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.

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.