It has been interesting to watch events since the closing of call centers that service phone company Airtel last week. Initial reports said that call center agents were sacked, but this turned out to be inaccurate. Their contracts had merely expired.
When Airtel entered 15 African countries about 18 months ago, they implemented their business model: they are the only phone company in the world to outsource all their operations except marketing, sales and finance in order to cut tariffs and increase call volume. The call centers in Nigeria were outsourced to Tech Mahindra and Spanco, who started talks on new contracts before the expiration of the old contracts on September 30. Failing to reach an agreement with labour unions and the agents, operations were suspended, which led to the picketing of Airtel offices by the NLC and network disruptions up and down the country.
Any one who has an idea about the telecommunications industry in Nigeria knows the kind of challenges that accompany it. There is zero infrastructure, and the cost of doing business is prohibitive. Every single base station in this country runs on generator 24 hours a day, 7 days a week, but the 17,000 base stations are far from adequate to cater for 90 million subscribers. That accounts for the poor network quality we experience on a daily basis, and it is also why the batteries of Blackberries do not last a full day, because of the power they use to maintain a signal. In Britain, a far smaller country, 66,000 base stations service 62 million people. If the number of stations were to be equivalent, that would leave a shortfall of 49,000, and one base station is erected at a cost of $250,000. It would bring the total investment necessary by phone companies on base stations alone to over $12 billion dollars. In a bid to improve network quality, Airtel have invested N75 billion in 2000 base stations, which will be completed by March next year.
In addition, there is vandalism of installations, the difficulty of meeting regulations to erect base stations as well as multiple taxation.
All the above make Nigeria a very difficult environment. The country ranks 137th out of 183 countries in the ‘ease of doing business’, and 129th out of 139 in Global Competitiveness. We make the mistake of thinking that thinking foreign companies will not have to look for ways to cut labour costs when they invest here. Even call centers have to be run on 24/7 electricity, which Nigeria cannot provide.
There is a big picture: In today’s hyperconnected world, it is easier than ever for money to go wherever the factors of production are cheapest. The booming call center industry in the Phillipines is just one example of this. This fact is something that African governments can use to employ their people and lift them out of poverty. There is an abundance of cheap labour here that makes Nigeria a potentially huge beneficiary of outsourcing, which can get our youths off the streets so that they won’t become armed robbers, suicide bombers, or election thugs. All that is needed is predictable government policy and an efficient port system — Apapa, i’m looking at you — and Nigeria could play host to the production line of every major electronics company in the world. As China becomes more prosperous, tens of millions of manufacturing jobs will be up for grabs in this decade. Only a combination of entrepreneurship at home, and inflow of foreign capital can mitigate the dangers posed by huge numbers of unemployed youth.
What the NLC should be focusing on, is understanding current global realities with regard to jobs and positioning Nigerian workers to take advantage, as well as engaging the government to hold up its own end of the bargain by providing power, security, and so on. Tax incentives can be given by the government, so that foreign companies can hire more Nigerians. Shutting down a company’s operations is not the way to go. Reports say Mahindra and Spanco have reinstated the agents, and they will resume on the 16th of this month. I just hope the battle has not been won, only for the war to be lost.