What do you want to be famous for?

What do you want to be famous for?

And we’re not talking just 15 minutes. India has become the destination for software development, as well as a number of major outsourced processes from accounting to call centres. As new markets emerge to offer services at cut prices, whole new industries spring up around the world, boosting economies and cutting costs, and corners, for big industry. Markets like Costa Rica, the Philippines and Ireland compete in the call centre industry as well, for example, but Africa has now started to look at what it can sell on the global BPO marketplace.

As The East African writes this week: For many developing countries, outsourcing is the ultimate get-rich-quick scheme. The author writes about “the lure of the half-trillion-dollar market”, which has seen 65% growth from 2005 to 2009, 85 per cent of which is unaddressed, being irresistible.

But none of this is inevitable. It takes strategic investment from public and private sector to build the infrastructure, the talent, the demand for a particular service. While Kenya wants to become the top BPO destination in Africa as part of its Vision 2030, there’s a lot of ground work to be done – locally and internationally.

Could African countries succeed in positioning themselves as an outsourcing destinations, as a way to boost the economy, create jobs, to develop new industries? Some of the raw ingredients are there: a young labour force that can be trained in new skills, for example. More importantly, labour is cheap while the cost of property and development and source materials is lower than in much of the world.

Take the film industry. We’ve already seen Mexico, Canada and Eastern Europe become choice destinations for films ‘located’ in the United States, as they offer cheaper locations. Already numerous advertisements that seem to take place in Rome or Paris are shot in Cape Town.

But it’s not as simple as a price tag. Whether it’s a call centre or a cinema lot, to build an entire industry involves infrastructure, technology, people, training, facilities, tax breaks and an economic landscape that encourages start-ups and new entrants, rather than kills any competition.

The GIBS’ review this week touched upon it, with a review of an article from Knowledge@Wharton about Chinese development, and a comparison with India.

“A crucial aspect of the Chinese version of the developmental state has been the creation of physical infrastructure like roads, airports, electricity, internet, etc., writes WMG Media. India, in contrast, has neglected the state provision of physical infrastructure in favour of ‘soft infrastructure’ – building human capital, especially the use of the English language, to make the country a resource of service professionals for businesses all around the world.”

So there are different routes to be taken to establish a centre of excellence and a capacity to solve and service a global need, but it definitely doesn’t come to those who wait. It takes private and public collaboration and conscious planning. As countries like Rwanda and Kenya invest in ICT and skills they may not immediately compete with the likes of India and China, but they’ll sure compete favourably with the rest of the continent.

Private Sector Development in Africa – Perceptions and Realities

Can the private sector really be a driver creating opportunities for people to escape poverty and improve their lives? In theory, private sector development should be the ultimate driver of socio-economic development through job creation and its contribution to economic growth. In practice, several factors such as perceptions of Africa, insufficient policy frameworks and dependence on international aid have resulted in limited private sector impact to date.

After working in Africa for a while, one easily forgets that many outsiders still have a very “Live Aid” image of Africa. They do not know it as a region with one of the highest growth rates and a rising, well-educated middle class, but rather think of it as a place of war, famine and corruption. This persistent perception, despite recent progress and achievement, also disempowers Africans, engendering a sense of ‘passive victim’ rather than ‘accomplished entrepreneur’.

Investors who take the time to understand the continent and its opportunities tend to be well rewarded. The British firm Tullow is probably one of the most striking examples. Not too long ago, it was still a smallish outlet but its investment and belief in the African continent has already triggered the fundamental transformation of two economies and thereby the success of its own operations. The investment Tullow made in oil exploration in Ghana and Uganda has led to significant discoveries that have spelt a new and lucrative future for both countries.

Apart from the abundant natural resources found in most of her countries, Africa is also touted as the potential food basket of the world. Agriculture accounts for more than 50% of GDP and up to 90% of employment across much of the continent, but productivity remains low. And while there has been much talk about transforming the sector, the reliance on subsistence and small-holder farming has proven more than a stumbling block to developing diversified economies with higher levels of income, than an opportunity in itself.

For private sector development to work, African countries and its development partners need to create policies for commercially viable markets while promoting their country’s image and competitive advantage. An example of this is Kenya; after the arrival of a new high-speed internet cable, recognized the opportunity for Business Process Outsourcing (BPO) through the pairing of enhanced connectivity and its relatively large base of well-educated workers.

Ultimately, the promotion of value-add industries and the development of the required policy frameworks and infrastructure will allow the private sector in Africa to make significant progress in its development and contribution to job creation and poverty alleviation. The classic example of trying to sell chocolate as a finished product instead of selling cocoa as a raw material has lost none of its appeal.