Out of the East

Asia’s growing influence in Africa is receiving worldwide attention. China’s investment in Africa will top $100 billion dollars this year making it the continent’s biggest trading partner. There are 800 Chinese companies with over 4 million Chinese people living and working there. China’s impact on Africa, as author Richard Dowden observed, is the biggest economic shift of the twenty-first century.

Now, the story of Asia’s push into Africa is being revised to highlight players from India. In June, Bharti Airtel, India’s largest mobile carrier – the 5^th largest telecom in the world – bought Kuwait-based Zain’s operations in 16 African countries for $10.7 billion in cash.

Bharti has been eager to grab a piece of Africa’s growing mobile market for some time. In 2009, it tried to buy MTN, Africa’s largest carrier, but the deal failed due to regulatory roadblocks. Undeterred, Bharti pivoted quickly setting its sights on Zain.  By June, Bharti bagged its African trophy, though some analysts thought it paid too much for Zain’s assets.

The Bharti Recipe

Bharti didn’t waste any time plotting its next moves. By September, the carrier had chosen IBM, a partner since 2004, to run its network and IT for its 2G and 3G services in a 10-year deal worth over $1.7 billion.  IBM will manage the company’s data centers, servers and desktop operations.

This week, Bharti announced its selection of two Indian outsourcing specialists, Tech Mahindra and Spanco, to run its back office and customer care operations in Africa.

With its coalition of outsourcing partners in place, Bharti aims to streamline its sub-Saharan operation and cut costs to service Africa’s low-income markets. The carrier hopes to grow its 36 million subscriber base to over 100 million by 2012.

That’s an ambitious plan considering that Bharti will only control the product development, brand management and marketing portions of its business. Bharti thinks that these are the only functions essential to differentiating its offerings.

Multinational carriers have been relying on “managed services” companies that specialize in providing technology and customer care. Bharti pioneered and refined the managed services strategy in India for nearly a decade. Their model is considered an industry prototype.

The African Factor

Bharti’s gambit in Africa is unique in several critical ways: Africa is Bharti’s first market beyond the Indian sub-continent. The African market is both large and amazingly diverse. The sheer scale and complexity of their African foray is raising a critical question among industry analysts: Can a company, even one as disciplined as Bharti, get its arms around such a diverse amalgam of people, cultures and processes?

Jai Menon, group director of IT at Bharti thinks it can. He told the Economic Times of India: “The system was built in India and did operate in geographies where the diversity is huge — be it culture, language, devices and affordability. It will be the same across Africa. This system will address the entire pyramid, and not just the top or bottom of the pyramid.”

It will be interesting to watch Bharti choreograph its operations while launching its brand across Africa’s disparate social, economic and political cultures.They’ve begun by hiring African personnel from other carriers to assume key roles. Bharti will need to recruit more African talent to build a business culture that can realize the company’s aspirations.

Bharti brings to Africa an uncanny knack for squeezing out costs. India has been a hothouse for cultivating their scalable, ultra low-cost model.  If we’ve learned anything, it’s that Africa will likely present new and unexpected challenges.  In any case, Indian companies, led by Bharti Airtel, are emerging as major players in Africa.

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As always, I’d appreciate your perspective.

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Want more info?

The Economic Times of India’s (Oct 26)  piece : “Bharti splits $500 mn Africa deal among IBM, Tech Mahindra and Spanco”.

Bharti Airtel & IBM described their plan for Africa in joint video press release .

Want more context?

Richard Dowden’s quote in the post’s opening paragraph is from his ’08 book, Africa – Altered States, Ordinary Miracles.  His section (Ch 17) “Asia in Africa – new colonists or old friends?” sketches Asia’s  long  history in Africa. He writes, “India is following China’s path. Though its rise is less dramatic.  In a few years time maybe every reference to China in this chapter would be followed by ‘ and India’.”

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The World Comes to Africa

As the World Cup gets underway this week in South Africa—the first ever to be held on the African continent—the world media is turning its attention there.

Typically, coverage of Africa by the international media is limited to stories about intractable problems—disease, war, famine, and corruption. Many of the World Cup stories are taking a similar tact. Stories about the South Africa’s five new stadiums underscore the nation’s mounting debt while other pieces highlight its security concerns.

A lot of the coverage reflects the world media’s skewed view of Africa as a monolithic place that’s plagued with tragedy. Severe challenges do exist, but many African societies are quietly building their institutions and infrastructures.  It’s time the outside world views Africa through a broader, more accurate lens.

Scale and Diversity

Africa is a vast and diverse continent where triumph and despair co-exist with everything in between.  It’s the “in-between” that tends to be overlooked in coverage about Africa.

Outsiders tends to underestimate Africa’s scale. As writer John Reader points out, the U.S., China, India, and New Zealand, together with most of Europe, could all fit within Africa’s coastline. This enormous continent contains almost a quarter of the world’s land mass.

The continent is amazingly diverse. The continent’s billion people inhabit 53 countries and speak over two thousand languages arguably making it the world’s most diverse region.  Africa’s diversity extends to its topography, climate, and culture.

Despite its remarkable diversity, most outsiders tend to picture Africa as a homogeneous region instead of as a melange of distinctive ethnic groups and cultures that influence everything from art and music to social structures.

Author Richard Dowden observes, “Every time you say ‘Africa is…’ the words crumble and break.  Every generalization must exclude at least five countries. And just as you have nailed down a certainty, a defining characteristic, you find the opposite is true.”  Stark contrasts and rich diversity are Africa’s defining features.

Failed States and Model Nations

One need only look at Africa’s recent history to get a sense of its diversity. During the last decade, the Democratic Republic of the Congo (DRC) was ravaged by an incomprehensibly violent civil war where millions perished. Somalia maintained its role as one of the world’s most lawless and dangerous states. Zimbabwe, endowed with abundant natural resources became known for its delusional ruler, Robert Mugabe, who decimated his nation’s economy. It’s understandable that such dire cases grabbed the headlines and shaped the world’s perception of Africa.

But during the same period, Botswana, Seychelles, Mauritius and, to a lesser extent, Senegal, Zambia, and Namibia encouraged private investment, grew their economies, and improved their living standards.  Kenya focused on building its tech sector and similar initiatives were launched in Ghana and Tanzania.  Oil-rich Nigeria took steps to reform its institutions and diversify its economy.

In light of Africa’s stark contrasts and rich diversity, it’s fitting that the World Cup is hosted by South Africa, a nation where eleven languages are recognized as official and many more are spoken.  South Africa has the continent’s largest and most diversified economy, but it faces serious challenges including steep unemployment and the world’s highest HIV/AIDS rates.  Here, too, great promise and opportunity co-exist with poverty and despair.

I’ve been traveling to Africa since the mid-80′s and whenever I think I’ve found an explanation for why things are the way they are, I’m proven wrong.  There’s always an exception. Diversity rules in Africa.

I’ll be watching the World Cup matches and rooting for the six African teams who qualified. They’re all underdogs, but I’ve learned never to count Africa out.

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Post-script:  It was a treat to experience the World Cup from Accra, Ghana. The country’s Black Stars team beat the USA to make it to the quarter finals.  Here are images from that trip.

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What do you think? As always, I’d appreciate your perspective.

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