The story of Africa mobile operators – Telecel Zaire

Africa with 54 countries, covers 30 million square km and has one billion people, the majority of whom earn a living outside the formal economy.

The role of business in building viable societies is less understood in developing than in developed states. The body of knowledge about the history of business as a social institution is one of the neglected aspects of the African narrative and literature.

One of the amazing facts of the history of Africa is that a body of ideas have been built up about politics and the role of political actors in advancing human progress, but little investment has been made in building a knowledge bank of ideas about business and its role in delivering the promise of a better life for the majority.

The African mobile telecommunications industry is 26 years old and although younger than most African states, the industry has revolutionised the continent in a variety of ways and valuable lessons can be drawn from the evolution and development of the industry that can guide the policy choices that have to be made in order to lift Africa up.

The first cellular call in Africa was made in the then Republic of Zaire (now the Democratic Republic of Congo (DRC)) in December 1986. The journey that led the DRC to be the pioneer of this technology is a story that exposes the personalisation of the state in post-colonial Africa.

Promoters of the first investment in mobile telephony in Africa were the late Miko Rwayitare, a Rwandese-born Congolese businessman, and his partner Joseph Gatt, an American businessman. One was a black African, who understood the limitations of being black in so far as being trusted as a principal in getting approvals from a black government was concerned.

• Chamisa under fire over US$120K donation
• Mavhunga puts DeMbare into Chibuku quarterfinals
• Pension funds bet on Cabora Bassa oilfields
• Councils defy govt fire tender directive

Rwayitare knew that he needed the assistance of a white American to convince the Mobutu Sese Seko administration to licence the business of providing mobile telephone service in a country that was plagued by an inefficient, poorly maintained, state-owned public telephone network that serviced less than 40 000 lines for a total population of more than 40 million people.

At the time, DRC was a 26–year–old nation under the dictatorship of President Joseph Mobutu, who had been in power for 15 years, overseeing a crumpling state that could hardly deliver services expected by its citizens.

The fact that the state-owned network could hardly service 40 000 lines was not accidental, but an indictment on the idea that Africa’s future is secure and prosperous in the hands of state actors.

Notwithstanding the poor quality of service, the idea of allowing a private operator was foreign to bureaucrats and promoters of the project understood that their best hope was to reach out directly to Mobutu, as decisions of that nature required the personal intervention of the head of state, as is typical in many post-colonial African states.

Gatt, a former executive of Pan–Am Airlines in Zaire, former chief executive officer of Air Zaire and former managing director of the Intercontinental Hotel (Kinshasa), was well known for obvious reasons in government circles.

As the head of the American airlines in Zaire, he was exposed to state actors who needed his services for their travel and accommodation plans.

Gatt, although a foreign national, had a higher political leverage than Rwayitare in post-colonial Zaire. He knew the psychology of state actors and what needed to be done to convince the system that the project needed to get the necessary approval.

Having been exposed to developments in Europe and America, starting with the introduction of cellular technology in Japan followed by Europe, the project promoters knew that they had identified the right solution for Zaire, but were acutely aware that the road to launch the technology was not going to be easy.

The break came in 1985 when Mobutu visited the United States. The promoters were creative enough to take advantage of the visit to get 10 cellphones from National Car Rental, a US car rental company, for use by the President and his staff.

The first phones to be introduced by Motorola were heavy like bricks. Mobutu was able to use the phone to call his people at the palace and at his office in Kinshasa. Having convinced the big boss of Zaire, the rest was easier.

Promoters then invited Telecommunications minister to Phoenix to attend a convention on cellular.

He was able to talk to his family in Kinshasa while in the US. Having experienced the technology firsthand, he became the ambassador for the project.

The government, as expected, approved the pilot project and it was known at the time that the project would be initially targeted at state actors under whose control the public–fixed system was vested.

The game that played itself in in the US would not have been possible if Rwayitare had proceeded selfishly to promote the project. Gatt was an American and he knew how to convince National Car Rental Company to accept a proposal to lease phones detached from the rental cars. He also had connections in both countries that came handy.

Could Rwayitare have been able to meet Mobutu without the assistance of Gatt? This question can best be answered only by Gatt, but it is often difficult for African nationals to meet their presidents in their countries let alone in foreign states.

The accessibility of post-colonial African leaders to foreign nationals poses its own entry barriers in so far as business development is concerned.

It was easier to see Mobutu, like it is for many African leaders in foreign states where they tend to be more relaxed, and given the propensity to travel, it is advisable to invest in ambushing the leaders at conferences or meetings in foreign lands.

For the average African citizen, who may have business ideas, it may take a lifetime to convert such ideas into concrete business projects because leaders are less accessible to their subjects.

State actors had no idea what needed to be done in order to get the project going. This was simply an uncharted territory. They now had to give life to the project and this required equipment as well as allocation of the frequency spectrum.

The equipment manufacturer at the time was Motorola, an American company, and it was not clear then whether the equipment would work in Africa.

They formed a corporation with its headquarters near Washington, DC. They decided tactically to acquire a struggling US mobile technology company, Cellular Development Technology (CDT) that had already created the chosen AMPS Analogne network platform in the US.

Rwayitare used his personal savings of $200 000 and a loan from a Canadian investment fund to purchase CDT and with that telecel was born.)In the end, Mobutu and Telecommunications minister granted Telecel the opportunity to build the first African mobile network. But then there was the issue of the licence itself.

There were no private telecommunications licences in Africa and the Zairean government did not know how to construct one. Rwayitare and Gatt, not wanting to delay any further, offered to shoulder this burden.

They hired a Parisian law firm and not an African law firm, to draft legislation that would allow Telecel to officially and legally operate a telecommunications network in the country.

In 1987, upon accepting the draft and enacting it as legislation, the Zairean government granted Telecel an operating licence in exchange for $1,5 million.Telecel signed up 3 000 subscribers in the first year of operations. Service was limited to the Kinshasa region and these customers were comprised entirely of government officials, business executives and expatriates.

In 2000, Telecel had over 400 000 subscribers in 12 countries before 80% of the shares held by the founding shareholders were sold for $413 million in April 2000 to Orascom Telecom.

Mutumwa Mawere is a businessman based in South Africa. He writes in his personal capacity.