Africa mobile phone networks: The power of the market

The evidence from human history confirms that notwithstanding the acknowledged shortcomings of the market, there is no better arrangement that can sustainably and reliably deliver the promise of a better, prosperous and inspiring life.

Report by Mutumwa Mawere

Africans that are resident in the continent have no monopoly of poverty, unemployment and inequality to suggest that there is a casual and direct link between the ills of today and the injustice and pain of a colonial past.

If this was the case then the universality of these ills would be a subject of debate.

Although poverty is universal, economic prosperity is not inevitable simply by imagining it.

Equally, history is full of examples of why economic freedom and rule of law can be relied upon better than dictates from state actors to unleash the creative and innovative genius of voluntary market participants.

If there was a lottery of life, many would vote with their feet towards geographical spots where freedom and justice reigns.

The history, evolution and development of the cellular industry over the last 26 years has demonstrated the unique power of the market to inspire individual entrepreneurs and corporations to become players against a backdrop of Afro pessimism.

Corporate empires have been built and new inspiring stories have been added to the African heritage menu. Yet the real story that lies beneath the veneer of success can easily be lost if the observers and writers of today fail to tell the story as it must be in order to shape the debates on key public policy choices that have to be made in order to democratise access and opportunities.

I will be the first one to admit that capitalism is not perfect, but I shudder to think what would have happened in 1986 if a decision was taken in the then Republic of Zaire that the first cellular network in Africa must be state-controlled and managed.

At face value, it would appear that the mobile phone network business is simple, but when viewed in its proper context it becomes self-evident that the industry involves not only the regulator, the infrastructure equipment suppliers, termination equipment, base stations and labour at various points in the value chain, but many other players whose voices and efforts are normally captured in one document called an invoice.

The partnerships that are necessary to build a network that connects between are numerous but what is significant is that the selection of actors was not facilitated by state actors.

Voluntary participants including the users are involved in the industry.

The people who deployed capital in the industry did so on risk fully cognisant of the consequences of failure.

From infancy, it was always clear that the market would determine the winners and losers. The history of the industry has demonstrated that even in Africa — where the ghosts of imperialists allegedly conspiring to do Africa harm loom large — it is possible to attract real capital and skills to build a world class industry.

The impact of the mobile phone industry on poverty reduction, employment generation and in reducing income inequalities may very well be better than what many post-colonial governments have done with aid money and taxes in reducing the frontiers of these ills.

The mobile phone industry is regulated and heavily taxed.The regulators of African mobile phone networks have been smart enough to allow the market to operate, while milking the cow rather than meddle in the pitch in the mistaken belief that the consumers would be better protected by the state and its actors.

About 700 million Africans now have a line or multiple lines.  Only faith has shown a similar penetration and even Africa’s persuasive politicians who want to cling to state power in the belief that they alone are better custodians of the battle to secure and deliver a better life have not been able to penetrate the hearts and minds of Africans in the same manner the mobile industry has managed to perform.

The entire value chain has been created from scratch with minimal state or donor support.

The regulator has played the role of referee and enabler, but cannot claim the credit for the success of the industry that really belongs to the private actors who entered the industry not by invitation or even through state patronage.

The individual actors being the licensed operators have been able to reduce the cost of service and the terminal equipment through competition.

African politics is not very competitive, but the actors believe that the continent is better precisely because of its non-existence than for its existence.

In many African states, the number of licensed operators is more than one and the combination of technological advances and competition has promoted efficiency to the benefit of clients.
Firms have been able to contract with labour with minimum union intervention.

The industry is now a large employer in Africa.
The recent transformation of workplaces in South Africa into war zones go a long way towards confirming the positive link between economic prosperity and flexible labour markets.

The role of firms and their actors is controversial not only in informing the choices on what kind of Africa we should have, but in meeting the challenges that confront Africans as they seek a better ground from which to bridge the time that life offers.

The manner in which the mobile phone industry has been spontaneously organised and the outcomes that have been achieved tell a story of an Africa that delivers not only profits, but partnerships that are enduring.

The industry is younger than many African states, but some of its founders have moved from the driver’s seat so that others can drive the bus much more efficiently and with the speed that consumers want.

As the industry has evolved the skill sets required during the formative years are different from the skills that are needed today suggesting the importance of leadership renewal in the business of serving human beings.

The only reason the industry exists in Africa is because there is a market that requires the service and solutions.

The same people need to be better governed by those that they elect into state positions and yet the post-colonial period has failed to produce the kind of outcomes that the private sector despite occasional state sponsored commercial violent acts has been able to produce.

Africa’s star is rising and yet the people who lead the economic charge in the continent are not reflective of the majority.
The book of faces of the corporate firms that dominate the mobile phone network business in Africa is not African, but it cannot be said that the service that is delivered to the majority Africans is less efficient because of the faces of the people who hold the shares in the enterprises that are used as instruments to deliver the connections.

The market has its own limitations and history is pregnant with examples of market failure.

However, the future of Africa is less secure if the lessons of the industries like the mobile phone networks are not digested and taken into account in deciding on what matters.

Political actors also make mistakes and yet many would refuse to accept the proposition that change is beneficial and the poor do not need lectures from state actors rather they need a fluid and transparent opportunity-driven society from which they can learn from others how to climb the ladder.

The story of the African mobile industry has to be told not because it is the only one that can help to expose the fallacy of the view that the future and its architecture can be left to the imagination of a few wise men and women in the state.

The men and women at the helm of the cellular industry did not come from another planet but are people of flesh and some of them are black like me.

We have often used scapegoats instead of addressing the real causes that make more Africans eke a living at the bottom of the opportunity ladder.

The history of the mobile phone operators helps us in framing our conversations so that the opportunities that lie ahead will not be squandered as a consequence of our actions.

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