Keywords: Information Technology, International Economic Affairs, Foreign Policy
Introduction
In August 1987, Mikhail Gorbachev holidayed in Nizhniaia Oreanda, Ukraine, where he wrote Perestroika: New Thinking for Our Country and Our World. This marked the beginning of social and economic reforms in the former Soviet Union, Glasnost (openness), and Perestroika (economic reform), which had a domino effect across a world that was ideologically divided between the Communist east and the Capitalist west during the cold war era. As a result of Gorbachev’s foreign policy decision, the Soviet Union began to retreat from building world communism towards glasnost and perestroika policies, marking a dramatic reduction in aid to Ethiopia from Socialist Bloc countries. Ironically Ethiopia during the Derg era (1974–1991) suffered several coups, uprisings, and wide-scale drought partly due to this withdrawal of support. Now roughly three decades later Ukraine where Gorbachev wrote his book is at war with Russia. Ethiopia is still experiencing uprisings, this time specifically affecting the Tigray Region of Ethiopia. There have been claims by both sides of serious war crimes including genocide, but this article bearing in mind these difficult issues would like to also examine another important ongoing event in Ethiopia, the liberalization of Ethiopia’s information technology sector, a Glasnost and Perestroika moment. What lessons can Ethiopia and indeed the rest of Africa hope to learn from this endeavor as they maneuver the global information technology revolution that is the hallmark of the 21st century?
Opening Up: Glasnost
The creation of liberalized economic systems has historically been endorsed and is often aggressively pursued as an international policy agenda for African states by international institutions created by the West and in charge of international trade and finance, such as the IMF, World Bank, WTO, and OECD. The policies of these organizations are theoretically founded on neo-classical economic presumptions which are an offshoot of David Ricardo’s theory of comparative advantage which in theory promotes economic liberalism. However, in practice, the widespread claim, among economists, that European countries have adhered to economic liberalism and free trade as a strategy for economic growth is not true. It is worth noting that since the 1700s, European states have deliberately enforced protectionist policies through the use of subsidies as well as tariffs and non-tariff barriers in a bid to develop their manufacturing industries and buffer their products from external competition.[1] This is an important point to note because in this case, we have an African state opening up its information technology sector for a company from a neighboring African state. However, do the above vague liberal economic trade policies apply when African states deal with each other as opposed to when they have dealt with European states for example? The hope is that this should not be the case. There are flaws with economic liberalism in developing states, especially in Africa. Francisco Rodriguez and Dani Rodrik argue that studies that show a strong positive correlation between external openness and economic growth in developing countries are based on flawed methodological and empirical choices.[2] Can the reverse be the case if glasnost is applied amongst developing states as is the case between Kenya and Ethiopia with regard to information technology? This is definitely an area that would require more research, especially in this case where technology and transfer of knowledge are what is at stake.
The Role of Science and Technology in the Dynamics of Global Change and the Significance of International Knowledge Cooperation
Africa has seen countries jumping from old telephone technologies to smartphones within less than a decade. The telecommunication companies have shed the old, maintenance-prone, and capital-intensive communication infrastructures that have now become obsolete. According to data by GSMA at the end of 2020, 495 million people subscribed to mobile services in Sub-Saharan Africa, representing 46% of the region’s population.[3] This combined with Africa’s projected demographic dividend where it will account for 80 percent of the projected 4 billion increase in the global population by 2100 could mean African people with access to smartphones and other nascent technology, and thus to communication- and information networks, have the potential to reshape and impact the global economy.[4]
Technology is driving economic globalization, the first wave of global change. Dirk Messner, former Vice-Rector of the United Nations University (UNU) and Director of the German Development Institute defines the first wave of global change as the globalization wave; which comprises economic globalization, cross-border dynamics, and global value chains. To him, the stability of global commons such as international financial markets and global infrastructures, such as the Internet is a required public good of which regulation exceeds the capacity of individual nation-states. So there is a need especially for states in Africa to work together and understand the dynamics of new technologies, especially the impact of ICTs, in order to understand the dynamics of economic globalization.[5] The World Wide Web and social communication media are also restructuring industrialization processes and global value chains. ICT infrastructure is also displaying a big potential for less developed regions and it is crucial for developing states not to be left behind. This is why the cross-border venture by Safaricom Kenya PLC into Ethiopia can be viewed as a noble endeavor, a catalyst for other potential future ventures by African companies within the African continent. What is also more crucial is that African states need to leverage the free trade agreement, the African Continental Free Trade Area (AfCFTA), with the ultimate goal being to accelerate the economic integration of the continent.
The Noble Ethiopian Experiment
Ethiopia has a population estimated at over 112 million as of 2021, which is forecasted to grow up to 160 million by the year 2035. The liberalization of Ethiopia’s telecommunications with the entry of Safaricom Telecommunications Ethiopia P.L.C which is expected to roll out services from 2022 marks a major turning point for the country, east Africa, and indeed Africa. What is unique is that Ethiopia has opened up its telecommunication sector to a consortium of companies, whose majority stake is owned by a Kenyan telecommunications company Safaricom.
