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.