Mo Ibrahim, Founder and Chairman of the Mo Ibrahim Foundation, discusses the challenges of innovation in the telecoms industry caused by poor power and other infrastructure. He is the founder of the African telecommunications company Celtel and later a major corporate philanthropist. He discusses his decisions to leave the large telecommunications company British Telecom and establish a consultancy called MSI in 1989, and then launch Celtel a decade later aimed at building a cell phone network in Africa. He talks about how he recruited and trained talent in Celtel and why he created the Mo Ibrahim Foundation in 2006, the creation of an impact fund, and the role of the governance index in improving leadership in Africa. Dr. Mo Ibrahim is a Sudanese-British billionaire who later set up the Mo Ibrahim Foundation to encourage better governance in Africa. The foundation also created the Ibrahim Index of African Governance, to evaluate nations’ performance. “Democracy and rule of law are very important and we really need to pay a lot of attention to them. But this is not the whole story. People cannot eat democracy. If we have democracy, but there’s no food on the table or we have famine, what we’re going to do with democracy. We need to develop skills, we need more technical schools because that is education for employment. People can find work with it. It’s important to listen to young people because the future belongs to them, not to us old men,” Ibrahim said. He also said: “We need peace in Africa because conflict destroys the government and our chances of moving forward.
Excerpts
You’re an iconic figure in Africa, whether you like it or not….
That’s kind of you.
….particularly as regards entrepreneurship and allowing youth to express their creativity, as exemplified by your own career. In this conversation, I would like to speak with you about different facets of that part of your professional life. There are two phases, at least, to an outsider—the phase when you built Celtel initially, and any reflections about it subsequently, and the work of the Ibrahim Foundation. Let’s start at the beginning. I would like you to reflect a little bit on how you came to start Celtel, and if you will, in a fairly open-ended fashion, some of the lessons that you learned along the way, and I will ask a few questions as we go along.
Yes, that is interesting. I have been in mobile communications all my life as an academic. I was a senior research fellow with University of Birmingham. My work there was in the area of the prediction of radio coverage in urban areas and rural areas, and that was pre-cellular. Preparation for the work started with really introducing this cellular technology, and we were part of that. British Telecom received one of two licenses, and they invited me to join as Technical Director, to design the first mobile network here in the UK. So I left my academic career, and I went into the engine room. As an engineer, we always love to play with the large train set, it’s more fun. So I spent some time there. We introduced the first network here, we designed that, and we then worked on the development of the GSM to be adopted by Europe, a common standard which was essential for the growth of the industry to bring the prices down and to enable roaming between countries. Because prior to that, there was various silos of different, small analogue
systems.
Every country had its own.
Yes, you couldn’t roam, you couldn’t roam even within in one country. For example, in the US, for many years, you could not roam between different parts of the country.
So what time period was this, roughly?
That was in the ‘80s, the mid ‘80s, when we started that. It was wonderful, those years. I spent about six years with BT, really cutting my teeth on how this system really worked, and how to enhance performance. I found it difficult to work for a big company like BT, which actually was not focused on mobile. BT, at that time, was the largest company in the UK—240,000 employees, profit of £3 million every day. The management of BT failed to see the importance of mobile. I recall the Chief Executive and the Chairman of BT, did not come to visit Cellnet cellular operation until six years after our launch—one week before I left, actually. By that time, I decided I had had enough, I need to go and do my own thing. So it was a drastic lesson of how major corporations fail to see the future. That operation was really very low down the chain of command, a very low priority. Nobody was focused on it. I always said, actually, the rise of Vodafone in UK was a gift of BT, actually—its inaction—more than anything else.
As you reflect on that period that you were with BT—was it arrogance? Lack of knowledge? Lack of resource allocation?
A little of both. BT had a 100-year history of being the established top dog in the country. It was the Ma Bell of United States and the largest company—huge revenue, no competition. It was also just privatized around that time. It was a bit of arrogance, lack of imagination, and overconfidence, really. It was a pity. Anyway, so I left, but what you do when you leave a position like that? You say, “Okay, I’m going to be a consultant,” because I didn’t want to work for anybody. I started a company called MSI, Mobile System International, which was a consultancy and also a software company. We developed our own tools to plan networks, to automate some part of that operation. This became very profitable, and our tools became industry standard. We had over 110 operators worldwide licensing our planning tools.
