One of the most important trends of the past decade was the emergence of India, China, Brazil, and Russia–the so-called BRICs–as the major growth engines for the global economy. Sub-Saharan Africa, with the exception of South Africa, has been left behind. But a major deal involving India’s Bharti Group and IBM, announced on Sept. 17, signals the potential for a major shift in Africa’s economic fortunes. Among other things, it likely will hasten the spread of affordable mobile phone services to millions of people who today can’t easily make or receive a phone call. Bharti has hired IBM to integrate and run IT operations for the mobile phone services in 16 African countries that it bought from Kuwait’s Zain for $9 billion in February. They include operations in Kenya, Nigeria, Uganda, Tanzania and Ghana.
IBM and Bharti have a history together. They established an outsourcing and business transformation relationship in India starting in 2004, and IBM has helped Bharti grow from 6 million subscribers there to more than 150 million–becoming the No. 1 mobile carrier. The arrangement gives Bharti a cost structure that makes it possible to charge among the lowest service rates in the world. “This is a tried and tested platform, and it’s a springboard into Africa,” says Craig Holmes, IBM’s communications sector sales executive for the Middle East and Africa.
Bharti is competing head-to-head with MTN, the African continent’s leading mobile service provider. There are abundant opportunities for both companies to flourish, since the penetration of mobile phones in Africa is less than 40% but is growing at 25% per year, according to a study by Deloitte.
Lower prices will improve affordability, but Bharti is doing much more to hasten adoption. For one thing, it plans on rolling out technology called Spoken Web, which was developed by IBM researchers in India. Spoken Web makes it possible for illiterate people and those who don’t have access to a computer to use the Internet to buy and sell goods and services via voice-enabled Web sites. “One of the reasons for the successful partnership of IBM and Bharti in India was Bharti’s willingness to engage with IBM Research and bring its innovations into practical offerings,” says Holmes.
Holmes also expects Bharti to enable mobile payment and micro-credit services in Africa–which will provide fundamental banking opportunities for many people who don’t have them now.
I’ve been watching Bharti’s efforts to establish a foothold in Africa for the past few years. Now that it’s there, you can expect major changes to come rapidly–and for the better.