[Naijanet] BEFORE BILL GATES ARRIVES
olorunfemi ojo
Wednesday, 12 January 2000
Before Bill Gates arrives
By Etim Etim
THE idea of a formal letter from President Olusegun Obasanjo to the American
computer tycoon, Bill Gates, offering him a package of incentives and
opportunities in the Nigerian economy is an uncommon initiative. Our foreign
investment drive over the years have been limited to presidential visits and
bilateral trade discussions. Babangida's economic diplomacy was equally a
radical departure from the past, but its success was checked by a set of
self-conflicting dynamics, including unbridled corruption. Obasanjo's
initiative seems very ambitious. Nigeria has been racked by years of misrule
and is trudging along with decaying facilities, Microsoft, on the other
hand, was voted in 1998 by {Fortune} magazine as the the eighth of the 100
best American companies to work for. All its workers are entitled to stock
options - opportunity to be shareholders ñ and most professionals hired
before 1992 have become millionaires, while six have already hit the
billionaire club. Gates himself is well-known as the world's richest man
with a net worth of over N5 trillion. So, ordinarily, the two do not look
like birds of the same feather. But when viewed in the context of the need
to forge strategic alliances in the global market place, the President's
letter becomes logical. Microsoft is a skilful global player, with
insatiable appetite for investment opportunities, especially in the emerging
economies where a big computer market is developing. Nigeria has a massive
population of about 160 million (World Bank estimates), 60 per cent of which
are aged between 16 and 30. Its educational system and the workforce are a
potentially vast market for Bill Gates' unique marketing style of combining
the need to spread computer habit with aggressive marketing of the products.
However, the company's idea of going global is very common and this is why
President Obasanjo's initiative is not totally misplaced, although not
entirely well thought out. Unlike the traditional American industrial giants
ñ the likes of General Electric, Motorola, or Coca-Cola - which step on to
the global turf by setting up unwieldy joint ventures, investing tonnes of
dollars in plants and industrial structures, deploying hundreds of highly
paid expatriates managers and hiring tens of thousands of local factory
workers and sales people, the Microsoft approach is leaner, faster and much
more highly leveraged. On choosing where to invest it keeps the operation
small, preferring instead to certify hordes of small local companies as
partners to do most of the work of selling software and supporting
customers. Those partners in turn train other partners, and the sales
network grows. The company also helps finance independent software
distributors, which are openly encouraged to handle competitors' product as
well. Imagine Guinness openly calling on its distributors to sell Star beer!
In addition, Microsoft supports other local companies to write their own
commercial software programmes that do not only complement its flagship
Windows operating systems, but also often compete directly with Microsoft's
word processors, speadsheets and other applications. The logic is that by
helping to nurture the development of local software industries, the company
builds its own aggressive sales force and, more importantly, it speeds
overall sales growth, thus shortening the time it takes nascent markets to
mature.
In this case Microsoft, on its own, is not a big employer wherever it
operates. But because it collaborates with others to spread the use of its
products, several jobs, especially in sales, are created down-stream. In
China, for instance, Microsoft's staff is less than 100. But they work with
hundreds of budding software companies and thousands of certified resellers
(companies, not people) which grow rapidly every year. In many other
outposts ñ Latin America, Eastern Europe, Asia and even Africa ñ this
strategy is adopted and modified variously. Interestingly, many of these
countries, were initially technologically backward, just as we are today.
But today, they account for 10 per cent of the company's overseas sales, and
they are by far the company's fastest expanding markets.
Before despatching his letter, the president should have met with our IT
operators. The outcome of such discussions would have influenced the tone
and focus of his letter. And in any case, they are the people Bill Gates
will look out for whenever he touches down at the airport. But if the
president's letter was just a rehash of the well-known Nigerian incentives
of free land and cheap labour, it probably was not well-focused. First,
because software products are so easy to manufacture and ship abroad, Gates
does not need to worry about building and operating factories. Instead,
Microsoft contracts out to others to duplicate and package much of its
software. Even personal computers do not also require much outlay to set up,
unlike main frames and minicomputers. Rather, the company's major worry is
usually poor distribution channels, epileptic transportation and
telecommunication infrastructure, stiff tariff regime and piracy.
In addition to attracting foreign investment, the government should equally
be concerned with the disappearing enterprising spirit in Nigerians,
especially in the real sector of the economy. How can the government induce
our wealthy former military administrators, former ministers and Abacha's
cronies to bring home their loot and help expand the economy? Our economic
landscape today is virtually colonised by Asians, even in areas that were
hitherto reserved exclusively for Nigerians by the indigenisation
regulation. The biggest ice cream parlour in Nigeria today belongs to a
Lebanese woman, while the biggest and fastest growing auto dealership
belongs to two Indian brothers. There are only two private indigenous
conglomerates today ñ the Dangote Group and the Doyin Group.
In the late 1980s, I participated in a media tour of Adebowale Electrical
Industries, an indigenous electronics and electrical firm along Ikorodu Road
in Lagos. The visit was arranged as a build-up to a syndicated loan the
company was about to sign with NIDB. The company's young executives were
effusive of its trade relations with some Japanese allies and export drive
into the ECOWAS sub-region. My dream then was that such was the foundation
of Nigeria's emerging industrialisation. Today, Adebowale and many other
indigenous manufacturing businesses are barely trotting. Yet, they are
supposed to be the breeding grounds for our managerial expertise which the
foreign investors would readily use.
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