By ELEANOR WHITEHEAD
The founder of Celtel talks about the role businesses can play in transparency and discusses trends in African governance
As entrepreneurial success stories go, few come bigger than Mo Ibrahim’s. In 1998, with a telecoms boom in full force, the Sudanese-British entrepreneur hatched a plan to create a pan-African mobile operator, and to do so without paying bribes. Unperturbed by the familiar mix of instability, corruption and high capital investment costs that had put other investors off the region, he established Celtel.
Mr Ibrahim was already a veteran of the telecoms industry, having started his career working for Sudan’s national phone company, before joining British Telecom and finally establishing his own consultancy. None of that, however, could match the success of the continent’s first borderless network. In 2005, when Celtel had about 24 million subscribers in 14 African countries, Mr Ibrahim sold it to the Kuwaiti company Zain for $3.4bn. In 2010, India’s largest telecoms operator Bharti Airtel swooped in and bought the group for $10.7bn.
Celtel’s success put Africa on the map as one of the world’s most exciting telecoms markets, and consolidated Mr Ibrahim’s position among the continents’ leading entrepreneurs. He went on to set up the Mo Ibrahim Foundation to encourage better governance in Africa.
While Mr Ibrahim is now preoccupied with issues of governance, he draws a strong link between his current work and his experience in telecoms. Take, for instance, the ‘Arab Spring’ – in part fomented via mobile phones, and through social networking sites. Mr Ibrahim offers other examples of phone cameras being used to indict corrupt customs officials; or to record and disseminate independent observations about elections in Zimbabwe.
“Freedom of information is essential for good governance, and this new generation have the tools to know what’s happening around them,” he says. “In the past we lived in the dark. Our generation had only one newspaper and it was owned by the government, one TV station and one radio station run by the government. We’ve switched on the light now. Every citizen is able to communicate.”
A bigger role for business
The positive role of business in development should not be limited to telecoms, Mr Ibrahim believes. “Businesses should stand up and speak for transparency, for policies like regional integration, educational reforms, and for human rights and equitable development. There is a complete absence of business in these agendas. Business is a great force of change, has a lot of power, but they are not using it because they are afraid of hurting the tender feelings of government,” he says.
“It’s in our interest to have stable and prosperous societies as an operational environment,” he argues. “I wouldn’t like to be in the shoes now of the shareholders or the board of these mining companies in South Africa, because your business is going to the dogs now. You have striking miners, you have violence, you have people dead. Is that good for business? Of course it’s not.”
Having made a political statement in the transparent running of Celtel, Mr Ibrahim pulls no punches on the issue of corporate governance. “The government doesn’t bribe itself,” he points out, arguing that if substantial payments are approved by a company’s board then no kickbacks should be able to pass.
“Always, always, corruption is not in the interest of business, because money seeps through to people who don’t deserve it and it affects your bottom line,” he argues. “It is a bad perception that if you don’t partake in [bribery], you lose business. If you all don’t do it, no one will lose out. The most absurd answer I get from some business people is: ‘I do it because other guys do it’. That is such a morally corrupt answer, and a defeatist answer. These are bad habits and need to be dealt with. And it’s not enough to preach. We need now to enforce the law as well.”
Mr Ibrahim believes that resource companies should disclose their payments. “How can you accept the signing of multi-billion dollar contracts in secret? What does it mean? It means that a bribe is being paid. This is the standard for capitalism today, and it’s time to have a critical look at what we are doing,” he argues.
Yet despite advocacy, measures to improve business transparency are proving difficult to pass. US oil companies are currently filing a suit against the Securities and Exchange Commission to attempt to overturn a law requiring oil, gas and mining companies to publish what they pay governments. The American Petroleum Institute – along with the Chamber of Commerce, the Independent Petroleum Association of America and the National Foreign Trade Council – is challenging Section 1504 of the Dodd Frank Act which requires resource companies to annually disclose their payments to governments, by country and by project. The measure’s passing in June 2010 formed part of a bid to create a new global transparency standard, but American companies argue that it disadvantages them against global counterparts.