In the UK, or worldwide?
Yes, worldwide. We had almost everybody.
So you managed to make a lot of connections with operators.
Exactly. And then, as consultants, we were very involved. We had a turn-key design contract for probably half of Europe, GSM networks. We did
You need two people, yes.
It needs a partner. Who is the partner? We never talk about this partner, you know why? Because he’s one of us. We don’t talk about that, but that issue is very important. So we decided to go and build a company to a very high standard.
To what extent was this an economic decision versus really an emotional decision, that you had accomplished something with the consulting firm, had some access to resources and had some technology and some skill sets?
Yeah, I think 70 percent of it was an economic decision, and maybe 30 percent of it was passion.
An emotional decision?
Not really, because if we found a project not feasible, we didn’t do it. We’ll turn down the project rather than build a bankrupt business.
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 Jame Lipton like approach to the initial round of questions.
Ibrahim, every two years, your foundation publishes a global Index of governance in Africa. The last report, in 2020, was rather worrying. What is the situation looking like today?
Of course, we have the problem of the pandemic now, which is threatening not only the health of our people but also our economic situation. And for the first time in over 25 years, we started to see a recession in Africa while Africa was growing continuously over the last 25 years. Of course, this is Covid and the outcome of it, which is not only limited to Africa, but everywhere, but it’s hitting us hard because we don’t have the fiscal space which as other countries have, which enabled them to borrow heavily to support the citizen and support the business.
There’s no such support for our business in Africa or for our people. We ask them to stay home and they cannot earn any money, unfortunately. While in Europe and elsewhere, people sit at home and receive their paycheques.
To what extent has the African continent, in your opinion, improved or regressed over the past five years?
Well, actually, it’s a mixed picture for Africa, unfortunately, over the last few years, we have seen deterioration in citizen rights, participation and democracy. That’s really unfortunate. And that trend has been enforced during covid because some leaders also use restrictive measures around the health crisis to pass on more repressive laws. And we can see people banning political opponents from public gatherings while they are handing their own political rallies etc. So it has been a clampdown really also because of covid, unfortunately, it has been misused in some cases. On the other hand, there are some bright spots. I mean, we see that there is development in the area of infrastructure and human development in general. It is still moving forward. But we are concerned about the rule of law and transparency and citizens’ rights in general, which has been deteriorating.
Is governance limited to the respect of democracy, law and transparency?
Democracy and rule of law are very important and we really need to pay a lot of attention to them. But this is not the whole story. People cannot eat democracy. I mean, if we have democracy, but there’s no food on the table or we have famine, what we’re going to do with democracy.
We cannot eat democracy. It is important to create jobs, to improve education and health, economic development. People need to have clean water. People need to have access to power and energy. Governance is a basket, a basket of public goods.. and bad economy about human development, but also about rule of law and about democracy, and we need to see progress in all of this. There’s no trade-off.
Several African countries are currently experiencing extremely complex situations: Chad, Somalia, Ethiopia to name a few. Some African leaders are clinging to power, conflicts are sprouting. There is also the impact of the pandemic, as well as the migration issue. Faced with all these parameters, what do you think the future holds for Africa in the next 5 years?
Each crisis has a silver lining. It enables us to reset. We need to reset now and to think again about how we’re going to move on from here. And that’s important to review our path of development in the right path to have reasonable self-sufficiency without interruption to the trade routes. What that did to us, somebody who had problems, but we need it to really build back a more resilient economy.And also, I hope for a more green economy. I wonder what big changes also have our young people. The majority of our population are young. We need to pay attention to our young people who don’t know to lose more people in the Sahara or in the Mediterranean. We need to create jobs. We need to improve education. And that should be education for employment. We need to develop skills, we need more technical schools because that is education for employment. People can find work with it. It’s important to listen to young people because the future belongs to them, not to us old men.
I mean, the problem in Africa, we have a lot of old men running the continent. And this is not really helpful. We need to move on from that and build a more progressive, more young, more active government, which is really focussing on the development of both, our human resources and our natural resources in hardbody. And we need peace. We need peace in Africa because conflict destroys the government and our chances of moving forward.