All eyes are on emerging markets in Africa. Growth is booming, particularly in Nigeria, where the market cap of the stock exchange has grown an astounding 962 percent since 2003. Starcomms, a Nigerian mobile telecom operator, is part of this growth trend; last summer, we became the first publicly traded telecom company in Nigeria, listing at $750 million.
However, growth comes with inevitable challenges, particularly in the dimension of capital markets and governance. In this capacity, Columbia Business School is playing a strong leadership role. Professors Enrique Arzac and Partha Mohanram recently joined the board of Starcomms and have brought their knowledge and expertise to this African growth story.
In 2001, less than one percent of Nigerians had a phone line — fixed or mobile. Today, about 30 percent of the population has a mobile phone, and that number has the potential to grow to 65 or 70 percent. The emergence of a strong and competitive telecom industry has had a dramatic effect on everyone in this country of 154 million. From the cattle driver who can now call in to hear prices in different markets before deciding where to move his herd to the businessman who can now access the Internet from the field, mobile telecom is quickly transforming the way business operates in Africa.
Starcomms is Nigeria’s market leader in CDMA service and its fourth overall telecom provider. We have grown from 2,000 subscribers in 2002 to nearly two million today. As the industry itself moves to a newer, more internationally competitive phase, our advantage is our human capital, which has only grown stronger with our newly expanded board. Professors Arzac and Mohanram bring us critical and unique expertise in managing a publicly listed organization and ensuring that international best practices are brought to Nigeria. Prof. Arzac brings the experienced eye of a global financier, while Prof. Mohanram brings acute accounting knowledge to bear. The complexity of being the first listed telecom and the associated governance issues make their insight crucial. Their experience with the telecom industry in countries like Argentina and India allow them to help us blend the ideal with the practical.
In the big picture, telecom is a macroeconomic driver; it’s a multiplier and, along with the financial industry, it is helping the Nigerian economy diversify and move away from traditional dependence on oil and gas. Telecom operators have invested billions over the last six years and are reaping rewards throughout the system.
The industry’s development mirrors the wider African surge. As a continent, sub-Saharan Africa is growing at around nine percent according to the International Monetary Fund. The traditional, western view of African business was only that of the “microfinance” paradigm. However, western businesses have finally come to realize that Africa has many well-run, sophisticated small to mid-cap businesses (by U.S. standards) that need direction in the crucial area of governance, over and above their need for structured capital.
By 2010, the Nigerian government expects the country to rank among the top 20 industrialized economies and double its GDP to $300 billion. With increased human capital and continued growth of telecom companies such as Starcomms, business in Nigeria will continue to transform both the country and the continent.Photo credit: Milica Sekulic