Mr Ibrahim – along with transparency campaigners – is unconvinced by their argument. “We want the SEC voted to uphold and implement the Dodd Frank rulings on extractive industries,” he argues.
“The argument by oil businesses that this will disadvantage them against other countries is ridiculous. Top overseas companies are also caught in this law, because this law is not just for American companies – it is for anybody who raises money in the US. That includes the top two companies in China, the top companies in the UK and in Europe – so it’s for everybody really. What is important is for Europe and for Britain to match that law. There is a push for it, but we want to see it happening. Why is it taking such a long time?”
Countries will also need help in managing their resource contracts, Mr Ibrahim says: “Many African countries are lacking the capacity to make good deals. This has got to do not only with being developing countries – that typically we lack some of the skills – but also, largely, small countries. And it’s difficult really to have the knowhow to make these negotiations.” He points to the National Resource Charter – a set of principles for governments on how to harness resource affluence for development – as a useful tool.
Businesses are increasingly interested in Africa, and its economic fortunes may be looking up, but some worrying human rights and democracy trends are emerging. This year’s Ibrahim Index of African Governance pointed to sustained improvements in human development categories such as health and education, as well as gender and economic opportunity. However, at the same time, there has been stasis in areas of participation and human rights, and safety and rule of law.
That is a concern, Mr Ibrahim says: “Economic development is not enough. It’s not an excuse to deprive citizens of their rights.”
Worryingly, declines have been registered in Africa’s four regional powerhouses since 2006. Nigeria, South Africa, Kenya and Egypt all dropped in rankings in areas of safety and rule of law, and participation and human rights, with particularly marked drops in people’s freedom to participate in political processes. Nigeria was named as the worst performer, falling for the first time into the bottom 10 governance performers in Africa.
There is a caveat for Egypt, due to a changing institutional environment post-Arab Spring, and Mr Ibrahim expects “major improvement in the future”. But for the three other regional hubs – which each play a huge role in the political and economic landscape of their regions – the findings give cause for concern.
While Nigeria’s performance has not actually worsened – other countries have simply overtaken it – Mr Ibrahim describes its languishing position as “very sad”.
Despite its poor governance track record, the country continues to top the list of target African markets for investors. “The attraction to Nigeria, of course, is that it is a huge market. Look at China and how much investment it attracted over the last 20 years, and bear in mind the record on democracy and human rights there. Capital will always go to those big markets even where there are issues that hinder those flows. But those flows are definitely considerably less than what Nigeria deserves,” he argues.
Speaking on the potential of the country to reform, Mr Ibrahim is measured. “I have a lot of trust in Ngozi [Okonjo-Iweala, Nigeria’s finance minister] as an experienced woman heading the economic team and at least of her intentions and integrity,” he says. “Whether the government will have the political will to move forward with reforms, improve the environment, stop the theft of oil – which is huge – is another question.”
The continent’s governance woes stretch beyond Nigeria’s borders. This year, the Foundation left its $5m leadership prize – designed for a democratically elected leader who governed well and stepped willingly down from his or her post – unawarded for the third time in six years. But Mr Ibrahim is adamant that this does not constitute an indictment of the continent’s leaders.
“Obviously it is going to take some years for the new generation of African leaders to take over and move forward, so we need to be patient here. No doubt there have been some successes. Offering the prize three times in the last six years is a great achievement, I think,” he argues. “But the prize is there for exceptional leadership, so we are looking for people by any standards, and I don’t think that if we look into Asia or Europe over the last six years then we would find those leaders.”
More broadly, Mr Ibrahim is bullish on the continent’s democratic direction. “A so-called Arab Spring can come in many forms – not only in the form of demonstrations. I think that a lot of African countries have gone through Springs in their own quiet way. There are maybe 30 African countries where peaceful change of power is in place; where reasonable elections are taking place and people come in and leave in an orderly fashion; where there is more space for civil society. So we are moving and slowly we are getting there. We need to see more of that.”