IBM’s up-beat briefing on their Sub-Saharan business was not only an eye opener on their aspirations for their business in the African continent, but so too a view into some of the unique challenges facing information technology suppliers in the region.
Notwithstanding IBM’s objectives for global sustainable growth, discussions with their executive team highlight the importance they place on Africa as a key ‘Growth Market’ of the future. The transformational opportunities that make the region unique are without doubt multifaceted and driven by wide ranging issues including geographic, geo-political, and socio-economic circumstance. The business environment is further complicated by the unique complexities of local legislation, lack of skilled staff, corruption and poor basic infrastructure; even, albeit to a lesser extent, in the more affluent South African region.
History teaches us that first mover advantage is crucial in the IT industry and IBM is keen to take advantage of this to develop a leadership situation in IT provision in the region. Often considered to be slow to change but with robust and effective execution, IBM has frequently been dubbed a ‘supertanker’ within the IT industry. In Africa, however, their aspirations and initiatives are more akin to an entrepreneurial start –up. Plans are pragmatic but the investment intent is clear; with local offices focused in areas of more intense growth, business partners are left to develop smaller and (currently) less lucrative markets.
Yet, the opportunity in the region is significant. Foreign ventures, significant natural resources and low cost labour will no doubt drive IT investments. This will, of course, vary significantly country by country but in an environment where basics such as water and electricity are still luxuries to many, investments in infrastructure will be amongst the largest, and this is an area in which IBM excels; government, telecoms, financial services etc. Although, from a pragmatic point of view, it’s also important that growth will be supported by more than just infrastructure investment. Oil and mining are significant revenue generators but manufacturing fails to match the growth many have seen in other emerging geographies such as Asia.
One can consider these to be the formative years of the evolution of the continent; where mistakes made are still lessons to be learned. Without stable infrastructure elements such as power, telecoms and water however, the incentive to invest is thwarted by supply. The power situation in South Africa is one such example where demand has outstripped supply. Here we have a (relatively) wealthy nation, with a larger than average (in Africa) established mining, process and industrial manufacturing sectors, having to engage in load shedding (intentional power outage) to protect a total national blackout of power ; clearly a challenge to overcome if investment growth is to be maintained.
But there are many areas where Africa offers clear value for inward investors. These include capitalising on mining expertise, South Africa’s nuclear power competence (notably their Pebble bed reactor expertise) and, of course, in taking advantage of low cost local talent. With particular regard to the latter point, it was interesting to have an opportunity to see IBM’s Integrated Delivery Centre. Providing worldwide multi-lingual support for a European banking organisation, it is a clear endorsement of world class technology service capable of being delivered from Africa.
Whilst the timing of Africa’s emergence from 3rd world status cannot be guaranteed by any means, where there’s a will there’s a way. I for one am an avid supporter African economic development, being Zambian born. What is clear is that support from the international community is essential to the Continent’s transition; and this means support from not only international organisations such as the IMF, but also governments and the broader business community. To this end IBM’s expansion and support of infrastructure and industry in Africa is a reflection not only of their belief in the region, but an incentive for others to invest or face getting left behind.