Africa and the emerging market Powerpoint presentation

Creating Emerging Markets – Oral History Collection

Mo Ibrahim, Founder and Chairman, Mo Ibrahim Foundation Interviewed by Tarun Khanna, Jorge Paulo Lemann Professor,

Harvard Business School September 15, 2017 in London, United Kingdom

Video interview conducted in English

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Interview with Mo Ibrahim

Interviewed by Tarun Khanna

September 15, 2017

London, United Kingdom

Video interview conducted in English

TK: This is Tarun Khanna with the Harvard Business School Creating

Emerging Markets project, and we’ll begin right away. Mo Ibrahim, thank

you for agreeing to talk to me.

MI: You’re welcome.

TK: You’re an iconic figure in Africa, whether you like it or not—

MI: That’s kind of you.

TK: —particularly as regards entrepreneurship and allowing youth to

express their creativity, as exemplified by your own career. In this

conversation, I’d like to speak with you about different facets of that part of

your professional life.

2 Creating Emerging Markets

There are two phases, at least, to an outsider—the phase when you built

Celtel initially, and any reflections about it subsequently, and the work of the

Ibrahim Foundation.

Let’s start at the beginning. I’d like you to reflect a little bit on how

you came to start Celtel, and if you will, in a fairly open-ended fashion, some

of the lessons that you learned along the way, and I’ll ask a few questions as

we go along.

MI: Yes, that’s interesting. I’ve been in mobile communications all my

life as an academic. I was a senior research fellow with University of

Birmingham. My work there was in the area of the prediction of radio

coverage in urban areas and rural areas, and that was pre-cellular. Preparation

for the work started with really introducing this cellular technology, and we

were part of that. British Telecom received one of two licenses, and they

invited me to join as Technical Director, to design the first mobile network

here in the UK.

So I left my academic career, and I went into the engine room. As an

engineer, we always love to play with the large train set, it’s more fun. So I

spent some time there. We introduced the first network here, we designed

that, and we then worked on the development of the GSM to be adopted by

Europe, a common standard which was essential for the growth of the

industry to bring the prices down and to enable roaming between countries.

Because prior to that, there was various silos of different, small analogue

systems.

3 Ibrahim Interview

TK: Every country had its own.

MI: Yes, you couldn’t roam, you couldn’t roam even within in one

country. For example, in the US, for many years, you could not roam between

different parts of the country.

TK: So what time period was this, roughly?

MI: That was in the ‘80s, the mid ‘80s, when we started that. It was

wonderful, those years. I spent about six years with BT, really cutting my

teeth on how this system really worked, and how to enhance performance. I

found it difficult to work for a big company like BT, which actually was not

focused on mobile. BT, at that time, was the largest company in the UK—

240,000 employees, profit of £3 million every day.

The management of BT failed to see the importance of mobile. I

recall the Chief Executive and the Chairman of BT, did not come to visit

Cellnet cellular operation until six years after our launch—one week before

I left, actually. By that time, I decided I had had enough, I need to go and do

my own thing. So it was a drastic lesson of how major corporations fail to

see the future. That operation was really very low down the chain of

command, a very low priority. Nobody was focused on it. I always said,

actually, the rise of Vodafone in UK was a gift of BT, actually—its

inaction—more than anything else.

4 Creating Emerging Markets

TK: As you reflect on that period that you were with BT—was it

arrogance? Lack of knowledge? Lack of resource allocation?

MI: A little of both. BT had a 100-year history of being the established

top dog in the country. It was the Ma Bell of United States and the largest

company—huge revenue, no competition. It was also just privatized around

that time. It was a bit of arrogance, lack of imagination, and overconfidence,

really. It was a pity.

Anyway, so I left, but what you do when you leave a position like

that? You say, “Okay, I’m going to be a consultant,” because I didn’t want

to work for anybody. I started a company called MSI, Mobile System

International, which was a consultancy and also a software company. We

developed our own tools to plan networks, to automate some part of that

operation. This became very profitable, and our tools became industry

standard. We had over 110 operators worldwide licensing our planning tools.

TK: In the UK, or worldwide?

MI: Yes, worldwide. We had almost everybody.

TK: So you managed to make a lot of connections with operators.

MI: Exactly. And then, as consultants, we were very involved. We had a

turn-key design contract for probably half of Europe, GSM networks. We did

5 Ibrahim Interview

Germany, we did Sweden, we did Norway, Denmark, and France. We did

Moscow, we did Singapore, we did Shanghai. We become the largest

independent technology consultants in Europe. Through that process, of

course, I came to know all the players—there were not many telephone

companies around the world, at that time, anyway. There were really quite

few—it was a very small network there—but we worked directly with the

chief executives of all the telephone companies worldwide, and we helped

companies, because of all the alliances that emerged. So, BellSouth would

partner with Vodafone to bid in Germany, and they would ask us to plan the

network. So we come to know everybody.

What happened then was that the struggle to acquire certain licenses

became feverish, and prices start to go up drastically. We worked

everywhere, Malaysia, Singapore, Australia, the United States, Brazil and all

over Europe—designing networks for everybody.

