Mo Ibrahim: The accidental businessman
Mo Ibrahim:
The accidental businessman
he activist and U2 frontman Bono describes the billionaire businessman Mo Ibrahim as a rock star. “I'd like to think I was, you know, Robin to his Batman. But I think in reality … I’m just kind of his roadie,” the musician told CNBC’s “The Brave Ones.”
The two were at an event at the University of Ghana and it was Ibrahim who people crowded around, not Bono, whose band has sold around 150 million records. “I remember being trampled by a lot of the students in the university there. They hadn't a clue who I was,” Bono said. “And I was cool … But at one point, I think one of them came up and said: ‘Would you take a photograph?’ And I … was kind of relieved. And then they handed me the camera and put their arm around Mo. So, he’s a superstar, he’s the rock star in the room.”
Bono and Ibrahim met around 15 years ago at an event in Senegal, when Ibrahim was “excoriating” the aid community. “He was explaining to people that it’s not the fight against extreme poverty that matters. It’s the fight to get people in the direction of prosperity. We had to think about things differently. Aid was critical, but the dignified response was to be involved with people in their lives, and in their businesses,” Bono told “The Brave Ones.”
Why does Ibrahim attract such fame? Well, aside from starting African mobile network Celtel in 1998 and selling it for $3.4 billion in 2005, he founded a prize for leadership in Africa and his Ibrahim Index ranks African countries in terms of how well they are governed, holding political leaders accountable for all to see.
“Because he takes on leaders, sometimes in ways that surprise all of us, he’s become a hero to people at the grass root level,” Ellen Johnson Sirleaf, the former president of Liberia, told “The Brave Ones.” “Because they know that he can challenge the leaders in their country … not only quietly, but also openly,” she said.
Ibrahim does not hold back with criticism of corrupt governments or outsiders’ perspectives of the continent.
“Unfortunately, when you ask Europeans or Americans about African leaders, the first thing they mention, ‘Oh, it's (former Ugandan president) Idi Amin, it's Mobutu (Sese Seko, a former Congolese dictator) … you always remember our bad apples,” Ibrahim told “The Brave Ones.”
“We have some decent leaders. Nobody knows about them. Because they're not in the news … We have a few criminal guys, but not many. We have a lot of good people. So, we need also to change the picture.”
“He was explaining to people that it’s not the fight against extreme poverty that matters. It’s the fight to get people in the direction of prosperity.”
orn in Sudan in 1946 and raised in Alexandria, Egypt, Ibrahim lived modestly with his parents and four siblings. He credits his mother for a focus on learning, which meant he was often top of the class in high school. “She had this obsession with education as the most important thing ... The only decent way out of poverty is education. And I'm grateful for her, because she pushed us,” he told “The Brave Ones.”
Ibrahim had an early ambition to be a scientist. “As a kid, the posters in my room were (Albert) Einstein, Marie Curie — and the inevitable romantic Che Guevara with the beret. That was in the 60s.”
After a degree in electrical engineering at the University of Alexandria, he worked for Sudan’s telecom department before going to the U.K., gaining a master’s degree from the University of Bradford and a PhD from the University of Birmingham. In 1983, he joined British Telecom (BT) as technical director, tasked with designing its mobile network, Cellnet (now O2).
“The total size of the industry at the time was £10 million ($12.9 million) a year. I was fascinated by the concept of mobile communication and mobility, because that was a new concept. Up to that time, telecommunication was about communication between two fixed points … Then the work started on the issue of, can mobile become really a popular kind of network? It was really for emergency services and police, fire brigade.”
“Because of my (up)bringing, because of my social background … we assume businessmen are crooks or people involved in funny stuff.”
But after around six years, Ibrahim became frustrated. “And I come from (an) academic background, but I was appalled about … the bureaucracy, and it was strange, because I'm not supposed to be the business person; I'm supposed to be the technocrat ... So, what do you do when you get fed up working in a large company and (are frustrated with) the bureaucracy? I said, ‘OK, I’m going to be a consultant.’”
Ibrahim never expected to go into business. “Because of my (up)bringing, because of … my social background … we assume businessmen are crooks or people involved in funny stuff. We respect professions, you know. You need to be a doctor, an engineer, to earn honest money and to do (the) right work, but guys involved in wheeling and dealing, we are suspicious of that,” he said. “That was my upbringing, in a way. I really wanted to work (in) research, science and I ended up being an accidental businessman, actually.”
He started his consultancy, Mobile Systems International (MSI), from his home in a north London suburb. “We became the largest independent technology company in Europe, and I had to learn how to run all this, and … I had no business training whatsoever … But really the most important thing is just common sense … And never (be) afraid of saying: ‘I don’t know.’” Ibrahim still encourages his managers to ask if they don’t know something. “You need to raise your hand and say, ‘Sorry, explain to me, what is this about?’”
