Market for Change: Consumer Access for African ICT Service Providers

Information communications technology (ICT) outsourcing has created millions of jobs throughout the developing world and is estimated to grow substantially over the next decade. A few emerging African players, notably Ghana and Kenya, contain the right mix of success factors to attract outsourcing business, including: (1) talent -- 60% unemployment among university graduates in some cities and a large labor supply with English skills and favorable accent; (2) business environment -- new, pro-business leadership in several countries, increased government funds for tax incentives and ICT training programs, and growing private-sector interest in Africa (e.g., private equity firms, telecoms, and partnerships with development agencies); (3) bandwidth -- new fiber optic capacity –the East African Submarine Cable System (EASSy) and a regional backhaul link will go live in early 2008, and telecom costs are expected to decline over next decade.

Despite this potential, reliable small and medium-sized ICT enterprises in emerging African markets remain off the map for Western consumers for several reasons. First, African entrepreneurs have little opportunity to build personal relationships with potential clients in the West – most of Africa is unfamiliar to businesspeople, and the ICT industry is young compared to the “brownfields” of India and Eastern Europe, which offer myriad tried-and-tested case studies encourage would-be clients. Second, the region has many scattered players with disparate marketing needs and service offerings – there is as yet no critical mass of providers to attract industry brokers such as TPI and Everest. Third, the high level of political risk in certain countries damages perceptions of the entire continent.

MfC bridges consumers in developed economies in need of low-cost ICT services with reputable African providers via an online marketplace in which consumers themselves rate businesses and provide feedback. The model allows consumers to interface directly with service providers at no cost to subscribe. Provider-partners are selected by a panel of in-country experts, based on objective quality and capacity measures adapted from international standards currently used in more established markets. A US-based team conducts semi-annual quality checks, and eventual evolution to a commission-based pricing system ensures sustainability of the business and increased local ownership.

I plan to advertise to a few core constituencies: (1) Medium-sized (less than $3m annual operating budget) non-profit organizations in the US; (2) administrative departments of academic institutions, principally universities in which I have connections through colleagues and classmates; and (3) large, established outsourcing companies and brokerage firms that may refer potential clients below their target size.

The organization’s marketing channels will evolve over time. Clients for the first few projects have already been identified through connections I have with non-profits from prior experience. After the pilot phase is complete, I plan to launch the web-based platform connecting providers to clients.

We will not have a large budget for media buys or sponsored searches; rather, I'll rely on existing social networks to publicize the website – former professors, social entrepreneurs, and others who may have ICT needs that could be outsourced. I also plan to contact industry thought leaders (primarily consulting/research firms such as Datamonitor) to ensure that we're “on the map” in research done on African outsourcing. Finally, we plan to attend road shows, highlighting the positive social impact of Market for Change and the high-quality services provided by firms in our network.

This product is unique in its “semi-profit” structure – that is, it generates enough revenue to be self-sustaining – and in both the client (US small businesses) and supplier (African ICT companies) base it serves. Unlike other web-based services, we provide an extra layer of screening for clients to ensure the companies they select are top-notch.

I graduated from Harvard University in 2000 with a B.A. in African Development Studies, a major I created to pursue my interest in this field. During my time in school, I presided over Harvard’s International Development Group, co-founded a multi-year initiative to study transitional justice in Rwanda, and worked for the World Bank and Ashoka: Innovators for the Public.

My experience has convinced me that the most effective, lasting solutions to poverty are those that enable people, rather than merely serve them. Enablers often come in the form of for-profit or semi-profit companies. To gain experience in the private sector, I spent the last two years at Katzenbach Partners, a growing management consulting firm, serving clients in the outsourcing and telecom sectors and starting the firm’s Social Entrepreneurs’ Forum. As a consultant, I’ve had substantial exposure to the ICT industry, and am well-positioned to start a venture like this one.

The mission of Market for Change (MfC) is to stimulate growth of the ICT sector in emerging African outsourcing markets, in order to fuel employment and, in turn, increase the demand and supply of high-quality talent within these regions. MfC was founded to address what I see as the biggest tragedy in the developing world: wasted talent. For decades, poor countries invested in education as a means of increasing human capital and building an attractive climate for economic growth. In much of Africa, these investments never yielded the intended return – for while capital is highly mobile, labor is not. Educated poor people tended to have two options: either stay in their home countries and risk unemployment, or go overseas and contribute to the “brain drain.”

Services outsourcing dramatically shifts the balance, providing young people with stable employment and income in the short-term, and a “foot in the door” with large companies in the long-term.

Just how many jobs would MfC create? The 10-12 Nairobi-based firms we plan to engage in our first year employ about 200 people, and are growing at a rate of 10% annually. Based on estimates from their leadership, MfC could increase this growth by another 20% -- 40 new jobs in the first year alone. Over 2-3 years, this could create at least 300 jobs in the ICT sector in Accra and Nairobi. In the long term, it would lead to increased credibility and visibility in global markets, and serve as an engine of growth for many African regions.