country’s small coffers are likely to struggle to buy all of the resources and equipment needed for a growing economy. Most of Rwanda’s 45 million people crowd onto scarce land and live from subsistence farming.
Maybe the biggest threat to the investor-friendly stability that Rwanda is trying to build comes from outside its borders. In the unstable eastern region of Goma, in the Democratic Republic of Congo, insurgents fight a running war. A number of donors cut off aid this year after accusing Rwanda of supporting the M23 rebels in the DRC. Rwanda denies this strongly. Gatete hopes private money will replace lost donor funds.
“Rwanda believes that in order to succeed peace is very, very crucial, that is why, when it comes to the DRC, we are the first to support the peace, and we believe that a solution is a regional solution working with the DRC government,” says Gatete, when asked by FORBES AFRICA about the allegations.
At home, many in Kigali say opposition is discouraged, to say the least. Two Rwandan journalists emerged from prison in August after completing a three-year jail term for what the courts called divisionism, genocide denial, defamation and incitement to violence. The two had written a series of articles critical of the government.
“The whole world is not homogenous. We cannot cut and paste democracy for something to look good. It has to work for us. We do not have the kind of democracy where we have a politician saying one thing and then the next day the opposition goes on the radio to say it is wrong. We have a parliament where all members can give constructive ideas,” says Vincent Karega, Rwanda’s ambassador to South Africa.
There is also the question of who will lead Rwanda when Kagame completes his term in 2017.
For the future, Rwanda is banking on ICT and the services industry. Kagame has studied the Asian Tigers and wants to make Rwanda the Singapore of Africa. The country has invested in hundreds of schools and colleges in an attempt to train a workforce capable of making this dream happen.
Many African countries could take a leaf out of Rwanda’s book when it comes to building an economy. True, Rwanda is a small country where it is easier to carry out sweeping changes among a people who are steeled to suffer for a better future by the violence and upheaval that befell their forebears. Taking that into account, there is no reason why many other African nations could not equally take advantage of the free market forces that Rwanda is unfettering by welcoming investors, fighting corruption and speeding up the internet.
Looking ahead, could there be a problem if the government in Rwanda feels it has lost control of its country to wealthy foreign investors? Unlikely, while this generation of politicians rule the roost.
“We want that,” says Gatete, “We need the private sector to be with us to build our economy… This is inclusive of the economic growth that is touching the lives of everybody and everyone is seeing the benefits of what the government is doing.”
It appears Rwanda Inc. is likely to be open for business for a long time to come.

Rwanda Inc. Rules In The Land Of A Thousand Cranes

A new generation of African entrepreneurs and businesses is emerging. They are challenging the old way of doing business and driving cross-border growth.
Kenya’s ICT companies are investing in Rwanda and are now looking to enter Nigeria, while United Bank for Africa and other Nigerian banks are rapidly expanding into Africa. In 2009, South Africa invested $1.6 billion (FDI outflows) into other African countries. MTN, a South African mobile giant, operates in 21 African countries; and Glo, a Nigerian mobile operator, operates in the Republic of Benin, Ghana and Côte d’Ivoire.
Africa’s statistics speak of tremendous potential: the continent is the size of China, Mexico, Europe, India, the States and Japan combined. The population will soon surpass China, with a middle class as big as India’s. Africa has enjoyed more than a decade of sustained GDP growth, which has often outstripped many other parts of the world.
There is frustration in that Africans are not reaping the rewards of the current global investor confidence. The mass export of commodities doesn’t see wealth trickle down.
Home-grown investments, focused on value-adding industries, are the key to changing this dynamic.
Africans still seem to choose products and investments from outside the continent. They prefer to export outside Africa rather than to trade, manufacture and add value within. Many African countries continue to trade raw materials but they don’t have the capability to refine or process, so they import the finished products from outside of Africa.