Ibrahim sold MSI to telecoms group Marconi for a reported $618 million in 2000. “Because I'm not a businessman, I did things completely different. I insisted everybody in the company must be a shareholder. And that was (a) long time before (share) options … became popular,” he said. Around 33% of the company’s shares were owned by engineering and software staff rather than senior management, a fact Ibrahim is proud of.
n the late 1990s, Ibrahim saw a gap in the market in Africa. MSI had designed mobile networks for operators in Europe, the U.S. and Asia, where licenses to operate were costly. “There was a big fight among the big telecom companies requiring licenses everywhere, because mobile communication became really the vogue, and return on investment was incredible at that early stage. People were really paying a lot of money to get a license to operate and nothing was happening in Africa.”
Part of the problem was the perception of the continent. Ibrahim recalls a contact he approached for investment in Uganda, which was offering free telecom licenses. But his friend’s response shocked him. “’Mo, you want me to go to my board and advise them to invest in Uganda? This country, you know, they have this terrible man, Idi Amin, running the country.’ I said: ‘Excuse me, Idi Amin left 15 years ago’… That really was a wakeup call for me … If that was the perception of Africa, no-one’s going to invest in Africa.”
The opportunity was huge: In 1998, the Democratic Republic of Congo (DRC), for example, had a population of around 55 million, but only 3,000 phones, Ibrahim wrote in a 2012 article for the Harvard Business Review (HBR).
Even though Ibrahim still considered himself a “techie engineer” rather than a business person, he could see that developing mobile communications in Africa was “too big an opportunity to pass up.” But there were hurdles beyond the negative perception of the continent: Funding, credibility as a network operator (MSI was a consultancy) and a lack of infrastructure.
“I have to put in the microwave (technology), the fiber … to connect the power to the exchanges … A major (challenge) … is the power. So, we have to put (up) all these thousands of radio towers, but they need power, 24 hours. This was not available, so I have to have a generator in every tower. Then I need to have a backup to the generator, and then I need to have batteries for emergency. Then I need somebody to go every morning to supply fuel, to check the water levels. Now these towers can be on top of hills … There's not good roads,” Ibrahim told “The Brave Ones.”
Investment was also a problem. “In a capital-intensive project like mobile networks … I need to build the network first, before I get one cent in revenue. Before anybody makes a call, I need to have the infrastructure made,” he explained. Typically, banks will loan more than 50% of the upfront costs, but none would provide funding for the network Ibrahim named Celtel. Eventually, Ibrahim had to offer the assets of the whole company as security for a loan, he wrote in HBR.
As well as a lack of infrastructure, the company had to deal with war in Sierra Leone and poor political relations between some countries. It took two years to negotiate with the governments of the DRC and the Republic of the Congo to allow a wireless link between the two countries (previously, calls were routed via satellite through Europe). There was also the issue of corruption — Celtel refused to bribe government officials when applying for licenses to operate, insisting that its whole board signed off on expenses over $30,000.
It also had to work differently in African countries’ developing economies, making its network available to customers who didn’t have bank accounts or couldn’t afford monthly contracts by selling scratch cards for small amounts of local currency. On the back of Celtel, other businesses sprang up: Retailers selling those scratch cards in small kiosks, subcontractors building the network and logistics businesses servicing the telecom towers.
By 2004, Celtel had reached $614 million in revenue. By 2005, Celtel was operating in 13 countries and had more than 5 million mobile subscribers and was considering an initial public offering (IPO) to raise further cash. After companies found out about the possible IPO, Celtel had several acquisition offers, and eventually sold it for $3.4 billion in 2005 to the Kuwait business Mobile Telecommunications Company (now Zain, which sold it to Bharti Airtel in 2010).
brahim made a “giant fortune” from the sale of Celtel, in Bono’s words. “I didn't realize it was going to be that hugely successful,” Ibrahim told “The Brave Ones.” “So … I said any money I'm going to make here in Africa … I’m going to put it back into Africa.” He started the Mo Ibrahim Foundation in 2006, aiming to improve how African leaders ran their countries.
He didn’t want to simply provide handouts. “I know a lot of wonderful people doing great things … Bill Gates and Melinda are doing a wonderful job … Giving blankets, baby milk, family planning. My view is just slightly different … why (do) African people need (aid) in the first place? Why (do) we need philanthropy?” he said.
“Africa should be rich, because we are a very rich continent. We're a huge continent. We have all these resources … so why are we poor? The answer was clearly the way we run our countries. It is the poor governance. It is the poor management of our resources — material and human.”
In 2007, he started publishing the Ibrahim Index of African Governance, measuring the continent’s 54 countries’ performance across categories including security, human rights, economic opportunity and welfare.
“Governance is about delivery of public good(s), delivery of education, health, safety, security … Do we have courts which are functioning? Do we have decent juries? Do we have judges, are they independent judges really? Poor people, people who live in rural areas, do you have access to justice? Education services, health, infrastructure, clean water, electricity, all these things have to be done by the government or facilitated by the government to get the private sector to do it,” he told “The Brave Ones.”
