How Strive Masiyiwa won his first mobile licence by recognising the informal economy

To win his first mobile network operator licence, Zimbabwean telecoms tycoon Strive Masiyiwa based his projections not on “World Bank numbers” but by studying the informal sector.

Strive Masiyiwa at the Africa Global Business Forum in Dubai

Strive Masiyiwa at the Africa Global Business Forum in Dubai

In the late 1990s Botswana’s government invited bids for the country’s first mobile telecoms licence. The five shortlisted companies were Masiyiwa’s Mascom Wireless, France Telecom, MTN, Bharti Airtel and Vodacom. A team of Swedish consultants were hired to run the bidding process.

Despite the fact that Mascom was the clear underdog, Masiyiwa remained confident they could win the bid. While the competing bidders flew in with private jets, some of Masiyiwa’s people had to drive from Zimbabwe to Botswana because they couldn’t afford plane tickets for everyone.

All bidders were asked to submit an estimate on how many subscribers they would be able secure within the first five years. Masiyiwa predicted he would register 120,000 customers. The highest number by any competing bidders was just 30,000. At the time Botswana’s population was only 1.2m.

The consultants were highly sceptical of Masiyiwa’s ambitious projections.

“We have seen your research. It is very well done, but we are finding it difficult to believe that there will be that level of demand,” a consultant apparently said.

During a panel discussion at the recent Africa Global Business Forum, held in Dubai, Masiyiwa explained Mascom came to its numbers by recognising the strength of the informal economy and understanding the local market. “I understood the informal sector was real.”

He suggested that even knowing the number of cattle in Botswana can offer insight into spending power. “Cows represent wealth in Botswana.”

Four months later it was announced that Mascom won the licence. A second licence was awarded to France Telecom. And after five years Mascom had 500,000 mobile subscribers, more than four times Masiyiwa’s initial estimates.

Masiyiwa is today one of Africa’s most wealthy and celebrated business people. He is the founder of Econet Wireless, a diversified telecommunications group with operations and investments in Africa, Europe, South America and Asia. His other business interests include financial services, insurance, renewable energy, bottling for Coca-Cola and hospitality ventures.