We need to understand what is preventing Africa from being home to value-adding and value-creating businesses. Why, for example, is Africa’s agricultural richness not generating an integrated growing and processing industry as it has done in Brazil?
Africa requires an environment that facilitates investment and greater market integration. The current weaknesses—corruption, high start-up costs, poor infrastructure—are well-known. But our study will also shed light on the legal, social and cultural differences within Africa that restrict cross-border investments.
There need to be integrated regional production chains within Africa, where Africa’s raw materials are processed into finished goods to be traded. Regional trading blocs— including the Tripartite Free Trade Area, which encompasses the East African Community, the Common Market for Eastern and Southern Africa and the Southern African Development Community—would thus thrive, paving the way for a Continental Free Trade Area, that would produce and trade high value-added goods internally.
Greater market integration in Africa will lead to a significant reduction in the cost of doing business and alleviate some of the problems associated with securing work permits and labor mobility.
Over the long-term, Africa’s competitiveness will hinge to a great degree on how well we educate our young people. Often, the most talented Africans have sought educational advancement and careers overseas, but a combination of transformational educational technology, growing opportunities at home and the poor global economic climate could see this brain drain becoming a brain gain. Retaining talent, home-grown or otherwise, is critical. Policy that enables skilled Africans to work across our borders more easily will help achieve this goal.
Never have circumstances been more propitious for African business. A rise in disposable incomes, high rates of urbanization and a fast-growing working-age population speak of an emerging class of purchasers of consumer goods, financial services and infrastructure, as well as a potential source of manpower for industrialization and agricultural development.
Africans must explore ways to move beyond regional differences and competition to build Africa together from within, so that Africans at all levels become the primary beneficiaries of the continent’s growth.

Unite And Prosper

South Africa lives and breathes football. Like oxygen, money is being pumped into the game in the form of prize money.
South African bank Absa renewed its sponsorship of the Premier Soccer League (PSL) for the next five years. The Absa Premiership is the richest sport competition in Africa, with R16 million ($1.9 million) up for grabs.
The current season will be different from previous seasons as it will be divided into four quarters, to be called the Q-innovation—the first of its kind in the world. As there are 16 teams in the PSL, each team will play 30 games throughout the season. The four quarters will alternate between seven and eight games, beginning with seven games in the first quarter. The winning team of each quarter will win R1.5 million ($182,600). The overall winner of the Absa Premiership will win R10 million ($1.2 million)—this means that there is a possibility of one team winning up to R16 million in a season. A bonanza for even the wealthiest of clubs.
Irvin Khoza—known in football circles as the Iron Duke—is chairman of the PSL and of the reigning league champions, Orlando Pirates. He is delighted with the renewal of the Absa sponsorship as well as the extra prize money.
“At the PSL, we are very excited with the Absa sponsorship and the new innovation that we have come up with,” he says.
“The prize money is very encouraging and surely it will help improve the standard of our football. When you look at our fixtures these days there is no game that is predictable because anything is possible in terms of the results. So it is going to be a very interesting season whereby all the teams that are competing in the PSL will be determined to do well from the beginning. We have very passionate supporters and fans who follow the progress of the PSL and we hope they will enjoy the quality football that the teams will be displaying on the field of play.”
MTN, the African cellphone giant, has also shown confidence in the PSL and has renewed their sponsorship for the next three years meaning that the MTN 8, with its popular slogan ‘Wafa Wafa’, will continue. The- winner-takes-it-all competition is one of the most-fascinating knockout cup competitions whereby, after merely four games, the champions win R8 million ($969,700).
MTN South Africa chief marketing officer, Serame Taukobong, is content that after a very successful four years of partnership with the PSL, which has benefited South African football, they will continue to invest in local football development and upcoming football stars.
“The MTN 8 is unique and is a very interesting competition that many people follow, hence we are so pleased that our partnership with PSL continues. It is even more exciting because we have the competition for the fans whereby they also have the opportunity to win some great prizes. We are looking forward to celebrating many more milestones in this MTN 8 exciting cup competition,” says Taukobong.
