Inside the Entrepreneur’s Studio: A Conversation with Mo Ibrahim
July 25, 2011 Editor 0
Authored by: Tayo Akinyemi
Most of you are probably familiar with the story of Dr. Mo Ibrahim, the British-Sudanese entrepreneur who built Celtel (now Zain) into one of the most successful telcos on the African continent (and beyond). Then you can imagine my surprise when the following email landed in my inbox:
Dr. Mo Ibrahim, founder of Celtel and a 2008 Time 100 honoree, will be on campus next week as the 2009 Bartels World Affairs Fellow. Dr. Ibrahim is one of Africa’s most successful businessmen and created the Mo Ibrahim Foundation in 2006 which awards the Achievement in African Leadership [prize].
I have been fortunate enough to secure a portion of Dr. Ibrahim’s time to attend Monday’s class. If you are interested, I would love to have you join us for a continental breakfast from 8:00-8:40 am, followed by discussion from 8:40-9:55 am.
Unbelievable-I couldn’t believe my good fortune. Never would I have imagined that I’d be within twenty feet of an entrepreneur of Mr. Ibrahim’s caliber. Not only is African telecom one of my primary interests, I’d been enamored with the CelTel/Zain story since completing a strategy project about its rival, MTN. Furthermore, I was intensely curious about Mr. Ibrahim’s motivation for creating his foundation.
On the surface, his two careers, telecom entrepreneur and democracy advocate, seemed rather disparate. However, (as I was recently reminded), the role of government is critical to the success of business in Africa, particularly when it comes to infrastructure. Given the critical role that government officials play in the distribution of licenses, it’s little wonder that he linked the two.
Those of us who attended this session were treated to an Inside the Actor’s Studio–style interview conducted by Mark Milstein, Director of the Center for Sustainable Global Enterprise. Please read on for a smattering of what we discussed. (Note: This is not a verbatim transcript. It’s just a summarized excerpt of a much longer conversation.)
How did you spot an opportunity for telecom in Africa?
People thought that Africa was too dangerous. People didn’t want to work in Uganda because of Idi Amin despite the fact that he’d been gone for more than 15 years. Cynicism and romanticism co-existed. Both are true, but the larger picture is also true. For example, everyone knows about Mugabe, but this is an incomplete, inaccurate picture. Life can be as boring in Africa as it is in Ithaca-people get up, go to work, etc. (Who knew Mo Ibrahim had such a wry sense of humor!)
Why was the success of the mobile phone so dramatic in Africa?
First, there was a high degree of equity in the phone call and secondly, the market was defined. There were limited ways for people to communicate; often, they had to meet in person. In Kinshasa, people used messengers. If you didn’t live in the same town, it could take ten days just to tell your mother that you were engaged.
Did you realize that cell phones would be so powerful?
They definitely exceeded our expectations. They are essential for trade and education and are a tool for democracy and openness. Zimbabwe and Kenya represent a great victory; people stopped elections from proceeding [due to their ability to communicate about what was going on].
What quality made it difficult for companies to learn how to operate successfully in this space?
Business people who were shifty and behaved illegally made things challenging. People warned us that it wasn’t possible to do business with integrity. But at CelTel, any check for more than 30,000 pounds had to be signed by the board. This was our silver bullet because the clout of the board discouraged bribery. At the end of the day, the level of transparency and quality of corporate governance enhanced the value of the company. When we sold the company we received 8.5 times EBITDA. In fact, Celtel’s story is taught at Harvard Business School as an example of how strong corporate governance attracts a premium.
How did the state of leadership help you determine what markets to enter?
We looked beyond the condition of the market to governance. We’ve paid for licenses but then walked away. We delayed entry in another place due to corruption. Don’t let short term gain push you to do something. In the end, it will harm the value of your business.
What advice do you have to give for people starting business with a social value?
Any business has social value, otherwise it’s unethical. For example, prostitution and gambling have no social value. Creating jobs and looking after the community are important. A business cannot thrive in a community that is failing. Social value should not be invoked as an excuse to do lousy, unsuccessful business. Mixing the two is a recipe for disaster. The sole purpose of business is to generate value generally, not just the kind that is social in nature. As long as the company is ethical, there is social value.
Why decide to promote democracy?
Democracy is terrible, but it is the least evil system we know. Democracy, transparency, good government, rule of law, and strong law enforcement are all very important.
A society of entitlement compounds the likelihood of success for the wealthy.
Doesn’t the Prize for Achievement in African Leadership give money to the already wealthy?
The first part of the statement is correct, but we we’re not dealing with wealthy, crooked people. Once you finish the job as head of state, you leave your means behind. Tony Blair charges $500M per speech and $2M to sit on Merrill Lynch’s board. But many leaders can’t rent an apartment in the capital where they were living because they can’t afford to. Also, we’re not paying people excessively.
Well, that’s all she wrote. Not surprisingly, the dialogue during this session was much richer than I could convey in this excerpt. Of particular note was the James Lipton-like approach to the initial round of questions. Thanks to that, I now know that Mo Ibrahim likes the sound of babies, admires Madame Curie (complete with poster on the wall), and detests hypocrisy. How’s that for a 360 degree view of a leader?
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