The Promise of Telecom Infrastructure for Africa

A recent article by Richard Wray and Fahad Mayet of the Guardian analyzes the connection between Africa’s telecommunications infrastructure, in particular its growing mobile phone network, and the prospects for economic growth. According to the authors, in sub-Saharan Africa, “a mobile phone can be a passport out of poverty.” Telecommunications infrastructure reduces costs of interaction, expands market boundaries, and improves information flows.

Citing research by Professor Leonard Waverman of the London Business School and others, Wray and Mayet note that Africans use their cellular phones for various business needs: retailers call suppliers for price quotes, farmers check weather reports, traders call contacts to determine what is needed at the market. In addition, mobile phones help remote villagers access medical advice and help doctors in regional hospitals get advice from senior doctors in cities. The authors also observe that the cellular industry in Africa has spawned intermediary services, such as mobile phone recharging.

Royal Dutch Shell – Nigeria Joint Venture at Risk

A recently leaked internal memo from Royal Dutch Shell’s chairman of Nigerian operations, Basil Omiyi, and comments from Shell’s CEO, Jeroen van der Veer, raise serious concerns regarding the future of the Shell-Nigeria joint venture. The memo lambasts the Nigerian government for its failure to adequately finance and support the Shell Petroleum Development Company (SPDC), the Shell-Nigeria oil and gas exploration and production joint venture. The memo, circulated on November 14, 2007, was reported by the Financial Times on January 30, 2008. According to Financial Times, the memo accuses the Nigerian government of failing to finance its 55 percent majority share in the Shell Petroleum Development Company (SPDC) . On January 31, Reuters reported that Shell was taking a write-down of $716 million related to its Nigerian assets. In a statement covered by Reuters, Shell said the write-down largely related to onshore assets, including impairments and provisions arising from funding and the security situation in Nigeria.

Bill Gates Steps Up Effort to Promote African Development

In a January 24 front page Wall Street Journal interview, followed by a keynote speech at the World Economic Forum, Microsoft Chairman Bill Gates stepped up his campaign to focus the world attention’s on the needs of developing countries.

The Wall Street Journal interview was a precursor to Gates’s speech at the World Economic Forum in Davos, Switzerland. Advocating a movement for “creative capitalism”, Gates stated in the interview, “We have to find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well.” In addition to emphasizing two important forces, self-interest and caring, Gates’s speech draws attention to a third force that he believes should be used to motivate efforts to improve the lives of the poor — the desire for recognition:

“I hope that the great thinkers here will dedicate some time to finding ways for businesses, governments, NGOs, and the media to create measures of what companies are doing to use their power and intelligence to serve a wider circle of people. This kind of information is an important element of creative capitalism. It can turn good works into recognition, and ensure that recognition brings market-based rewards to businesses that do the most work to serve the most people.“

The text of Gates’s speech is available on the Gates Foundation website. The Gates speech was also covered by the Boston Globe.

4th Tokyo International Conference on African Development Scheduled for May 2008

The planning process for the Fourth Tokyo International Conference on African Development (TICAD IV) is well underway. The first conference was held in 1993 and subsequent conferences have been held every five years. The Japanese Ministry of Foreign Affairs has released a concept paper with the theme — “Towards a Vibrant Africa: Continent of Hope and Opportunity.” The conference will be held from May 28 to 30, 2008, in Yokohama, Japan. A key goal of the conference is to further mobilize the knowledge and resources of the international community to help ensure that growth in Africa is self-sustained, pro-poor, and inclusive. Priorities include trade and investment, infrastructure development, and agriculture. The concept paper also emphasizes the need to support South-South and triangular cooperation, in particular, Asia-Africa and Intra-Africa cooperation.

For more information, see:

• TICAD IV homepage (Japan Ministry of Foreign Affairs)
• TICAD IV Concept Paper (Nov. 2007)
• TICAD UNDP website

Launch of Pan-African Satellite Offers Promise of Improved African Telecommunications

On December 20, RASCOMSTAR-QAF launched the first telecommunications satellite dedicated solely to the African continent. The satellite was built by Thales Alenia Space under a $150 million turnkey contract with the Regional African Satellite Communication Organization (RASCOM), a treaty-based, inter-governmental organization. RASCOMSTAR-QAF is the pan-African operator in charge of deploying and operating the satellite, including system financing, design, supply, construction, installation, reception, and maintenance.

The satellite will provide fixed voice and data, Internet access, and broadcasting services. In particular, the satellite should help improve Internet and telecommunications connectivity in rural communities that currently have limited, if any, access to phone and Internet services. The dedicated satellite will reduce costs and improve pan-African inter-connectivity for African telecom operators.