This season the football fans have shown great interest in attending the MTN 8 games—whether it’s the inexperienced or seasoned teams playing—crowds have been impressive. As the MTN 8 cup competition happens during the early stages of the season it showcases each team’s new players.
MTN was involved in bringing the world famous Manchester United to South Africa during their pre-season tour friendly games against Amazulu and Ajax Cape Town. By the way, if you need an example of how much money really is in football, Manchester United—the most valuable sporting brand in the world—is worth $2.23 billion. The fact that the two small PSL sides could compete on the same level as the nineteen-times English champions is a clear indication that the standard of football in South Africa has shown signs of improvement. Players across Africa show great interest in plying their trade in South Africa because of the magnificent stadium facilities and high salaries. Some top players in the PSL—who play for the big teams like Kaizer Chiefs, Orlando Pirates and Mamelodi Sundowns—earn more than some of the overseas players. These top earners include: Sundowns captain Teko Modise; Pirates striker Benedict McCarthy and Chiefs forward Bernard Parker.
The Telkom knockout cup is another competition in the PSL, which attracts interest, especially due to the R4.2 million ($511,000) prize money and the awards presented to individual players. What is encouraging for football in Africa is that the Nedbank Cup allows small teams from the lower divisions to participate, in what sometimes turns into a David-and-Goliath showdown for the R6 million ($729,600) prize money.
SuperSport, the satellite television channel which broadcasts across the continent, has been granted the television rights worth around R2 billion ($243.3 million) to broadcast the games live. Football clubs benefit greatly from these television rights because they get the grant from the PSL which helps them with funding. They can prepare for games properly, afford to stay in five-star hotels; travel on expensive flights, hire reputable coaches and pay good salaries to their players.
It appears failure is no barrier to the flood of cash into the South African game. The national team, Bafana Bafana, has performed poorly in recent games. The team failed to qualify for the last African Cup of Nations and struggled in the qualifying games of the World Cup against weak teams such as Ethiopia and Botswana.
Despite its lukewarm game, Bafana Bafana got a large financial boost from SABMiller, the owner of Castle Lager, which renewed its sponsorship of R100 million ($12.1 million) for the next five years.
The FIFA 2010 Football World Cup was a big success in South Africa when it comes to the organization of the event. The legacy continues as more and more investment pours into the country. Furthermore, South Africa will benefit for decades to come from its world-class stadium facilities and infrastructure which was built for the championships.
In the 1960s, Orlando Pirates used to travel hundreds of kilometers from Johannesburg to Durban on the back of an open truck. Now, they could afford to fly in private jets and the money, despite the recession, appears as likely as the Indian Ocean to dry up.

Football is Money in Africa

Crossing Pont Félix Houphouët-Boigny in Abidjan, you get to see Côte d’Ivoire’s dichotomy clearly. In front of you, mid-rise buildings glow with neon lights through the darkness: Pepsi, Mitsubishi, MTN create a mask that hints at prosperity. But the queues of young men waiting on street corners and the cranes pecking at the drifts of garbage on the water’s edge tell a different story.
Once the region’s most sophisticated economy, Côte d’Ivoire is now a case study for the economic impact of conflict and political paralysis. But even though its election descended into violence and the country teetered on the brink of another civil war, the much-delayed completion of the transition from post-war junta to democratic state has put Côte d’Ivoire back on the path to regaining some of its former glory.
A shaky cease-fire, signed in 2003 to hold the country together after an attempted coup, led to a government that controlled the south—under Laurent Gbagbo—and a north run by Forces Nouvelles rebels.
During that limbo, investors talked about the country’s potential and the build up of money that was waiting to be released once the election finally passed. But it was delayed, then delayed again, until it seemed as though the delay would be interminable. While regional neighbors, such as Ghana, saw their economies boom and attract international investment, Côte d’Ivoire was in stasis.
