ICT infrastructure boom
THE communications and ICT infrastructure boom in Africa and the entry to the continental market of the Asian tigers has paved the way for one of SA’s pioneering hi-tech companies to join the fray in this field.
Africa’s more stable countries are in an economic growth phase. More of them are embracing corporate governance principles and there is a hunger for technology to drive the next phase of the ICT explosion that has been a feature of Africa in recent years.
James McCormack, COO of Dimension Data Emerging Africa, who has been responsible for getting the company’s emerging Africa business off the ground for the past three and a half years, says: “The relative political stability we see across the continent, coupled with the commodity supercycle over the past five years driven by China and India, have been responsible for a growth rate better than in decades.
“This in turn can be coupled with the unbelievable growth that extends around the cellular companies and the development of communications generally. We see our business, which is more orientated towards corporations and governments than consumers, as the next wave of communications across the continent.”
Dimension Data is essentially an ICT infrastructure player, dealing in big networks, data centres and storage environments, and using Microsoft infrastructure-type software products. McCormack says there is a huge backlog in respect of ICT infrastructure on the continent and the company’s involvement is in the basics of connecting up companies, branches, people and even governments.
“We are concentrating on markets where there is either a large consumer base that drives financial services uptake, or in the commodity-based markets —oil and gas in particular — where there are opportunities for us.
“We’ve gone into those markets and typically made a small acquisition. We’ve retained a strong local partner in those entities from an ownership structure perspective (minimum 51%) because one of the key things in these types of investments is that you need to retain the local relevance of your business. We can’t plant a Dimension Data flag and say we are here and expect everyone to do business with us.
“Our experience and success has been in being relevant in the marketplace and bringing what we can from a global perspective.”
The company now has more than 500 Dimension Data people across the continent and sees the expansion of its African footprint as an important part of its growth.
“We also have businesses in Europe and the US, but we do not experience the slowdown in our emerging Africa businesses as we see in some of these other markets. We believe that the relatively low base that these markets are coming from means that they are not going to stall as possibly some other markets in the world have done. We are growing the businesses rapidly and we don’t foresee a material slowdown in that growth in the next 18 months to two years.”
He says that the major risk the company faces are generally financial payment risks.
“But if you look at the expansion of our typical banking-type institutions, all of them are making real investments in these markets that significantly help us to de-risk our payment mechanisms and financial situations. We are used to dealing with each other and this de risks the situation from a payment and financial perspective.”
The company has put together a typical hub and spoke model, with the main hubs situated in north, west, east and southern Africa. In North Africa, the hub is in Algeria, with potential satellites in Morocco and Libya. In West Africa, the company has a substantial presence in Nigeria, with a satellite operation in Ghana.
In East Africa, Dimension Data has set up its base in Kenya, with offices in Uganda and Tanzania. In southern Africa, the company has a substantial business presence in SA but McCormack says for the purposes of emerging southern Africa , “we’ll probably have our most substantial base in Angola, where we currently have a business, and we are also in Namibia and Botswana in this region, for a total presence of 11 countries, including SA.
“What’s missing on our map at the moment, and which we are busy looking at, is Egypt— intrinsically a substantial market that will also help us with expansion to the Middle East.”
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