Which region promises the greatest expansion? IBM thinks the answer is Africa. It’s not alone among tech companies that are seeking new markets and trainable talent on that continent. While growth tapers off in many more developed regions, Africa offers great potential, particularly as its workforce gains access to education and technology for communication.
IBM has been in Africa for more than 60 years, where it currently has a presence in more than 20 cities. But last year, it decided to really focus on Africa to bring its revenues there up from $400 million to $1 billion by 2015.
Nascent, but huge potential
A recent Bloomberg article quotes Bruno Di Leo, head of IBM’s global sales: “It’s nascent, it’s unstable, but it has a huge potential.” He sees it as having the same potential that was to be found in China a decade back.
To prove itself to the powers that govern the continent, IBM is doing what some individuals do when trying to break into a new area: It’s working for free on Africa’s water problem.
Taking the first step toward expanding its African presence, in August IBM announced the opening of the first IBM Research lab in Africa in Nairobi, Kenya. This lab, one of only a dozen worldwide, will recruit applicants throughout Africa to work with IBM researchers through a Resident Scientist Program. They would be signed on for one year with an option to extend their tenure.
As Anthony Mwai, IBM’s Country General Manager in East Africa, said, “As we build a great workforce in Africa that is aligned with national goals and help governments and industries envision and build Africa’s future, we are establishing a foundation for IBM’s long-term success.”
Next Big Thing?
It's a nascent market, but companies like IBM think Africa
has enormous potential for growth in electronics systems.
Targeting water shortages
To win the governments’ goodwill and cooperation, IBM offers applications of its tracking technology to their water problems at no charge. Water supplies are a serious problem in the shantytowns that border Tshwane in South Africa, where most people have no plumbing. The water supply for the 32,000 residents comes from large, leaky tanks. Despite its scarcity, a quarter of the water supply ends up going to waste or is unaccounted for.
In October, IBM set up an analytics system to track the water in order to come up with an effective solution to the problem. Perry Hartswick, an architect of IBM’s Smarter Planet program, which applies technology to civic issues, explains the approach as follows: “We’re walking in to say we’re here to be a part of Africa. That’s a very important part of the way we approach any new geography.”
Skin in the game
The term for that kind of commitment, which demonstrates a personal stake in a plan is “having skin in the game.” In an Economist article about high-tech companies’ new interest in Africa, Mark Walker of IDC uses that term to describe today’s approach to global expansion. The companies' approaches call for “investing in local people, so there’s proper knowledge transfer, investing in country offices” to show they are serious about sticking it out even if the first few quarters yield losses.
Following IBM’s lead, companies like Google, Microsoft, and Orange, the French mobile operator, are working on bringing their technology to African markets. Microsoft plans to bring broadband to Kenya even where there is no “electricity, using solar power and ‘white spaces’, or spare broadcast-television frequencies.”
Fernando de Sousa, Microsoft’s general manager in Africa, predicts that broadband will be accessible to 6,000 people in the Rift Valley within a year.
While Africa is far from a safe bet, those companies willing to take a chance on it may be able to not only do good for the region, but do very well for their own bottom lines.