In November 2010, there was one last twist. The incumbent old warhorse Gbagbo refused to yield, leading to a violent standoff. The victor, Alassane Ouattara, formed a government within the compound of the Golf Hotel in Abidjan, protected by a ring of UN peacekeepers while militias fought in the city around them.
Escalating international pressure and financial sanctions eventually led to the collapse of Gbagbo’s support. Ouattara, a former International Monetary Fund official, took over in April last year but not before the country had defaulted on its bonds by failing to make coupon payments to international creditors London Club, while its assets were frozen.
His early achievements—in reassuring investors that the arrears would be repaid and getting backing for debt relief from France—were encouraging, and today in Abidjan there is a cautious optimism. The city is not visibly transformed from two years ago, but construction projects are restarting and traffic is building. Though the change has not been dramatic, the lifting of the deadlock means that companies can finally plan beyond the short term.
“There’s a sense that a lot of things are possible,” says the director of the private equity firm Emerging Capital Partners’ (ECP) Abidjan office, Brice Lodugnon. The security situation has improved and there’s some certainty over the direction of the government, which has pledged to increase spending on infrastructure and agriculture.
The good news is that at least around Abidjan, infrastructure and utilities still function. There are good companies in many sectors and a relatively strong system of governance. Key industries, including financial services, are competitive and the country is still the world’s largest exporter of cocoa. But while Côte d’Ivoire has some of the political risk of a post-conflict environment, it does not have an abundance of underpriced opportunities. That’s a problem for investors.
Even before the crisis, there were tentative expansions into previously politicized industries, including cement making and flour milling, with companies from North Africa, as well as the country’s large French and Lebanese expat communities, moving into manufacturing and processing. Agribusiness group Olam has pledged a further $200 million in investments, while ECP is expanding its portfolio in the power sector. Rather than looking for a new cohort of investors, Ouattara’s government might find more support from those existing players, now free to make long-term plans.
Many businesses were battered by the 2011 crisis but now stoically downplay the human cost of that period, talking instead of the relief at their newfound ability to plan beyond the short term. Still, the scars are there. At the height of the violence, pro-Gbagbo forces executed one of the country’s largest foreign investors—Yves Lambelin, the former president and patriarch of Sifca. That story gets told regularly.
International investors speak highly of Ouattara. One CEO of a multinational operating across the continent said that the president—while his ability to create a government is unproven—is one of the most accomplished leaders in economic planning in Africa.
Politics are bound to be difficult. An hour’s flight north of Abidjan is Ouattara’s hometown of Bouaké, until recently the headquarters of the Forces Nouvelles. There, the difference in development is marked. The roads are in worse condition and the security presence, in the form of UN peacekeepers from Pakistan, are far more visible. People living there refer to the country’s “reconstruction”.
Further up country the situation is worse, with an entire generation denied access to education after the southern government abandoned schools. An executive in a cotton company, with an extensive presence in the north, called the state of some areas “appalling”.
Making sure that the country’s redevelopment is even and that the government—headed by a northerner—does not re-open divisions that are still fresh, will be a massive task for the new president.

Healing The  Divide Will Be  No Easy Task

<div id="attachment_326" style="width: 272px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-326" class="wp-image-326 size-medium" src="/wp-content/uploads/2017/04/Airtel-037-262x300.jpg" alt="" width="262" height="300" />Manoj Kohli</div>
Forget oil and gold, there is new treasure in Africa—mobile phone subscribers. By the end of 2011, Africa will have surpassed the half a billion mark in mobile phone subscribers and the number is rising. In 2008, there were 246 million and three years later, this number has nearly doubled.
Manoj Kohli is at the heart of this growing business as the CEO (international) and joint managing director of Bharti Airtel. It launched in November 2010, after acquiring Kuwait-based mobile telecommunications company Zain for $8.3billion. The company inherited operations in 15 countries, cementing its position as the world’s largest single country mobile operator.
