AS new businesses are created and developed, and oil-based economies work to diversify in the face of low oil prices, evidence shows that business-to-business (B2B) opportunities throughout Africa will thrive.
According to the World Bank, 35 of 47
economies in sub-Saharan Africa took at least one step in making it
easier to do business in their country in 2015. Rwanda implemented a
credit-scoring service; Kenya launched government-run company
registration services; Madagascar strengthened minority-investor
protections; and Equatorial Guinea took the registration procedure for
new businesses from 16+ steps down to four, and the processing time from
120+ days to 10.
In their report, Lions on the Move II:
Realising the Potential of Africa’s Economies, McKinsey Global Institute
stated an increase in the number and size of African businesses means
that, “While the consumer story has generated headlines, the relatively
unsung business-to-business market represents an even larger
opportunity.”
McKinsey expects B2B demand to grow by
US$1tr, bringing the figure to $3.5tr by 2025. African companies spent
$2.6tr on the B2B market in 2015 – 40 per cent of which was in South
Africa and Nigeria.
“Half of that total was spent on input
materials, 16 per cent on capital goods, and the remainder on a wide
range of services, including business and financial services,
transportation, and information technology and telecommunications
services,” according to the report.
This spending pattern is expected to
continue in the coming years, with spending on services growing fastest,
at 3.5 per cent annually. To achieve this potential will require
Africa’s companies to step up their performance.
Africa is home to 700 companies with
revenue of more than $500 million per year, including 400 with revenue
above $1 billion. However, the region has a relatively small number of
large companies. It needs more.
The top 100 African companies have been
successful by building a strong position in their home market before
expanding, adopting a long-term perspective, integrating what they would
usually outsource, targeting high-potential sectors with low levels of
consolidation, and investing in building and retaining talent.
Bearing this in mind it is no wonder
that a telecom company like Tigo Tanzania is shifting gear to embrace
this model of business.
This does not mean that the company will
discard business-to-consumer models. Far from it. The consumer of
mobile internet data and voice services still remains the backbone of
Tigo’s clientele. Put otherwise, both models of business can be run
concurrently.
Tigo’s new-found path is informed by the
fact that Tanzanian B2B telecommunication market is likely to witness a
significant growth in the near future owing to the adoption of large
data usage, voice and video across various sectors.
Take an example of a TV company
transmitting from a remote place – a reliable fast and efficient network
of fiber optics is no doubt needed here. With the fastest growing
technologies that are gaining sufficient traction from different
industries, business-to-business model is popular in the market as it is
cost-effective and offers benefits such as wireless transactions to
users.
At a recent media function, the Tigo
Managing Director, Simon Karikari noted that B2B solutions present a
great opportunity for telecoms players in Tanzania and beyond.
“Tigo Business will offer variety of
business solutions which empower businesses and help them cut their
communication costs by up to 30 per cent while simultaneously increasing
productivity. These solutions include call user groups, voice and data
bundles, along with voice and data roaming services,” he said.
Giving an example of the new
state-of-the-art, tier 3 designed data center located at Salasala in Dar
es Salaam, Karikari explained that it’s intended to open new
opportunities for connectivity thereby supporting the growth of the B2B
telecommunication market that will subsequently spur the growth of other
markets.
It is worth noting that
telecommunications are sure precursors for growth the world over.
Enterprises are inducting new technologies to improve their businesses.
Tigo is already playing a crucial role in this evolution.
An emerging trend is expected to
minimize the burden of hardware, software and other complexities faced
by businesses. Cloud-based offerings such as Software-as-a-Service,
Platform-as-a-Service and Infrastructure-as-a-Service are expected to
have a broader acceptability in Tanzania soon.
Tigo has been investing heavily on the
laying out of fibre optics and other infrastructure to bring this to
fruition, he noted. To support the point, Karikari said that Tigo
Business offers will ease the worries of the clients because they are
more efficient and cost-effective.
“With the unlimited Business Day voice
and data services available on Tigo Business, organizations no longer
have to worry about missing calls or dealing with the stress of unsent
emails.
Our offer allows businesses to make business calls anytime, anywhere in Tanzania so that no customer queries go unanswered.
“Tigo’s Business Day also offers
unlimited data and unlimited calls to any network at one flat rate
during the business day to help organizations stay connected throughout
their business day,” he added.
The evolution and convergence of
technologies have blurred the lines that once separated telecoms players
from the world of information technology, and the two sectors are on a
collision course. Many telcos are actively trying to make use of their
existing scale and IT savvy to move beyond basic voice and data services
and begin selling IT services.
A number of telcos have recently
acquired IT companies in order to drive growth in ICT services and
related network areas. The continued convergence of IT and traditional
tele- coms markets and the opportunities it creates will cause telco B2B
offerings to grow at attractive rates in the coming years, with B2B
growth surpassing B2C growth rates for the first time ever.
Governments will need to address
productivity and drive growth by focusing on six priorities emerging
from this research: mobilize more domestic resources; aggressively
diversify economies; accelerate infrastructure development; deepen
regional integration; create tomorrow’s talent; and ensure healthy
urbanisation.
This agenda will require a step change
in the quality of African leadership and governance, and active
collaboration between the public and private sectors.
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