We asked why nobody was willing to do work in Africa. Nobody’s

willing to go and do anything in Africa. I remember a conversation I had with

the national director of one of the active Bell operators in US, who was quite

active in the acquisitions outside United States. We were partners in

preparing the bids and designing the networks. I said, “Our friends in

Uganda, I know some people there. They called me and said, ‘We really need

to have a mobile network, we’d love to have one.’ And it’s free for you to

help achieve this. You’re paying top dollar to acquire licenses elsewhere,

why don’t you come to Africa and do it?” His answer was rather shocking

to me, actually, but it was quite educating. He turned to me and said, “Mo, I

6 Creating Emerging Markets

have no prejudice, I love Africa, but how can you ask me to go and build a

network in a country run by Idi Amin? This guy’s a dictator, a joke.” I said,

“Idi Amin left the country 15 years ago.” He said, “Really?” And he laughed,

and he said, “You know what? I am the most liberal board member in my

company, and the most internationally traveled. I was a hippie when I was a

young guy. If I think Idi Amin is still running Uganda, what do you think my

fellow board members would think about all Ugandans?”

TK: Well, I think most people wouldn’t know who Idi Amin was.

MI: He said, what he said was, “My fellow board members will think

Ugandans still live up in trees.” It was really a very interesting moment for

me, I remember it vividly. It became clear to me that nobody was going to

go and do anything in Africa. At that time, also, our company matured in

terms of what we were doing. It was an exciting time for me. We had a good

offer to buy the company, and we decided to sell. Around that period we said,

“Well, let’s go into Africa. Nobody else is going to do it.”

TK: How long had you run the consulting firm?

MI: We started in ’89, and we started Celtel in ’98. We sold the first

company a year later. We got a very good price for it, and for the first time

in my life, I became almost rich. Everybody said, “Okay, Mo. Now you

7 Ibrahim Interview

should go to Barbados and just enjoy life.” I said, “No, no, no, I’m going to

go to Africa.” They said, “You’re crazy.”

I think that the perception is that foreign companies go into Africa

mainly for extraction. You go and you pick up some copper, or some iron, or

some diamonds, and you go home. Here was an industry where we were not

going to take anything out of Africa—we were going to put very expensive

infrastructure there. If anything happened to it, you would lose everything,

and that’s why people were afraid. Being an African, I’m more familiar with

Africa. Africa’s not perfect, but it’s also a really normal place. There’s

clearly a huge gap between perception and reality. Whenever there is a big

gap between perception and reality, I think you have a great business

opportunity. I think that was the situation, really, at that period of time. It

was a mixture of business judgment and passion. I felt I needed to do

something, also, for my people—I felt I had a debt I needed to pay back,

because I left the continent very young.

So I decided to go and do that. It was a very interesting experience

because building a mobile network in Africa was really tough. By that time,

we had built so many mobile networks almost everywhere. Typically, all you

needed to do was to overlay the mobility part of the network over the fixed

network, because the incumbent—the telephone company operator—would

have already brought all the wires, the microwaves, the cables—it would

usually be theirs. Typically, you would just put some switches and some

radio stations, and you would connect using the infrastructure of the

incumbent, the telephone company operating.

8 Creating Emerging Markets

In Africa, there was nothing like that. There was no infrastructure. Telephone

companies in Africa have had a difficult time. They existed for so many

years, but they could not really invest for the simple reason that their main

customers were the government departments, and those guys never paid their

bills.

TK: These were all state-owned companies, right, for the most part?

MI: Everywhere. Look, not only over there, but around the world—it was

state-owned companies, it was government departments. I did my training

with the GPO [General Post Office], which was the precursor of British

Telecom—which was a government department, the General Post Office.

Actually, they were called just, Post Office.

TK: That’s right, yeah, post and telegraph.

MI: There was a telecom department that reported to the minister of

transport, telecom, postal, and roads, and whatever. So it was a small

department. The director of that department did not dare cut off the minister

of defense or the foreign ministry. You would not just cut off your customers

if they don’t pay. So this telecom company was really bankrupt. They appear

to have great leverages, but they all have bad debts—bad debts that could not

be settled, actually. So there was no money to invest. If you made a profit,

you had to hand your profit over to the treasury. And then, the finance

9 Ibrahim Interview

minister would decide whether to give you some money or not. So there was

no investment, really. The total number of fixed lines in a continent of one

billion people was no more than three million. Most of them were in South

Africa, Egypt, Morocco. Sub-Saharan Africa? Nothing. The DRC, with 60

million people, had 3,000 lines—most of them not working, actually. So that

was the situation. The continent was hungry for connection.

When you look at the equity in a mobile call, you always look at the

value of a mobile call—a mobile phone. If I’m here in London right now,

what is value of a mobile call? I have so many alternatives if I wanted to

communicate. Let’s not even talk about the Internet, because at that time we

did not have Internet. But we had fixed lines. We had quite a high penetration

of fixed lines, so that was one option. We have the tube, we have the

underground, we have taxis we can take. We have a postal service that

guarantees you delivery in 24 hours. We have all these sort of things. You

don’t have that in Africa. You don’t have that. If you want to call or

communicate with somebody who is just 20 miles away from you, that can

take a whole day—a physical trip. So the equity in a phone call in a place so

wide—Africa’s a huge space—is really immense.

So that was the situation when we went to Africa. There were also

fears around issues of corruption and rule of law. I never believed that Africa

was that corrupt, frankly. It was like a caricature kind of picture, which we

brandish about. I also believed—and found it to be true, actually—that

business was really the instigator of corruption. Because if you think about

it, no politician can bribe himself. You need to have a partner.

10 Creating Emerging Markets

TK: You need two people, yes.

