Growing a Global ICT Business From Africa

Tuesday February 1, 2011

UGANDA has a fledging IT industry with top end training institutions churning thousands of graduates annually. Computer Warehouse Group, a Nigerian IT firm, officially opened its offices at the end of October. Paul Busharizi and David Mugabe interviewed the group’s chief executive officer, Austin Okere, about the business. Below are the excerpts.

QWhat is Computer Warehouse Group (CWG) and what is your business in Uganda?
CWG started in Nigeria as a hardware company in September 1992 and it has grown to become a communications and a software company. It has also become a pan-African company.

We have set up operations in Ghana, and Uganda is our second operation outside our home country. We have plans to be in 10 African countries by 2015.

What will you be doing in this market?
The name CWG was quite a pullback for us before it became a strong brand. The name is not synonymous with what we do. CWG is the biggest systems integration company in sub-Saharan Africa. In Nigeria, out of 24 banks, 11 are using our core banking applications, Out of the 24 banks, 20 of them ride on our communications networks.

We can bring the same value here. We provide managed services for Stanbic and StandardChartered banks. What we are doing is replicate what has worked and has taken businesses forward.

What is the size of CWG, turnover and all?
We are becoming a public company in 2011. We have done a private placement. We listed first on the Lagos Stock Exchange, but we have aspirations to list on the NASDAQ. We have about 550 employees, of which about 85% are certified engineers. Our turnover was $120m last year. The group is about 18 years old. We focus on communications, oil and gas and banking.

18 years ago, you started from scratch, what was the turning point?
I worked in an Indian-owned computer company in Nigeria, but setting up CWG was a shock. I took some money from five of my friends. The company where I worked before used to get 85% advanced payment, but for my new company, people said we needed to show some track records.

There were no opportunities for loans, entrepreneurship was not known, but we got one bank which gave me my first break.

My collateral was my video, and car, an old Peugeot 504. We started with $16,000, and the loan was $5,000. It was a difficult time with elections and riots, but it was also an opportunity because when the riots settled down, service providers were few. So those of us who weathered the storm got a lot of business.

What kept you alive during this tough time despite being a new company?
What kept us primarily was the grace of God and the discipline. We were our own bosses. We were very careful with the money, and conserved the little we had to pay salaries. I used my car to do deliveries. We were not about the image, but getting the job done.

Would you say African businessmen’s vision is too small and, therefore, we do not make large enough sacrifices?
As young African entrepreneurs, we are always in a hurry to say we have arrived. You have to see a need first and be burdened enough by the need to catch a vision and sell the vision to people who will follow you. Once you are burdened enough, that burden is not lifted till you fulfill the need.

You must have the character, competence and focus. We are easily defocused, you start as an IT firm then you hear oil and gas is making money and you go into that as well. The vision is more sustained if it is need-based because you do not let up. The money will take care of itself.

Did you have that mental shift of creating structures? How did you overcome the fear of having to be physically at the business?
If you don’t have structures, it is difficult to expand. In Africa, business works because the owner is seated there counting his money and the goods that are going out. When you treat people like owners, they start to play like you. You don’t have to micromanage people.

The Y2K was also a big break for us. People were running with purchase orders for people who were ready to take them. Infosys came into Nigeria and were looking for a partner and a lot of people were changing their banking software because of the Y2K bug.

We got three banks at the same time and this is when we started with the software company. We had eight offices in Nigeria. In 2002, we went and started CWG Ghana and it was very successful because of the same customers we were servicing in Nigeria.

We went into oil and gas in Ghana as well. These same skills we can bring to the Ugandan oil companies so they do not have to reinvent the wheel.

What was the thinking behind bringing in new partners in equity?
If you start an entrepreneur business, you are all powerful, you say move and it moves.

For you to make it into an institution, there has to be governing structures which you subject yourself to. You have to let your powers go as those of the institutions go.

As Africans, we find it difficult to let that power go and because of this, the organisation doesn’t become powerful. Having to make all the decisions will make you tired but not powerful. You also have to keep good books. If somebody wants to invest in you, how will they value you?

Wasn’t the fear that you are letting go of your authority real for you?
It is always a double-edged sword. The private equity firm says I am giving you $20m if you do this turnover. If you don’t meet your target, you can lose your company.

The first firm valued our company at $8m and they wanted to buy 25%. In 2005, the second group valued our company at $32m. In 2008, the third group bought 17% at $10m. When they come in, they also help you to prepare for the market. Today, each share is 7.8 units.

It shows that our firm was undervalued by the two previous groups. This is where we are losing. We need the structures and best practices because we lose out to Asians, the Middle East or South Africa because they are more prepared to use it.

How much of the company still belongs to you?
About 75% still belongs to the original company.

What are Uganda’s chances as an ICT hub?
I see a lot of potential. We had a choice of setting up CWG Kenya and we chose Uganda. You are on the threshold of being an oil producing country, have a young educated population, infrastructure, are well positioned on the lake and you are in a region which is now becoming an economic zone.

We must play a part in that process. IT is going towards utility. Uganda is the hub of future IT utility.

The New Vision Newspaper