Africa is driven by quality

Most African countries may still be fledglings in the ICT space when compared with a country like SA but they are still driven by quality and not price, as was the case a few short years ago.

According to Tim Schumann, Business Connexion`s group executive: technology infrastructure and Africa, gone are the days when tenders would be awarded to the company with the lowest cost proposal.

"In the past, it was not unusual for companies tendering for a contract to quote widely disparate figures for the same solution. Often bids would vary by as much as $10 million on a $12 million bid! Behind most of the cheapest bids was a case of old technology dumping. Now it is the quality of your solution, your track record and thus your ability to deliver that counts," he says.

"We`ve also seen a definite preference from African countries to deal with their African counterparts versus other internationals, even if the technology is the same. However, South African companies doing business in Africa can encounter some level of animosity due to their insensitivity to local cultures," says Schumann.

He adds that local companies expecting to achieve successes need to "temper their arrogance by understanding the environments in which they operate and respecting the business culture in the different countries".

"If local businesses can do this they will find that there are excellent opportunities in Africa, which still has the biggest potential for technology growth outside of Eastern Europe," he says. In particular, opportunities are abundant in the telecommunications and financial sectors, he adds.

He quotes the example of Addis Ababa, which has a population of about four million people but less than 10 ATMs. The shortage of these is as a result of the lack of infrastructure to support the banking sector.

"Africa needs to continue to upgrade its telecommunications infrastructure and this is the bottom line. Foreign aid going to our poorer neighbours is almost always directed to some extent at telecommunications. If people are unable to communicate with each other, they are unable to do business and therefore, incapable of creating the vibrant economies that Africa so desperately needs."

The terrain in most countries and a dispersed population are the two main barriers for infrastructure development, he says. Therefore, wireless and satellite technologies will be key to overcoming these.

Business Connexion was instrumental in providing a broadband wireless infrastructure for Zenith bank in Nigeria so the bank would be able to conduct inter-branch transactions. In most instances, African banks are unable to efficiently communicate with their various branches and other banks around them.

To be able to achieve its full potential, the financial sector in various countries will need hefty investment and supporting infrastructure. As it stands, Nigeria has 89 banks servicing that market. Although the Nigerian government plans to consolidate the industry, there is still a need to improve technologies for the benefit of the various economies. "Once infrastructure is improved, banks will be the first users of the technologies installed," he notes.

Despite the massive opportunities for ICT companies on the continent, doing business in Africa still represents its own set of unique challenges. Schumann lists these as project financing, decision-making cycles being too long and finding the right in-country partners to help with projects.

"Developing in-country skills is a major requirement of the client and external systems integrators like Business Connexion. Both parties benefit as the cost of after sales support is much cheaper when there are skills on the ground in that country," says Schumann. "Therefore, skills transfer remains an important objective for Business Connexion."

"A key challenge in Africa is managing a different set of risks. In a country where logistics are a problem because there are inadequate roads and power supply is sporadic, companies will need to be vigilant in their business processes. To mitigate the risk, you have to know the environment in each country before setting up shop there," he advises.