African States look to seize economic opportunities from outsourcing
Ghanaian businesswoman Estelle Akofio-Sowah once considered a career in politics before deciding that she could do more for her country's economy by becoming a successful entrepreneur.
The Internet-provider business that she launched in Accra in 2001 has gone on to become one of Africa's most important “incubators” of new web-based companies in both Ghana and beyond, helping create badly needed jobs and promoting development.
Often requiring relatively low capital investment, such new service industries employing Internet technologies offer high potential for economic development and social advancement and can significantly contribute to the growth of Africa's economies. However, governments frequently overlook the needs of trade in services when setting economic priorities and even companies can fail to spot available export opportunities.
“Advances in information and communications technologies are creating exciting new opportunities for developing countries to export services and it is important that they seize their chances. In many cases, it is no longer necessary for providers and users to be close to one another,” said Patricia R. Francis, Executive Director of the Geneva-based International Trade Centre (ITC).
An engine for growth
ITC, an agency of the United Nations and the World Trade Organization, has been working to promote trade in services as an engine for growth and greater economic integration in Africa.
It hopes examples such as that of Ms Akofio-Sowah will inspire entrepreneurs from South Africa, Kenya, Nigeria and Ghana, when they gather for a conference in Accra from 6–9 November to explore opportunities for outsourcing in financial services and information technology.
Ghana's President, John Agyekum Kufuor, will open the conference, in recognition of the importance that growth in trade in services can bring to Africa.
Services have become critical to economic growth and the reduction of poverty, not only because jobs in services constitute the bulk of employment in the “new economy”, but also because services are already crucial to the success of manufacturing, trade and overall economic activity.
Although services – ranging from transport and telecommunications to accountancy and call centres – account for over half of the economic output of African countries, and even more of their growth, African states have been slow to seize on the potential of outsourcing to boost exports and intensify regional cooperation.
Even in South Africa, the regional economic powerhouse, outsourcing businesses, whether they are call centres or more sophisticated enterprises, employ less than 3% of the workforce, a far cry from the situation in India and some other Asian developing states.
In partnership with the World Bank and the Dutch Centre for the Promotion of Imports from Developing Countries (CBI), the ITC has convened the Accra “Bridges Across Borders” meeting for entrepreneurs to exchange market information, form alliances, make contacts and identify niche market opportunities.
Fostering SME partnerships
“The main idea is to develop networks amongst these [four] countries which can in turn yield outsourcing outlets and lasting partnerships,” said Friedrich von Kirchbach, Director for this programme at ITC.
Small and medium-sized enterprises (SMEs) in Africa are especially poised to benefit from these trends. “SMEs are flexible,” said Edmund Opoku-Agyeman of the Ghana Export Promotion Council, “and have the ability to respond quickly to requests, which make them highly competitive in the knowledge process outsourcing business model.”
Brokers from the United Kingdom and the Netherlands will provide insights into the needs of buyers. Demand for offshoring services has been predicted to rise 30% in the Netherlands in 2007 and companies are looking beyond India, the traditional supplier, to meet their requirements.
To be successful in knowledge process outsourcing, countries need an effective regulatory framework, a skilled workforce and the necessary technological infrastructure, such as broadband Internet access. In this respect, Ghana offers an example, with one of the most open environments for financial services in Africa and a recent $40 million loan with the World Bank to invest in Internet technology.
During the conference, ITC will launch a global demand study and present research outlining outsourcing opportunities in Ghana, Kenya, Nigeria and South Africa.
A similar “Bridges Across Borders” conference in South Africa last year, focusing on construction, transport and financial services, fostered partnerships between businesses from more than a dozen countries and generated millions of dollars of new business.