Thales Alenia Space is a joint venture between Thales (67%), a French aerospace, defense, and IT company, and Finmeccanica (33%), an Italian aerospace and defense company. RASCOMSTAR-QAF, registered in Mauritius, is a joint partnership of LAIP (33%), GPTC (29%), RASCOM (26%) and Thales Alenia Space (12%).

For more information related to Africa’s first dedicated telecommunications satellite, see:

• Press Release from Thales
• RASCOM inter-governmental organization homepage
• RASCOMSTAR pan-African satellite operator homepage

IBM Expanding Operations in Africa

In a wave of well-publicized recent announcements [Fortune, Voice of America, Forbes, MarketWire, MarketWire 2] IBM announced it will be greatly expanding its activities in sub-Saharan Africa in 2008. IBM’s plans include: (1) an $120 million increase in investment in Africa over the next two years; (2) an Africa Innovation Center housing a High Performance On Demand Solutions lab in Johannesburg; (3) hiring 100 new professionals to meet growing regional demand for services, global delivery, and software development; (4) donating a $1.5 million BlueGene/P supercomputer to the Center for High Performance Computing in Cape Town; and (5) a joint venture with CARE to create an Africa Financial Grid for microfinance institutions. IBM currently has offices in 20 African countries.

The Africa Innovation Center, scheduled to open in the second quarter of 2008, will provide advanced software development capabilities and access to high-end servers and storage equipment. The Africa Financial Grid will consist of a shared services and infrastructure model to help microfinance institutions expand into other services, such as micro-insurance, bill pay, credit scoring, and international remittances. IBM will design and manage the Grid’s technology platform and CARE will provide local resources and infrastructure. The BlueGene/P supercomputer will be hosted by the Meraka Institute, a nonprofit technology and economic development organization. According to Forbes, the supercomputer will be used for programs requiring extraordinary processing capability, such as modeling the local effects of climate change, identifying more efficient ways to process local minerals, and predicting the spread of infectious diseases. IBM also named Dr. Robert Mayberry as Vice-President, Emerging Markets, Sub-Saharan Africa.

Nigeria Anti-Corruption Campaign Suffers Major Setback

Nigeria’s law enforcement agency recently announced that it was reassigning Nuhu Ribadu, the current Chairman of the Economic and Financial Crimes Commission, to a remotely located training institute for at least a year. According to the New York Times, Ribadu “has risen to become one of the most powerful and feared figures in Nigeria.” His aggressiveness in combating government corruption have been lauded at home and by the West. Not surprisingly, his willingness to take on powerful Nigerian politicians has put him in a precarious position. The move to sideline Ribadu was quickly condemned by activists, including Nigerian Nobel Prize laureate Wole Soyinka, as a step backward in the effort to clean up Nigeria’s government. According to Soyinka, “it is the ruling party itself, the PDP, that continues to suffocate the nation in its folds of corruption, negating every attempt to rid her of this incubus, since that party has exhibited itself, again and again, as the very quagmire of corruption, nurtured on corruption, sustained by corruption and dependent on corruption for its very survival.”

The Business of Health in Africa

The Business of Health in Africa, a new study commissioned by the International Finance Corporation (IFC), surveys and analyzes sub-Saharan Africa’s rapidly growing private health care industry. The study was conducted by McKinsey & Company and largely financed by the Bill & Melinda Gates Foundation. The study notes that the private health care sector in Africa is surprisingly large and constitutes an important, diverse component of the region’s health care systems. The study estimates that total health expenditures in the region will increase from $16.7 billion in 2005 to $35 billion in 2016. In addition to chronicling the constraints facing the provision of health care in Africa, the study makes five key policy recommendations. The study urges stakeholders to: (1) develop and enforce quality standards, (2) foster risk pooling programs, (3) mobilize public and donor money to the private sector, (4) modify local policies and regulations to foster the role of the private sector, and (5) improve access to capital. In conjunction with the release of the report, the IFC announced that it is launching an initiative to mobilize up to $1 billion of investment and advisory services support over the next five years. IFC’s strategy includes creating an equity investment vehicle for health care entrepreneurs and businesses, partnering with local financial institutions to improve access to long-term debt for health care organizations, and supporting country assessments and a biannual report on the climate for health care investments.

World Bank and China to Cooperate in Africa?

A Financial Times story on December 18 reported that the World Bank and China have agreed to undertake joint development projects in Africa. Robert Zoellick met with the Chairman of China’s Export-Import Bank during a recent visit. It remains unclear, however, whether the leaders of the two banks will succeed in moving from vague statements of their desire to cooperate to true cooperation in development lending. Zoellick’s comments were also covered in an article by the Associated Press — China Sees Rising World Bank Influence.