As of March 31, 2011 the operator had 220 million customers around the world and $5.9 billion in revenue. At the time of this interview, Airtel had hit 50 million paying customers in Africa; its target is 100 million customers by 2013.
“The Bharti Airtel business is doing well and we are satisfied with our first year in Africa. We are making good progress on all fronts, in terms of financial performance, market growth, market share growth, cultural aspects, government relationships and brand equity. We are happy that the first year has gone very well,” says Kohli on the seventh floor of Parkside Towers, the Bharti Africa headquarters in Nairobi, Kenya.
Bharti, the number one player in India, landed in Africa knowing that it was going to have to fight it out with established players like Britain’s Vodafone, South Africa’s MTN, France Telecom (Orange) and Luxembourg’s Millicom.
“India has a population of 1.2 billion and Africa has about one billion. India is very diverse; Africa is more diverse not only because it is large geographically, but it also has different communities, different countries and therefore different governments and regulations—whereas India is one nation, with one language, one government, one currency, one time zone, and one cricket. Therefore, in that aspect India is less diverse than Africa. Both have scale in terms of population and opportunity, but because Africa is more diverse, it makes it more complex. India has 13 to 14 competitors, which is not viable for any market. Africa has anywhere between three to five major competitors but the quality of competition is good,” says Kohli.
The Airtel brand made its presence felt by slashing call rates, sparking a price war in major markets. In Kenya, for example, where Airtel is number two—with 3.6 million subscribers by June 2011—there was a major decline in average tariff for on-net calls from KSh3.92 ($0.04) per minute to KSh2.67 ($0.03) per minute, according to the industry quarterly statistics in May from the country’s industry regulator, the Communications Commission of Kenya. Bob Collymore, Safaricom’s CEO, was quoted as saying that the price cut was “morally reprehensible”. Safaricom is Vodafone’s brand in Kenya. As the new kid on the block, Airtel was not letting up and Safaricom followed suit.
As Kohli looks back at Bharti’s performance in the last year, he says the company has established its brand. This, Airtel has successfully done by associating itself with the youth and the two big passions in Africa—music and football. In 2010, the operator brought together American R&amp;B musician R Kelly and eight African music superstars—2Face, Amani, 4×4, Movaizhalene, JK, Alikiba, Fally Ipupa, and Navio.
In football, Airtel has partnered with Manchester United in launching the Airtel Rising Stars program for under-17 boys and girls in 15 African countries.
The second major milestone, says Kohli, has been replicating Bharti’s Indian business model in Africa.
“It is still a work in progress, but all the initiatives of bringing in our global strategic partners like IBM, Ericsson, Nokia and Huawei have kicked off, which is a huge transformation for Africa. For example, IT education, training and employment will go up because IBM has come along with us to various countries in Africa.”
Bharti has entered into a 10-year agreement with IBM where the latter will install and manage the operator’s information technology infrastructure and applications in line with its objective of ensuring affordable and innovative mobile services in Africa.
In the coming years, Bharti has several strategies. One is taking networks deep into Africa’s small towns and villages not currently covered by mobile networks. The second is a wide distribution.
As Africa opens up, thanks to fiber optic cables, Bharti is keen on enhancing the internet culture in Africa through 3G data. Already, the operator has 3G licences in 12 African countries. In November 2011, Airtel was awarded licences to operate 2G and 3G GSM services in Rwanda.
Although Bharti is betting on 2G and 3G services to increase penetration, the telecom brand is also eyeing a mobile money service, already  a major cash-cow for Safaricom—to date, $1.8 billion has been transferred through its money transfer service M-Pesa, which was launched in 2007.
Kohli admits mobile money has been a small aspect in the business because in India, the business has had to comply with strict restrictions by the Central Bank. “Our M-commerce product will be a great differentiator for us in the long-term,” he says.