MI: It needs a partner. Who is the partner? We never talk about this

partner, you know why? Because he’s one of us. We don’t talk about that,

but that issue is very important. So we decided to go and build a company to

a very high standard.

TK: Can I pause you for a second?

MI: Please.

TK: To what extent was this an economic decision versus really an

emotional decision, that you had accomplished something with the

consulting firm, had some access to resources and had some technology and

some skill sets?

MI: Yeah, I think 70 percent of it was an economic decision, and maybe

30 percent of it was passion.

TK: An emotional decision?

MI: Not really, because if we found a project not feasible, we didn’t do it.

We’ll turn down the project rather than build a bankrupt business.

11 Ibrahim Interview

TK: When you talk about the equity value of a call, it’s probably

determined by two things: one is, what’s the value to the person initiating

the call and receiving it—which is very high because they have no

alternatives—and the second is, how much can they pay for it? The paying

capacity is low on average, so is that just a scale that—

MI: That was, of course, one of the issues we were looking into. To our

surprise, we discovered that the equity of the call was so overwhelming that

people had to make a decision, at the end of the day—shall I buy a beer, or

shall I buy a scratch card?

TK: Yeah, a minute of calls.

MI: Yes. What shall I buy? We ended up winning most of these

deliberations, but our friends in the beverages industry would say, “You guys

are hurting us.” So that was a challenge. Then, from the outset, I thought the

main challenge would be putting in place the infrastructure, because we had

to put in the infrastructure. That’s why the job was harder—I had lay cable,

I had to use microwave, I had to produce the backbone of connectivity in

order to do it. But added to that were some other problems—take power, for

example. We take power for granted, because in our experience, power

comes from a small socket somewhere in the room, and we just plug into it.

It’s everywhere. Power is around us. Unfortunately, in Africa, we don’t have

that.

12 Creating Emerging Markets

Power is not there for most of the geographical areas we work in, and when

it is there, it is not reliable. So this means you have to use generators

everywhere, and, of course, back-up batteries. Now, if you provide the

country’s coverage, this means you have to have an army of people who are

visiting all these remote locations every day to bring the diesel for the

generators and to check the batteries. Doing this is a massive operation, but

you have to do it. It is something we didn’t have to do in Europe. So that was

a real challenge, especially because of the difficulties with roads. When you

have to go to a mountain, sometimes you have to use helicopters to lift the

equipment, or you have to use the mules to carry things. So it was hard work

to put the infrastructure in place and keep it operational.

The main challenge, and it was a most difficult one, was the

financing. Banks at that time did not want to do anything in Africa, all these

great banks. It was such an unbelievable situation. I don’t know of any other

telephone company in the world that had to be funded completely by equity.

Typically, with most of these companies, you have 50 percent debt of your

capital. We had to fund by raising capital. In seven years (the lifespan of the

company) we had nine rounds of financing.

TK: All equity.

MI: Yes. Because we had to fund it by equity. There was no other way,

no debt. Banks didn’t want to touch us.

13 Ibrahim Interview

TK: And even the governments wouldn’t step in over time, as the networks

became viable?

MI: No. The government was looking for more revenue, so actually they

tapped us for more taxes. We were happy to pay taxes. Actually, we loved

being the largest taxpayer in about ten countries. If I’m paying tax, it means

I’m making a profit. So I’m happy, there’s no issue there. But whenever

there’s a problem, they come and say, oh, let us invent a new tax. In one

country they use something—they call it an air tax. It’s using the air. I said,

“I use air, you use air, you breathe, as well. Why are you charging me for the

air?” But we understood. The business was so profitable anyway, though; it

was not a major issue for us.

TK: Can you talk a little bit about the investors who came into these

multiple rounds? Initially it must have been you, yourself, and your friends?

MI: We funded the business, largely, myself and my colleagues. A

number of my colleagues also made good money because of one thing I

always done—all of my employees were shareholders in the company. I

insisted every employee should be a shareholder in the company. I’m not

talking about the management, I’m talking everybody. So when we sold the

first company it was good, we got $900 million for it. So a lot of our

colleagues became millionaires. Many of them wanted to continue to do the

business, but I put everything I had in Celtel, the second operation. We were

14 Creating Emerging Markets

the largest shareholders. The first people who came in were the international

development agencies, finance people like the IFC and CDC Group, which

is a development finance group owned by the government of the UK. They

saw immediately the value of what we were doing, and they were the first

people to come with us. Later on, the Germans came on, and OPEC from US

came in. So they were first wave of partners, and each round of finance we

would also follow—we would also fund. We always used an anchor, an

external, to set the price.

TK: But there were no domestic sources of equity money, either.

MI: No way. No, we could not raise anything.

TK: Not even from South Africa?

MI: We did not operate in South Africa. We operated in about 14 or 15

countries, but not in South Africa.

But the point I want to make, which is very interesting, actually, is

that the issue of corruption was immediately raised. In our first board

meeting, we said, “Okay, how are we going to deal with that?” From the

start, I had a very strong board. I always believe that as a chief executive, I

have to have a very strong board, which I can recruit to work for the company

for free, as well. Because in my case, at least, in what I’m trying to do, I think

that was important for the credibility of the company. So I had the first Chief

15 Ibrahim Interview

Executive of Vodafone, Sir Gerry Whent, who just retired, Sir Alan Rudge,

former Deputy Chief Executive of BT, Lord Jim Prior, Dr Salim Salim—

who was head of the African Union. I had a lot of very senior people, and we

said, “We’re going to institute a very high standard of governance, better than

any listed company even in Europe. Can we do that? An African company—

let us have a challenge here.”

