live in Nigeria. This was way back in 2001 when they were only two
operators, the other being MTN. Over the years, the company has
undergone so many changes of name and management that we can hardly
keep up.
Strive Masiyiwa, CEO and Founder of Econet Wireless, recently took to
his blog to reveal his side of the story behind the company’s downfall
in Nigeria. An extract from the blog post:
It’s time to play by a different (ethical) set of rules (Part 7) Nigeria 1 of 5
Sometimes the price can be very high in the fight against corruption.
I had the privilege of making Nigeria’s first GSM phone call back in
2001 when I called the regulator to say, “We’re live!” Who would’ve
believed then that Nigeria today would have more than 167 million
mobile phones?!
It all started out as a very exciting new chapter for enterprise in
Africa. Shortly after President Obasanjo was elected, the new
government announced an incredibly transparent international auction
process for three national mobile phone licenses.
To participate in the bid, you not only had to raise money, but there
had to be a member of the bidding consortium who was an experienced
GSM operator. Econet Wireless met the requirements because of its
experience in Zimbabwe and Botswana. Our Nigerian partners, which
included state governments, local banks and high net worth
individuals, were financial investors. The largest shareholder had
only 10%. That was the written agreement.
I managed to assemble a consortium of 22 investors to put up the money
needed to bid. Our shareholders were all Nigerian, mostly
institutional investors including leading banks and two state
governments, Lagos State and Delta State. The license cost us $285m
and was the most expensive license ever issued in Africa at the time.
This was 2001.
We considered the investment not only about putting together a
network, but also about building a nation. We knew it had the
potential to transform Nigeria’s entire business and social
architecture.
Most of our investors had between 1-10% shareholding. Econet Wireless
Nigeria had only 5% of the shares, but that was fine because it was 5%
ownership of a very big pie.
As the “technical partner and operator,” Econet was the company with
the expertise to build and operate such a business. Our financial
investors recognised this, and also allowed us to receive 3% of the
turnover as our fees. This was standard practice in the industry.
We were one of the winning bidders and they gave us just six months to
set up business and get our network operating. We were under a lot of
pressure but our network was live two days before the others!
Customers were pouring in. We were number one in the market with an
estimated 57% market share.
Then came the fateful day when I was told that our company must pay
a total of $9m in bribes to senior politicians (in state government)
who had facilitated the raising of the money to pay for the license.
I refused to authorise the illegal payments. Meeting after meeting was
held to try to get me to agree, but I would not. The money would not
be paid as long as Econet was the operator and I had signing
authority.
James Ibori, the Governor of Delta State, was demanding $4,5m be paid
to him in his personal capacity. He was one of the most powerful men
in the country and had a reputation for violence. When he heard that I
was refusing to approve payment he issued an ultimatum:
”Pay or I will chase you and your people out of the country.”
I refused.
The shareholders met and voted Econet Wireless Nigeria out of
management. They cancelled our management contract. James Ibori and
his colleagues personally attended the meeting to remove us. After the
meeting one of them (a prominent local businessman even today) came up
to me and said: “Unfortunately for you, God does not have a vote.”
I had to withdraw all my staff and their families: 200 people in all.
We left Nigeria.
Most of our people had to be retrenched. The loss of the contract
almost drove us to bankruptcy as a group.
They invited a big international operator to replace us as technical
partner and operator. They changed the name of the company from Econet
to V-Mobile.
Within days of their arrival, the managers of the new operator signed
off the payments demanded as bribes.
Then what happened?
A few noble Nigerians had both the integrity and courage to carefully
collect all the documentation on the movement of the money, and pass
it all on to me.
There’s a saying worth remembering in uncovering the trail of
destruction that is corruption: “Follow the money”…
I bided my time… then I wrote a letter to the United States Department
of Justice!
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