Opportunities and Risks for IBM in Africa

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IBM is hoping to raise its income in Africa to $1 billion over the next two years by matching its expertise with the countless challenges that need to be resolved on the continent.

The economies of many countries in Africa are growing rapidly, but they are still facing a multitude of infrastructural challenges. This represents an enormous opportunity for IBM, whose hardware, software and data management consulting services could help improve agricultural productivity and government efficiency as well as the performance of power grids and transportation systems.

IBM’s new CEO, Ginny Rometty, is approaching Africa like her predecessors approached China and India, as a vast and untapped market rife with potential. In 2008, the revenues of IBM in Africa were approximately $400 million, but this is expected to reach $1 billion by 2015, representing faster growth than was achieved in India. The company hired 1,000 new employees in Africa in 2011 and another 1,000 in early 2012.

Business opportunities abound for IBM in Africa. For example, the company has evaluated water supply systems in South Africa, computerized government payroll systems for Cameroon’s ministry of finance, and entered into new 16 regional markets by managing the computer systems of Bharti Airtel, the second-largest wireless provider in Africa.

The myriad opportunities in Africa are matched only by the challenges of doing business there. Epic traffic jams in major cities like Nairobi, the threat of violence erupting in places like the Democratic Republic of Congo and major infrastructural shortcomings elsewhere represent just some of the difficulties associated with doing business in Africa.

All of these difficulties constrain economic growth and discourage enterprises from entering the African market despite its tremendous potential. These challenges could be mitigated and overcome through development efforts, which could help greatly decrease the costs and risks associated with doing business in Africa, allowing not only IBM but other international companies to enter greatly promising and extremely underserved markets.

– Caroline Poterio Martinez

Source: Business Week
Photo: IMB

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