It was very interesting, how we operated the company. So for

example, when it came to the issue of corruption, we said, “We’re sitting in

our comfy rooms here, and we can talk about corruption and make wonderful

statements—because somebody proposed we use a slogan called ‘Not a

Single Dollar’—but people use slogans all of the time, how we walk the talk?

How do we execute?” We came with an answer. We said, “Okay, we know

that, if somebody comes under pressure, it will not be me, it will not be board

members, it will be the manager on the ground, the chief executive of the

company in the country where we operate, this is the guy who is vulnerable.”

So the minister of interior might visit you at night and say, “Look, we’re

preparing for elections, and we know you love the president, and we need

something.” What are you going to say? What are you going to do? We

said, “These guys need support.” So we agreed in our regulations that any

chief executive of any of our companies could not sign a check for more than

$30,000, we chose that number carefully. We’d just help to enable the small

operation to keep ticking, and the board would be ready to really deal with

any emergency, and would be able to authorize funds so that we wouldn’t

hamper operations.

16 Creating Emerging Markets

The board was amazing. For seven years of operation, I never had a problem.

If there were any measures that required extra funds—some unforeseen

condition where we needed to acquire some hardware or software to enhance

our operation—I was able, in 24 hours, to communicate with the board and

get the board’s approval. This system protected our people in the field. So

we said, “Look, we don’t want heroics. If anybody comes to you asking for

anything, say, ‘Fine, what you want? I will write to my board.’” On my

board, I didn’t only have those great people, I also insisted on the IFC, CDC,

OPEC, DEG of Germany, FMO of The Netherlands—they all came on

board. I said, “I want a senior director from each of you guys to come and sit

on the board.” And the people, you know, said, “Look, but I only have two

percent. Why are you offering this position?” I said, “That’s my gift to you—

you come to the board.” So I had all those people on the board, people from

the governments of developed countries. Nobody can look at these names

and those people and say, “Ah, you write to them, ask for a bribe.” So we

never had a problem. In our experience, we found it was not an issue.

TK: Were you able to set an example through this to other entrepreneurs

working in Africa? Did other people emulate?

MI: I believe so, because it’s something we also talk about a lot. Once I

left that business and established my foundation, this was something that I

talked about in Africa, and actually in Europe, as well, because we need our

partners. We cannot do the job in Africa without their help. We need good

17 Ibrahim Interview

governance, not only at the state house, but also in the boardroom. That’s

something I hope your school really insists upon and tries to instill in your

students. We have to have good governance, otherwise you are polluting the

whole ecosystem.

Also, I found that if you develop a reputation that you don’t pay,

people will leave you alone. If you start to pay, you have a myriad of

problems, because various people are going to come to you. And if the

government changes, the new guys come to you, and if you stop paying, you

become the enemy, because you gave to other people, but you don’t give to

me—that’s a big problem. And then, this extends into other countries—your

reputation goes ahead of you. All of this hits your bottom line. It just really

doesn’t work.

TK: So as you said at the beginning of this conversation, one of the other

perceptions of Africa had to do with rule of law, not just small corruption,

but expropriating assets. When you put in so much fixed investment, people

would worry about it. Did you have any experience of that sort of

expropriation of assets?

MI: We had issues. We had to fight some battles. I went to court in three

countries where the government had committed a breach in our contract. We

have clear contracts, and so if something goes wrong—if somebody gives a

bribe to somebody or somebody later oversteps their duties, or if they try to

force us to do this or do that—we will not tolerate it. So I went to court three

18 Creating Emerging Markets

times in three African countries—in local courts, against the government—

and I won every case. I tell my friends—business people, who complain

about Africa and rule of law—that I fought these cases here [in Africa], and

that I won against the governments in the local courts. Can you go to court

in China, or even in India, against the government and hope to win as a

foreign company?

TK: In India you can, yeah.

MI: Look, the Vodafone problems recently have been—

TK: —Yeah, but anyway, that’s a separate issue. But what are the three

countries?

MI: Zambia, Malawi and Chad. It doesn’t matter which, but these were

three sub-Saharan countries, and I went to court. In one country, we just

walked away. We just walked away. What happened was, we won the

license, we paid the license fees, and we went, but the environment was so

bad, we said, “This is heartache, it’s not worth it.” And we walked away. We

said, “Here is the license back to you, is a gift. We’re not even asking for our

money back, enjoy it.”

We ought to be ready to make such decisions. If it doesn’t work, it

doesn’t work, fine. We’ll swallow that.

19 Ibrahim Interview

TK: Let me shift gears a little bit away from corruption. In the past when

we’ve spoken, you emphasize a lot the issue of skills and talent and so on.

How did you manage the recruiting of talent to build this pan-African

company? What are some of the attempts that you had to come up with?

MI: That was very important, because management is crucial in all of

what we do. We had some advantages, really. First, within the telecom

industry—because we work in all these worldwide operations—people know

us. When I say people, I mean worldwide, people in the industry. We had the

reputation for technical excellence because we’re doing all this wonderful

stuff. But also, people noticed that we were the only company that embraced

all of our shareholders. So it’s an attractive company for people to work for.

