Nigerians Rush To Set Up Businesses In Ghana

Although sometimes chaotic, the Nigerian market has always seemed big enough to keep its local entrepreneurs occupied. However over the last twelve months, there have been significant moves by Nigerian companies looking to carve themselves a presence in other West African countries. With the announcement of two Nigerian investments this week in Benin and Ghana – one large and one small – Russell Southwood looks at how and why things are changing.South Africa is both an economic engine for the southern Africa sub-region and a platform for those wanting to do business across the continent. Although there are no exact figures, probably about 30% of its ICT companies have some involvement in selling their services across Africa and many multinationals make South Africa their regional headquarters for Sub-Saharan operations. In connectivity terms, despite the high monopoly prices of SAT3, the size of the South African economy and its connections with its sub-region means that it has become the sub-regional hub for countries like Namibia and Mozambique.Although South African ICT companies often look longingly towards becoming global operations (by buying companies in developed markets), their strength probably still lies in the scale of their domestic market and their uneasy links with the rest of the continent. Uneasy? There are not many Africans who will tell you that they have met modest, quiet South Africans in the course of doing business. They probably exist but they just haven’t met them yet.The Nigerian economy may be only a third of the size of South Africa’s but its mobile market will soon be bigger than South Africa’s. However, as a country it lacks proper power and transport infrastructure and along with its sheer size and scale of population, these have seemed to keep Nigerian ICT entrepreneurs eyes focused on their own country. Despite having a SAT3 landing station, Nigeria is not yet connected to any of its neighbours, although there have been long-standing plans to connect to Benin. Lagos airport is not a hub for regional flights in the way Johannesburg is and there is no airline of international standing providing regional flights.A couple of announcements this week signal that this may all be beginning to change and there is much more that is going on below the radar. Nigerian entrepreneur Mike Adenuga has been reported as being unable to return to Nigeria as a result of a run-in between the former President and Vice-President. But this has enabled him to play a more active role looking for business elsewhere in the region. Globacom’s ambitions in the region were signalled in announcement 12 months ago. Its investment in the Glo 1 international fibre cable (connecting many countries in West Africa) gives it an ideal future springboard for further involvement in the sub-region. Cheaper international connectivity will give it an interesting competitive advantage.But Globacom and the Beninois Government surprised everyone last week by announcing that a licence had been awarded to the company and it would be rolling out services in 60 days. According to Globacom’s Chief Operating Officer, Mohammed Jameel it was preferred ahead of the other bidders because of its technical superiority and ability to deliver.According to the minutes of the Benin Government’s Council of Ministers (10 August) the bidding for new licences was launched (rather quietly) on 3 August and the decision was taken on at the Council of Ministers of 10 August to grant the licence to Globacom.This makes some of a nonsense of the Benin Government’s claims that it wants to run the telecoms sector in a different way to its predecessor. The Minutes of the Council meetings on 2 and 3 August make no mention of the tender and deciding a tender of this kind in seven days seems incredibly fast. Of course, the intention may simply be to displace MTN who are in dispute with the Government over licence fees (see issue 363) and has had its network switched off.Globacom paid FCFA33 billion for the licence to be paid in four tranches, the first tranche of which, FCFA15 billion, has to be paid by 19 August. Its taxes in the Cahier de Charges have been lowered from 6% to 4%, it has no import duties for three years and is exempt from co-location costs with Benin Telecom for one year.No sooner had news of this announcement been absorbed than the company announced with its usual 100% self-confidence that it would be granted a licence in Ghana. Globacom has been involved in sponsorship already in the country so it fell to the Manager in charge of Events and Sponsorship at GLOBACOM, Olayinka Atande to tell the press that: ‘Any thriving company which does not see the essence in establishing in Ghana is not serious.” The regulator NCA confirmed that it was studying an application from Globacom. Its name did not feature in the Westel acquisition (which may go to Celtel) but it could bid for incumbent Ghana Telecom that comes with a mobile subsidiary, One Touch.Meanwhile on a more modest but nonetheless interesting note, one of Nigeria’s key ISP players Linkserve has also set up shop in Accra. It is selling a satellite broadband Internet solution that promises download and upload speeds of 3 mbps, which even if you discount for operational speed, is a fast service. Obviously it requires VSAT equipment to implement. It is targeting internet users, corporate businesses, NGOs, embassies, mining industries and government institutions especially in the rural underserved areas. Linkserve promises that it has plans to roll out other products using SAT3 and wireless broadband technology before the end of 2007.Besides the two companies above, there are other companies like PC assembler Omatek that have opened up an office in Ghana. And the traffic is not all one way as Ghana’s Soft Tribe have repaid the compliment and opened up offices in Nigeria. There are few multinationals with regional offices in Lagos but GS telecom runs a successful pan-continental business from the city.If it is hard to meet a quiet, modest South African in business, then it is doubly hard to meet a Nigerian who has these qualities. But it is the entrepreneurial energy of people in the ICT sector from both these countries who are driving forward the emergence of a common market in Africa.
Source:www.balancingact-africa.com.