Shareholding of Safaricom Telecommunications Ethiopia P.L.C. (STE),
| Rank | Name of Owner | Country | Percentage Ownership |
| 1 | Safaricom | Kenya | 55.70 |
| 2 | Sumitomo | Japan | 27.20 |
| 3 | CDC Group | UK | 10.90 |
| 4 | Vodacom | South Africa | 6.20 |
| Total | 100 |
It is indeed a noble endeavor to see an African technological company investing heavily in another African country. This venture does bring the economic ties between Ethiopia and Kenya much closer. We have also seen the intervention from a foreign policy perspective with the heads of states from both countries deeply involved in the process. However with a population of over 100 million people and what is considered a virgin telecommunications sector even for a company of the magnitude of Safaricom Kenya PLC, initial financial investment and skilled technical expertise beyond the African continent will be needed. The consortium offering this support is composed of companies from South Africa, Japan, and the UK. This can be viewed as an advantage for Ethiopia even though it has taken a while to open up its telecommunications sector. It can, for example, leverage the lessons learned from Kenya, which through the M-PESA mobile money service launched by Safaricom in 2007 has revolutionized the information technology sector not only in East Africa but Africa and the world. The economic impact M-PESA has had in Kenya for the last 15 years cannot be understated. According to the latest financial results released by Safaricom in April 2022 Kenyans transacted 29. 5 trillion shillings in the M-PESA ecosystem. This translates to 250 billion US dollars. Considering Ethiopia has an untapped or virgin mobile money ecosystem and more than twice Kenya’s population it is safe to assume that if M-PESA’s success is replicated in Ethiopia there will be a huge economic transformation. There is already a scramble for this market with Huawei the Chinese technology company reducing its footprint in neighboring Kenya to focus on Ethiopia which has virtually no 4G or Fibre network and infrastructure in place. There is hope that this investment can be a much-needed example of what potential intra-African trade can have in the 21st century. In addition, Safaricom Kenya PLC’s multivendor strategy which pitted Huawei China, Finnish rival Nokia, and rival US tech companies all bidding for their 5G rollout tenders may also mean that Safaricom Ethiopia PLC can leverage their virgin network to the best bid available.[6]
Conclusion
The future is bright. In February 2022 a group of only Kenyan telecoms engineers made the first technical call on Safaricom Telecommunications Ethiopia P.L.C’s network. There is also a deliberate effort to employ Ethiopian employees, onboard Ethiopian suppliers, agents, and vendors from the onset, and facilitate the transfer of knowledge and skilled expertise between Kenyan and Ethiopian employees. For me personally, this is an example of the solidarity of our Pan-Africanists’ forefathers Toussaint Louverture, Jean-Jacques Dessalines, Haile Selassie, Julius Nyerere, Robert Sobukwe, Ahmed Sékou Touré, Kwame Nkrumah and many more envisioned. However, there is still a long way to go. African technological companies still do not have the capacity to fully run a technological company without assistance from American, Asian & European expertise, investment, and intellectual property. The lack of enough skilled tech labor and insufficient transfer of knowledge from the global north to the global south is a hindrance.
It is also a fact that the distribution of scientific and technological capabilities is extremely polarized across the globe. This means that the net recipients of Intellectual Property Rights royalties and fees are based in the global North and the net payers are based in the global South. Companies like Safaricom pay huge amounts for software licenses and maintenance fees for cloud services where they store their data. The advocates of Intellectual Property Rights argue that Southern countries with a strong regime of Intellectual Property Rights will benefit from greater inflows of technology transfer.[7] However, the fact on the ground is that access to advanced technology is restricted. American, Asian & European companies and the states from where their head offices are based consider this knowledge crucial to their national interests and thus it will not be shared easily. Companies in the global North may be reluctant to establish production facilities, build R&D labs, license know-how, and engage in strategic technology agreements in countries that do not properly guarantee Intellectual Property Rights[8] . But in Kenya where there is a robust Intellectual Property Rights regime in place, there seems to be no goodwill in terms of this investment required above. There is hope this will change. Microsoft, Amazon, and Google have set up residence in Kenya to tap into the growing availability of skilled labor, available IT infrastructure, and enabling investment environment facilitated by the Kenyan government. These companies also know that Kenya is at the vanguard of the technological renaissance in Africa, as the investment in Ethiopia has highlighted. It will be in the interest of Kenya, Ethiopia, and indeed the rest of Africa to utilize these arising opportunities.
By Tuesday Orina Masaki
Phd Candidate, International Studies
University of Nairobi
[1] Murithi, T. (2014). Handbook of Africa’s international relations.pg 317
[2] Rodriguez, F., & Rodrik, D. (1999). Trade policy and economic growth: A skeptic’s guide to the cross-national evidence. London: CEPR.
[3] https://www.gsma.com/mobileeconomy/sub-saharan-africa/#:~:text=By%20the%20end%20of%202020,almost%2020%20million%20on%202019.
[4] Drummond, P. F. N., Thakoor, V., Yu, S., & International Monetary Fund. (2014). Africa rising: Harnessing the demographic dividend. Washington, D.C.: International Monetary Fund.
[5] The Global Politics of Science & Technology Volumes 1 & 2 by Maximilian Mayer, Mariana Carpes, Ruth Knoblich (eds) Heidelberg: Springer, -Vol. 1 The Role of Science and Technology in the Dynamics of Global Change and the Significance of International Knowledge Cooperation in the Post-WesternWorld: An Interview with Dirk Messner
[6] Mureithi, Carlos. “Kenya becomes the second African country to roll out 5G.” Quartz Africa, April 2021.
[7] The Global Politics of Science & Technology Volumes 1 & 2 by Maximilian Mayer, Mariana Carpes, Ruth Knoblich (eds) Heidelberg: Springer, -Vol. 1 The Globalization of Intellectual Property Rights: Much Ado About Nothing pg 162
[8] Ibid