We tried to recruit as many Africans as possible, because we wanted

people who understand the environment. For a manager really to be

successful, they need to hit the ground running. We discovered that a lot of

capable Africans are working out there in the diaspora, as you call it. People

working for Ericsson, for Siemens, for Nokia, for Motorola, people working

for operators, etc.—many of them highly qualified Africans. They dreamed

of going back to work in Africa. The problem was that there were no

appropriate jobs for them to go back to that offered good salaries and good

standards of living. So, here was an opportunity, now—we were an African

company, but we operated as European company. Our salaries were

competitive, and we had these share options and offered people to go back to

20 Creating Emerging Markets

work in their countries. So we really had an easy time finding good

management.

TK: So the options—it was not a listed company?

MI: No.

TK: So what were the options on, the incentives?

MI: It was a private company. Every year we offer some of our shares.

TK: Shares of the company—

MI: —shares of the company, and we tried to price it attractively. The

general saying in the boardroom was, “Look, as shareholders, we never lose

money by giving shares to our employees. We never lose money.” And it’s

true.

It creates a complete different type of company, different type of

atmosphere. Everybody’s responsible. That was really wonderful. We also

tried to produce fast tracks for the locally employed people. The challenge

for each chief executive and the management team was to try to identify who

are the kids really with… with that, you know—

TK: Special.

21 Ibrahim Interview

MI: —special thing with bright eyes, and found them. We—sorry to

Harvard—went to London the business school here and asked—

TK: Good school. That’s a wonderful school.

MI: We asked them to design a program for our management, and this is

middle management, which we are thinking of moving forward. We had an

intensive, continuous program here. We were putting our people through that

program. The fact that we were operating in fourteen Africa countries,

offered, also, the option of moving people up from one country to another

country—from a position in a bigger operation to a more senior position in a

smaller operation. They get the teeth cut there, and then we move them to a

bigger one. So that was the dynamic within the company. But we think this

is a very essential factor in our success—creating a cadre of management

which is effective and capable. I think that was a very important focus for us.

TK: So you managed to avoid the corruption problem, and you managed

to circumvent the talent issue in some sense—

MI: The talent issue, yes.

TK: —which are the two big constraints.

MI: Right.

22 Creating Emerging Markets

TK: So you ended up selling the company to Zain. Did you not imagine

something different? Did you not imagine listing it, building a pan-African

company with African ownership? I wonder how you thought through that.

MI: I’ll tell you the story. The company, at that stage of development, I

think our revenue was about $1 billion. We were making a profit of around

$300 million a year—profit—after tax. So we were in a really good position.

The problem for us was we, at that stage, were growing around 50, 60 percent

per year. This requires a huge investment, and this job of financing is really

tough—very distracting for the management. My CFO had no other job other

than raise money. He had no time to do any other thing. Really. So we started

to talk about our next phase. At that time, we had 14 operations. All of these

operations, of course, were independent companies that we owned—if not

100 percent, at least 80, 90 percent of the operations. We had the diversity—

the diverse operations—so it was very secure. I just couldn’t understand how

the banks were looking at it. It wasn’t like there was civil disorder in this

country, and then, if something were to go wrong here, I had fourteen

operations…

TK: It was a safe bet.

MI: A very safe bet. Operations were all profitable. Our only problem was

cash flow, because we were growing, growing so fast. I thought growth was

a wonderful thing, and I needed really to keep building. But banks would not

23 Ibrahim Interview

deal with us. The same banks, which were piling on real estate in the US and

doing all kind of stupid stuff elsewhere, they would not invest in an African

company with such amazing financials. We just couldn’t understand. Then

we decided to list the company. We said, “By listing the company in UK, we

can move quickly to join the Fortune 100, where we can easily access funds.

TK: There was no real option for an African listing in Jo’burg or

something?

MI: We thought London would be—

TK: Better.

MI: —Yes, a good, a better listing. I also wanted to bring the story of

investing in sub-Sahara Africa to the outside world. To say, “Look, guys,

Africa is not a basket case. Here is a company we started six, seven years

ago, and we’re listing it now, as one of the Fortune 100 companies.” That

would have been a great story for sub-Saharan Africa. So we started the

process. The board-appointed deputy chair at that time was Lord Simon

Cairns, who was head of CDC before he joined our board to manage this

process. We hired Goldman Sachs and Citibank to help handle it. Banks were

not familiar with Africa, so it was difficult. Those guys came in and said,

“Oh, how interesting. We’ll see, you know, what the company’s worth, how

it work, etc.” And then, in the first meeting they said, “We think we can float

24 Creating Emerging Markets

it with a $24 per share”—around that number was what they said. But they

needed to go look at the company to see what was going on, so we said,

“Fine, you can go around.” Then they started their due diligence and when

they came back from their first trip, they raised the target price to $30 per

share. Another trip, the share price went up to $34 and finally $45.

Meanwhile as we were going through this process, we started to receive

unsolicited offers. We received six unsolicited offers and the Board formed

another committee to manage that process and the final price came out at

$56.

TK: Much higher than the listing price—the proposed listing price.

MI: Yes, the suggested listing price, right. Now here is the problem.

Besides the DFIs, at that time we had three or four private investors come in.

Suddenly, those guys found that they’re making a hell of a lot of money. Our

share price was $2 when we started seven years earlier. It kept moving up.

After six years, the last round of finance, the share price was $15. Now, six

months later, somebody’s offering us $56 for that share.