According to Jupiter Research, the number of active users of mobile money services will exceed 200 million by 2013. Nearly 40% of active users by 2015 are expected to be in Africa and the Middle East.
Looking into the crystal ball, 2012 will be about supremacy and transformation of wireless broadband. “There are many countries that are already mature on the voice side, but on the broadband, they would like to have more capacity and better experience. In Africa, where the average subscriber age is 18 years old, there is a propensity for youth to need voice (2G) and internet (3G),” says Kohli.
As far as mobile use in Africa goes, the only way is up; 2012 is likely to see massive investment aimed at increasing internet penetration through wireless internet.
The other growth will be driven by penetration into Africa’s smaller towns, not covered by wireless. This expansion will see the further growth of M-commerce as more of the unbanked population log on.
For new technology, Kohli says his company will test 4G in India first.
“Regulators in Africa will have to make licences for that and it could take anywhere between two to three years.”
Bharti Airtel will invest nearly $1.5 billion in its 2011/12 financial year. Also in 2012, there will be HSPA+ (an evolved high-speed packet access) to Africa. This will see internet speeds of up to 21 megabytes per second.
So does Kohli see more investors coming to Africa in 2012?
“I believe that in small countries, the viability of operators beyond the third is not likely. In small markets, I don’t think you will have more than three players. In larger markets, it could be four; I think that is the right level of viable competitive intensity for Africa, primarily because huge investments are required for Africa and it is very important that the operators are financially healthy for them to make all those investments in the coming five years.”
As a first-time investor in Africa, Bharti is grappling with poor infrastructure and power shortages. For a company that has to run its networks round-the-clock, it has forced the operator to turn to diesel generators which is obviously pushing up operating costs.
“That is why we are converting many of these sites to be run by solar and wind energy because the diesel cost is high and we want to avoid polluting the environment.”
The other hurdle for Bharti has been a high cost structure. The operator is benchmarking with its Indian operations, where costs are significantly lower. To deal with this, the operator is exploring economies of scale and sharing. “We are currently engaging regulators and competitors to support sharing of passive towers, networks and fiber optic. In some countries we have already had positive responses.”
In an earlier interview, Kohli told telecomasia.com that Bharti was talking with Etisalat, MTN, France Telecom, Millicom and Vodafone.
Bharti also has to handle the problem of weak telecom skills in Africa. “Ideally, we would like 100% of employees in each country to come from the country itself. However, this is not possible today because many skills are not available locally. Therefore, we have to bring skills from other countries in Africa, as well as from India. But we are determined that in the next two to three years, we will invest a lot in building these skills in each country and grow young African leaders to lead our operations in their home countries,” he says.
Kohli adds that, despite the challenges, Africa is still a great place to do business because of the available opportunities of growth and a growing population that is embracing technology. “In India, infrastructure only improved in the last 10 years. The cost structure is lower because India has a local manufacturing and service sector whereas in Africa, the manufacturing and service sector is not as big. India has gone through that improvement period in the last decade and I am confident that Africa will go through a similar improvement period in this decade.”
With unemployment plaguing the continent, Bharti wants to contribute towards job creation by involving young entrepreneurs in its business operations.
“We are developing young entrepreneurs who like technology and would like to sell technology as distributors of our various services and products. There is tremendous scope. Silicon Valley and India have many entrepreneurs doing outstanding work for value-added services, content creation, new applications. I am confident that in the next two to three years, young talent from Africa will also work towards development of new value-added services and applications.”
Kohli believes telecom can be the growth engine for the continent.
“Because the infrastructure in Africa is weak—roads, rail and air connectivity—it makes telecom an integrator that can bring speed, efficiency and productivity to Africa. With internet wireless broadband coming, I think the contribution of telecoms will be far greater in the next three to five years in building Africa into a strong economy, with growth going up from 4-5% and maybe 8-9% in the coming five years.
“India went through the same curve. We had a 4% rate of growth and because of IT and telecom, we have gone up to 8-9%.”

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