The Ibrahim Prize rewards political leaders in Africa who have “strengthened democracy and human rights for the shared benefit of their people.” Since the first prize was awarded in 2007, only six leaders have won it.
Former president of Mozambique
Chissano was the first to win the Ibrahim Prize, awarded for his role in “bringing peace, reconciliation, stable democracy and economic progress to Mozambique following the civil war.”
Former president of South Africa
Mandela was given an honorary Ibrahim Prize, for being an “exceptional leader,” after spending 27 years in prison for attempting to overthrow apartheid. He was elected president of South Africa in 1994 and served one five-year term.
Former president of Botswana
Mogae was awarded the prize “for his role in maintaining and consolidating Botswana’s stability and prosperity in the face of an HIV/AIDS pandemic,” among other achievements such as gender parity in tertiary education.
Former president of Cape Verde
Pires won the prize for his contribution to the country’s democracy, stability and prosperity. “Under his 10 years as president, the nation … won international recognition for its record on human rights and good governance,” the judges stated on the Ibrahim Prize website.
Former president of Namibia
Pohamba abolished school fees, meaning an increased level of literacy in the country during his presidency, and was also praised by prize judges for his investment in health. More than 80% of those with HIV received treatment under his governance.
Former president of Liberia
The most recent winner of the Ibrahim Prize, Sirleaf was awarded for her “exceptional” leadership of a country that had suffered 14 years of civil war and was later hit with the Ebola crisis.
Seventy-two percent of Africans now live in a country where governance has improved over the past decade, according to 2018’s index. But it also showed that the decade was one of “lost opportunity” in terms of economic development, and that the growth of the working age population is outstripping financial gains.
“We need to manage this bulge in population and we need to find a way to create jobs, create investment … In the next 10 years Africans of working age will increase by 30%. Will our job market increase by 30% over these years? … That is a challenge for us,” Ibrahim said in a video on his foundation’s website.
Kenya (ranked 11), Morocco (15) and Cote d’Ivoire (22) improved the most in the index over 10 years. Kenya did particularly well on its business environment, including elements such as the efficiency of its customs procedures and the absence of bureaucracy, while Morocco scored well for accountability of its government and public employees and poverty reduction efforts.
Mauritius (1), Cape Verde (3), Ghana (6) and South Africa (7) remain relatively unchanged over the period. Countries toward the bottom of the list that have seen increasing deterioration include the DRC (47), Equatorial Guinea (48) and Libya (52).
Writer: Lucy Handley
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Editor: Matt Clinch
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As well as helping people have better lives, the index also informs potential investors, says consultant Pascal Lamy, former director-general of the World Trade Organization. “In every big multinational that’s now looking to invest in Africa, the first thing they will look at is this big book with all this data. And I can tell you this will have a big influence on whether they do it or not,” he told “The Brave Ones.”
Along with ranking countries, the Ibrahim Foundation awards a prize worth around $5 million over 10 years to politicians for good leadership. Ibrahim argues that some leaders stay in office too long because the power goes to their head. “I have seen many African leaders come to office very well meaning, they live in a bubble and they start to grow this crazy idea about being indispensable, by being extremely wise. We say, excuse me. Some humility please.”
“European leaders, American leaders … they become rich after they leave office, actually, because every bank in the world wants them on their board … Their memoirs sell for a huge amount ... They go on the speech circuit. They make a lot of money,” Ibrahim told “The Brave Ones.”
“Our guys have none of this. So, what do you do after office? If you are a good leader and clean, you leave an office, you are penniless. You have nothing,” he added.
“What do you do? They have to go and take a job at university or somewhere to pay for the rent. We say no. We want you to go around Africa now. To go around countr(ies), speak to the school kids. Tell them what it means to be a leader. Tell them your story. Go … talk about African issues around the world.”
In 2017, the prize was awarded to Ellen Johnson Sirleaf, then the president of Liberia, who helped the country grow its economy more than 7% a year between 2006 and 2014. “She took over a country that was devastated and broken by 14 years of civil war and was later struck again by the Ebola crisis,” the judges' citation states. “She restored Liberians’ dignity and pride in their country,” it adds.
The prize only gets awarded if there is a leader whose behavior merits it and there have been some years where no award has been given. “It's not just a great thing if you receive it. It's a terrifying thing if you don't,” Bono told “The Brave Ones.” “So, even though Mo doesn't vote on the committee, people, heads of state look at him with a certain amount of trepidation.” The late Kofi Annan is a former prize committee chair, and it is currently overseen by Tanzanian politician Salim Ahmed Salim.
Some have suggested the large prize was a bribe for leaders, but Mary Robinson, the former president of Ireland and a board member of the Mo Ibrahim Foundation says: “It was the controversial part (of the foundation) in the beginning. And Mo had to spend a lot of time explaining, ‘No, corrupt leaders would make far more just by milking the system the way they were doing.’”
She adds: “He's always on the side of Africans, young Africans, the potential of Africa. He really passionately believes in the future of the continent, the future of his own country, Sudan, that's what gets him up in the morning.”