So suddenly we had this pressure from the shareholders who said,

“Wow, somebody paid $15, and six months later is getting four times their

money.” So the discussion around whether to sell or list became a little bit

complicated. My personal preference really was to list. But as always, I

referred to the board—I was the largest shareholder in the company by far,

but I never exercised a veto in the company. I had only one seat on the board,

25 Ibrahim Interview

although legally I should have seven seats or so. I had only one seat, and we

had thirteen board directors, because I really needed the advice and support

of the board. Some people might say, “I can run the company myself. Why

you need a board then?” But I don’t agree with this, so I tried to empower

the board, to help them feel their responsibility. I got decent people anyway,

so what’s the problem?

So I said, “I’m going to abstain through the whole discussion. I’m

grateful for the people who funded the company and who guided the

company. Well, the company’s fine, you guys do what you like.” Clearly

people preferred to take the offer. Although I offered that, if we list, I’m not

going to sell any shares. So all my allocations of the secondaries, I’m passing

to my shareholders, just to help. But that still would not have not have been

enough. So that’s how the decision was taken to sell the company.

TK: As you look back, a lot of time has passed. They’ve been through Zain,

so now, Sunil Mittal’s company bought it.

MI: Bharti bought—

TK: —Bharti bought it from Zain. What is your reflection on how mobile

telephony has shaped up? And then, I want to shift to the foundation.

MI: Of course, I always feel that we sold a bit too early. The same

company was sold three or four years later for nine billion. Anyway, so what?

26 Creating Emerging Markets

C’est la vie. It’s a good story. Our people also did very well, which was great.

We created over 150 millionaires in the company, which was nice. For me it

is a slightly different picture now. Mobile phones became very popular, and

investment in companies in Africa started to flow, because before, everybody

thought they had lied about the amount of money you made there. So banks

are all over themselves, now, to fund things like this.

TK: So you accomplished—

MI: Something there, yes. Imagine how much would have been achieved

for shareholders if we had financed our operation by 40, 50 percent. Imagine

how it would have doubled people’s returns. But anyway, it doesn’t matter.

It was good job, it’s done, it was wonderful. But then, the industry changed.

Mobile phones became a utility, just like a water company or a power

company. So, it lost a lot of the early excitement. But life is short, and I also

wanted to do something else, that made the separation much easier.

TK: Let’s talk about the Foundation phase and so on. Do you have any

thoughts on the transition, from being a cell phone entrepreneur to being a

different kind of entrepreneur, setting up the Foundation?

MI: No, not really. I was still working in the same space, except that I no

longer had a commercial interest. That makes you even more free. When you

have a license from a country, it’s very difficult to stand up and criticize the

27 Ibrahim Interview

president or say the president is a thief, because if you do that, you cannot

operate in that country. You have a license, and it would be irresponsible for

your employees and your shareholders to do that sort of thing.

With the Foundation, there’s more freedom, and I enjoy that freedom.

I’m not beholden to anybody, and we can say it as it is. So I’m really enjoying

this second phase of my life.

By the way, we have also created an investment fund—an operation

in Africa— Satya Capital. We’re also teaming with other people who had an

impact fund—

TK: You’re still involved in funding entrepreneurs—

MI: Yes, we have our own internal fund Satya Capital, our own money.

TPG-Satya, a joint platform which is focused also on Africa and recently

started an impact fund (the Rise Fund), which was initiated by TPG and

includes a number of wonderful people such as Reid Hoffman, Jeff Skoll,

Bono, Richard Branson etc on as the oversight Board and investors.

TK: Social impact, yeah.

MI: Yes, a $2 billion fund—an impact fund—where we’re targeting

profits, because I don’t believe in just charitable funds. But it also measures

social outcomes and environmental outcomes. So we have some business

activity, but most of my time is spent on the Foundation.

28 Creating Emerging Markets

TK: So, if I understand correctly, within the foundation, one of the early

activities was the index—the governance index. Can you speak about some

of the issues that you faced with getting that adopted in the early days, and

how it’s become part of the fabric, if you will, of governance?

MI: We really wanted to talk about governance and to simplify the

discussion about governance. How do we talk about governance? We don’t

want to talk poetry or to talk theoretically—we can quantify it. That was the

whole idea behind the index. We said, “Okay, governance—what’s good

governance? It’s about the rule of law, it’s about paying attention to the

education and health services you’re providing. It’s about the rights of

women, civil society, management of public finance… about infrastructure,

clean water, electricity, and all that. It’s a basket of public goods that each

government needs to deliver to is people.” We thought all that could be

measured.

So why do we have to measure all this in all 54 countries and publish

it every year? Because then there’s a clear picture of what’s happening,

really, on the ground. People can talk about governance in an objective and

measured way. It’s not about good speeches. It’s not about charming the

people. It’s about what you deliver. I think that’s how people should be

evaluated. To be honest, not only in Africa—

TK: Everywhere, yeah.

29 Ibrahim Interview

MI: —everywhere. So that was the idea behind the Index.

TK: You must have faced some opposition to it.

MI: Early on, some leaders would call and say, “Mo, why is my country

down there? I thought you were a friend of ours?” I would reply, “Of course

I’m a friend of yours, that’s why I’m doing it—because I want you guys to

improve.” But yeah, let’s go through the numbers, because every digit we

have in that index is referenced. Every single number is really referenced.

TK: Documented, yeah.

MI: Yes. We have 35 international organizations worldwide that work

with us, all respectable people. Some huge—like the World Bank, the IMF,

and some foundations or statistical offices. And we reference every number

we put out.

