An Africa Business Community - www.africabusinesscommunities.com
Africa is a far better place to do business than five years ago. The spread of mobile telephony has revolutionized ordinary life in a continent with the world's lowest penetration of fixed-line telephones.
Satellite links have vastly improved Internet access, and a new undersea cable that runs along the coast of Africa (SAT-3) promises to improve and reduce the cost of all types of communications.
Surprisingly, wage competitiveness is a problem. Although Africa is the world's poorest region on average, wages in the formal economy generally exceed those paid in China and India, where government keeps basic food, housing, and transport costs relatively low through subsidies and controls.
In urban Africa, costs for food and transport in particular are relatively high, which forces wages up. The supply of African professionals and skilled workers, meanwhile, is tight; shortages also drive up wages. Indeed, an Indian software programmer typically earns less than a comparable African programmer. Even wages for routine data-entry tasks in Africa are usually no less than those paid in south Asia.
The odds that Africa one day will receive a fair share of outsourcing jobs are improving. But there is a risk that the region will fall further behind. African governments also must be willing to start small: expend a lot of effort to attract pilot projects in the hope of larger employment in the future. With sensible reforms, many barriers can be removed or at least eased.
African governments often boast when they simply stop the corrosive effects of corruption and irrational business regulation. But little attention is given to the high cost of telecommunications, unreliable electrical-power systems, and the poor transport infrastructure.
African leaders have been slow to realize that they must woo foreign corporations with special services, training programs for workers, and even subsidized offices. Asian countries attract many jobs by creating industrial parks, with more reliable services, including ultra-reliable communications networks, offered at competitive prices.
By restructuring their secondary schools and universities to train graduates with skills demanded by multinational corporations, Asian countries also create more competitive workforces. There is no doubt that Africa is poised to position itself at the top of the outsourcing echelon. Key differentiators such as a large, well-trained talent pool and geographical proximity to many western nations allow the continent to compete in attracting overseas clients.
Customer service and IT outsourced to Africa provides the needed influx of foreign investment in a continent struggling to assert itself in the booming industry of information technology outsourcing.