For most telecoms engineers, connecting people is the main component of the job description. For Mo Ibrahim, that spec took on a new meaning with his home-grown mobile telecoms firm, Celtel: through it, the Sudanese-born entrepreneur rewired an entire continent. In doing so, he made up for the failure of largely state-run fixed-line operators to provide any meaningful communications backbone.
Ibrahim, along the way, has been no stranger to adversity – especially from first-time investors in the region. “With Celtel we found it very difficult to borrow in order to fund our expansion, even though we were profitable, because foreign investors had an overly pessimistic view of doing business in the continent,” he tells Emerging Markets.
Turning the tables
But the former Marxist engineering student used investor ignorance to his advantage: “We clearly saw the wide gap between this perception and reality, and this lack of competition in some ways helped us.” The firm has now invested over $750 million over its 15 countries of operation, where it serves more than 20 million subscribers.
Ibrahim’s phenomenal success has set the precedent that “private investment in Africa is possible by harnessing the purchasing power of those at the bottom of the pyramid,” says Diane Coyle, who heads Enlightenment Economics, a consultancy specializing in new technologies. “The insight that you can make money out of poor people has encouraged many foreign investors into Africa.”
The economic gains of Africa’s mobile telephone boom cannot be overstated. According to a study by the Centre for Economic Policy Research, for every 10% of the population covered by a mobile network in Africa, GDP growth jumps on average by 0.59% per year.
The transformative impact of the technology isn’t just in its economic potential. Its political promise is formidable too. Across Africa, activists can now rally supporters rapidly, often beyond the watchful eye of the state. The mobile phone has democratized the flow of information and helped create new players in the political process.
Ibrahim’s business philosophy harkens back to a revolutionary ideology based on undercutting the legacy of colonialism. He explains: “There are too many sub-scale countries in Africa with too many regulations and frontiers; this is a big hindrance. Colonial borders are artificial and cut through ethnic groups and economic activities. What’s particularly frustrating is that African governments then go on to apply lots of red tape which undermines the business environment and regional expansion.”
Despite the obstacles, Ibrahim’s vision succeeded last September when Celtel created in East Africa the world’s only pure cross-border network.
Selling point
In 2005, Ibrahim sold Celtel for $3.4 billion to a Kuwaiti operator, MTC – in one of Africa’s biggest ever corporate finance deals. He retired from the business that he helped spawn to focus instead on philanthropy. This year, the veteran investor fronted $150 million to establish the Africa Enterprise Fund, a fund that will invest in financial services, mining and energy projects – but, crucially, only in companies that have a demonstrable plan to go pan-regional.
Since retiring, the tycoon has also waged a vocal campaign to promote good governance in Africa, to help local businesses flourish with the state’s support, rather than despite its interference. Last October, for instance, he launched the Mo Ibrahim Foundation, the aim of which is to nudge African leaders into doing better. Each year it will award a $5 million prize to the former African head of state whose governance record ranks the highest on the Ibrahim Index of African Governance – a measure of countries’ performance by such criteria as safety and security, rule of law and corruption, participation and human rights, economic opportunity, and human development.
Ibrahim believes it is important to have an African-led initiative fostered by civil society, which focuses on policies with measurable outcomes in terms of development and security, and is distinct from the Washington-based multilaterals. “There is some fatigue in the continent from all the advice we are getting from the rest of the world, and there are also clear limits to what African institutions can achieve. So civil society in Africa should be galvanized to take control of our own lives.”
African-led or not, Ibrahim acknowledges that the index may well “publish things some governments may not like.” Still, he argues: “Since we analyze the bread-on-the-table policy outcomes rather than taking sides, we have credibility because of our neutrality.” Even critics who say the money would be better spent on schools and hospitals admit that the billionaire philanthropist has jump-started the debate about how to inspire good governance and private enterprise in Africa. “Africa is moving forward; investors are moving south; and civil society is mobilizing, empowered through communications,” Ibrahim concludes. His own story shows this is more than mere rhetoric.
This profile is one in a series of twenty, published in a special commemorative edition to mark the 20th birthday of Emerging Markets newspaper. The profiles canvass twenty of the figures who have had the most impact on the rise of the emerging markets over the past two decades.