We were getting these calls and these irate messages. At least in one

or two cases, there was a fallout with some leaders who were really upset.

But with time, people appreciated that I don’t make the index. Like

everybody else, I receive the results. It is the researchers who do this work.

It is a collation of numbers—people just adding statistics, that’s it.

Everybody now understands that, so I don’t receive any more irate calls.

TK: Do you get the sense that it has influenced outcomes?

30 Creating Emerging Markets

MI: I think so.

TK: In what way?

MI: Because what is happening now, is almost all international

development agencies—the ministers of international development in

Europe, MCC (the Millennium Challenge Corporation) and USAID, all use

the index. And this is public information. So when any of these organizations

sit with the government to discuss what they need, or how they can help, they

bring the index and they put it on the table, and that’s how they start. So the

governments find that they also need to also be ready, that they need to study

the index, as well. So it became an agreed medium between different parties

to really sit down and have a conversation—

And that’s what we’d love, to have a conversation based on data, not

based on slogans or anything else. Civil society uses it, we give it to

parliamentarians, who give it to academics… because the value of this data

is huge. It is evolved data, collected over a period of over 15 years now,

because we started in 2000. You can see the dynamics of development, what

is happening over 15 years in each area in the country. You can see the

process of development itself—does the rule of law come first, and that helps

investment, and then that helps infrastructure? Or, is it the economy that

drives development—the economy grows and then businesses have to put

pressure on the government to get its act together to improve this and

31 Ibrahim Interview

improve that. It’s a subject for academics—it’s a wonderful amount of data

for people to look at and see what is happening.

A lot of different people—business people, my friends, for

example—say, “Mo, thank you. This is the wonderful thing I’m getting for

free. I always pay for consultancy, but you guys give me this for free.” We

say, “Oh, wonderful, be our guest.” Because they say, “Look, before I go to

the country, I check your index. If there’s no rule of law, or this problem or

that problem, then I don’t go.”

TK: So it influences capital flows and talent coming in and out.

MI: It affects—yes, if affects many things. It’s not decisive—it’s not a

bible.

TK: But it’s one important—

MI: It is really a guide—for different people, for different purposes.

TK: And now, around the index, you have many other—you mentioned the

fund already, but you have many other initiatives, right?

MI: Well, the prize for the leadership.

TK: The prize, yes.

32 Creating Emerging Markets

MI: We have also a number of scholarships, a number of fellowships. A

few things, yes.

TK: The prize, of course, attracts a lot of attention, particularly when you

don’t award it. Can you say what you feel about that?

MI: We offer this prize for leadership. We say, if an African president

comes to office in a democratic manner, moves the country forwards (and we

have the data to show this—reduced poverty, improved health, improved

education), and then leaves on time, in a peaceful process of transfer of

power, we say this is wonderful. We say, “We love you, you are a hero.” We

live to bring these guys out of the shadows for people to know. Because the

problem is we have a lot of a number of very good leaders, nobody knows

about—even Africans don’t know about good African leaders. Everybody

knows about the bad leaders.

I told you about my friend talking about Idi Amin. In his Idi Amin is

still sitting there. I hope he has changed his mind now. Everybody knows

Mobutu, but nobody knows Festus Mogae, nor do they know Pohamba.

Nobody knows Chissano. These names, nobody knows them. I say, look, this

is—we need our kids—

TK: We need our heroes.

33 Ibrahim Interview

MI: We need our heroes. What is more, if you take people out of poverty,

it’s a wonderful thing. If you save the lives of so many thousand infants, if

you help educate kids, if you can add jobs—this is wonderful. So we need to

celebrate these people. That’s one objective. The second objective is that our

leaders don’t have—I mean, our good leaders—don’t have life after office.

TK: Economic life.

MI: Yes. Because there’s nothing to do. Suddenly the palace is gone, the

state house is gone, the helicopter is gone, the presidential plane is gone, the

convoy of cars is gone, and you have nothing. Some of those heroes find it

too difficult even to rent an apartment in a capital in which you used to rule.

TK: If they’re honest, yeah.

MI: Look, your leaders here in Europe and the United States become rich

after they leave office. How much money will your book bring in? Just write

your memoir, and how much will that pay? Another $200,000, $300,000,

even $500,000 for a speech. The board of Morgan Stanley—they all go this

path, so they all become rich after office. Our guys don’t have that, so we

say, “No, no, don’t worry. We will take care of that in a modest way, and you

just now go and do whatever you want to do, whatever you really want to do

as a free person.” What we found is that all of our laureates are involved in

mediation in Africa, in peace. Somebody goes and spends two or three years

34 Creating Emerging Markets

in Madagascar. Nobody wants to go to Madagascar because of the problems

there. It’s our guys, Chissano, who went there. Somebody goes after Kony in

Uganda, to try to sort it out. DRC—always trouble in DRC. Those people are

running around in DRC, in Kenya. So this peace process, reconciliation, etc.

is necessary.

Then, one of our laureates is focused on the education of young girls,

because they are at a big disadvantage. Somebody else is just obsessed with

the issue of HIV/AIDS and goes around to his fellow presidents—sitting

presidents—to explain to them how they should come out and deal with this

issue, because they have been reluctant to deal with this issue. It’s like a

stigma and nobody wants to say, well, I have a big problem in my country.

It’s a real shame. It’s a shame to let people die. Another president took all his

money and created an institute to train civil servants. So they’re all doing

wonderful work. I say, fine, you go around, go to schools, tell the kids how

is it, what does it mean to be a good president, how it’s done. So this is the

real objective of what tried to do with the prize. And by the way, I don’t sit

on the prize committee, I’m not a member of that.

TK: So in a sense, you’re creating more role models.

MI: Exactly. We need to bring them out of the shadow because nobody

knows about them.

35 Ibrahim Interview

TK: Tell me about your recent Marrakesh event—or your annual event

that your foundation has. How has it shaped up? How does it help to

spotlight other issues? What are you accomplishing with it.

MI: Right. First, there are our core events. One event was the leadership

ceremony where we have a conversation about leadership. It runs about an

hour and a half. We had President Köhler from Germany, who did a

wonderful speech. I hope people check it out. It’s on our website and

YouTube, about leadership. Then we had Amina Mohammed, a Nigerian,

Muslim woman who is the deputy for Secretary General of UN—a mother

of six children who worked hard to do the SDGs, and now she’s in that great

position. Amazing story. How can she manage to do all these things? She

also delivered a speech. We also had some wonderful music, with some of

the best artists in Africa. It was moderated by Zeinab Badawi of the BBC.

That is one event.

Then we had a forum. The forum focused on the issues of young

people, jobs, violence, terrorists, and migration—we discussed a number of

these issues. We had the president of the International Crisis Group, we had

the Emir of Kano, Sanusi, who used to be head of Central Bank, because he

has a good insight. He come from the north of Nigeria where there are a lot

of issues. We had a very good discussion. I had the UN envoy to Libya,

another area which is affected by terrorism and migration. So we also had

wonderful people on this panel.

36 Creating Emerging Markets

In between, I had one to one discussions with three prominent characters.

One of them was Kofi Annan, where we had a discussion about UN—where

is it going, why it’s not being reformed, the relationship between the UN and

the African Union, the issues of the ICC and Africa. So I had that discussion,

it was about half an hour discussion. The ICC Prosecutor, Fatou Bensouda,

was also there to present her case. I had another one with Bono, who’s

running ONE organization, and who is also an activist besides being a rock

star. And then, the last one was with Paul Polman of Unilever, where we

talked about the role of business in this current environment. We see

inequality, we see dissatisfaction with the issues of climate—we are going

through a very strange phase. Where is business, what is business doing, and

what should it do?

TK: I gather from your earlier comment that you’re not satisfied with the

role that business has been playing?

MI: I think business can do more, frankly. Yesterday, actually, I was

having dinner with a group of business people. It was a business dinner, with

some people from different firms—about 20 people were there. In the

discussion, we talk about Brexit. I had this issue with them. I said, “All of

you are upset with Brexit. I haven’t heard any voices from you guys during

the referendum. You were silent. Why?” We have an organization called the

B Team, which—I don’t know if you’ve heard about the B Team—agreed

that all CEOs should help to explain the issues around, because a lot of lies

37 Ibrahim Interview

were thrown about. People didn’t know the facts, what was going on. People

thought they were going to make a lot of money if the UK left the EU. Now

we discover we’re going to lose a lot of money, actually. We have to pay to

leave. Anyway, so—

TK: So they have to speak up and be advocates.

MI: Speak up. Why you were silent? There are so many issues. People

have clear views but they never spoke about it. Never indicated to people.

But I was also pleased that so many people are coming to join the B Team.

The number of business people coming and standing up is really interesting.

I don’t think businessmen are evil. Just it can get so much into the siloes

and—

TK: Well, I think business people need role models, too, just like anybody

else.

MI: Exactly.

TK: I have one last question because our time is running out. Going back

to your first phase as a telecom engineer and operator-entrepreneur, and

then as a philanthropist-entrepreneur, in a sense, how do you compare the

two phases?

38 Creating Emerging Markets

MI: I think each of them has its own excitement. Each of them, they are

exciting because they have purpose. You have a mission, and you’re

convinced of what you’re doing. I really believed in the future of mobile

phones in Africa—the continent needed that, we knew how to do it, and we

decided we were going to do it. So, really, you wake up in the morning

focused on that. It has to happen. There is huge satisfaction when you start

to see that it’s really happening. Working with a team of talented people,

committed people, it’s really invigorating. So it was a wonderful phase. That

adrenaline was pumping. The foundation work is really satisfying to me as a

human being, because at the end, you do what you do. You teach, you do

business, you sell your labor.

But then at the end of the day, as a human being, what have you really

done? What was the value? What did you add to this planet or to the people

around you? I think at the end of the day, that’s what matters. So if you really

think, when you go to sleep, that you know what, “I’m really glad to help. I

may succeed, I may not succeed, but at least I tried.” So it’s a nice feeling to

feel that as a human being, that you’re acting really as a human being. So the

work on the foundation is nice in that way, it’s satisfying. So maybe it’s

selfish feeling, but it is nice.

But also when you meet people—not here, because nobody in Europe

knows what you do, but when you go to Africa—everybody knows what

you’re doing. The guy who carries your suitcase at the airport says, “Oh, God

bless you, please keep doing what you’re doing.” You see the taxi driver, you

39 Ibrahim Interview

say, “Oh, we are reaching those people.” It’s interesting. Those people know

what we are trying to do and they love it. This is such a satisfying feeling.

TK: Well, Mo, you’ll be remembered, I’m sure, as someone who tried to

help. Thank you very much.

MI: Thank you.

TK: Thanks a lot.