‘Wave has destroyed 20,000 jobs in Senegal’, says Orange’s Alioune Ndiaye

By Julien Clémençot
Posted on Wednesday, 6 April 2022 11:02

Alioune Ndiaye, CEO of Orange Middle East and Africa, in Paris on 1 April 2022. © Vincent Fournier for JA.
Alioune Ndiaye, CEO of Orange Middle East and Africa, in Paris on 1 April 2022. © Vincent Fournier for JA.

Alioune Ndiaye, CEO of Orange Middle East and Africa, comments on the arrival of US fintech in West Africa, responds to criticism regarding the price of the Internet and welcomes the positive role of the Chinese equipment manufacturer - Huawei - on the continent.

Ndiaye has been the CEO of Orange Middle East and Africa (Omea) – a group of 18 subsidiaries of the French group in Africa and the Middle East – since 2018. Although in recent years Orange has not concretised either the great merger envisaged with Airtel and MTN or its entry into the Ethiopian market, the former head of Sonatel still has a high profile on the continent. Under his leadership, the holding’s turnover increased from €5.1bn ($5.5bn) to almost €6.4bn ($7bn) in 2021 and he is now by far the largest contributor to the growth of Orange.

A few days before Christel Heydemann took over as CEO from Stéphane Richard, the Senegalese man was the main guest on Jeune Afrique-RFI economy, which aired on 2 April on RFI. Below are the highlights of the interview with Bruno Faure.

At a time when the group’s governance has been shaken up by the forced resignation of its CEO, Stéphane Richard, is your departure topical?

Alioune Ndiaye: I’ve been lucky in my career because I’ve always been able to plan my exit and I had indeed arranged to leave my post this year. However, a new general manager arrived on 4 April, a new president will start in May and we are discussing how I can guide the group during this transitional phase.

Consumers are constantly reproaching us when we talk to them about telecom operators as they feel that the prices for communications and the Internet are too high…

Orange is making every effort to make the price as accessible as possible. The UN considers Internet access affordable in Africa when the price per gigabyte is less than two per cent of gross monthly income per capita. All operators were – on average – at 13.2% in 2016, we went down to 4.2% in 2019. Orange is in 18 countries and in nine of them, our average price is already below two per cent and prices are still falling in all our countries of operation.

Rising oil prices and tensions in the wheat market as a result of the war in Ukraine are increasing inflation around the world, including in Africa. Governments are looking for room to manoeuvre. They all want to avoid social unrest. Does this add to the tax burden in the telecom sector?

We have always experienced a somewhat high level of fiscal pressure, as up to 30-40% of our turnover is levied by the state. This trend is sometimes fuelled by international institutions. Dialogue with governments must lead to a more predictable, balanced and adaptable fiscal and regulatory framework for our rapidly changing industry.

You say this quite diplomatically, does it make you angry?

It’s not anger, it’s a deep conviction. Mali, irrespective of what people say, has adopted a reasonable level of taxation. Initially, there was not even a specific turnover tax for the telecoms sector, whereas now it is six or seven per cent in each of our countries.

In the medium term, governments that bet on a sustainable level of taxes by setting investment obligations are adopting a more virtuous model, as they are not hindering the sector’s development. In Mali, we are the largest taxpayer – one of the organisations that generates the most revenue for the state.

In its five-year Engage 2025 plan, which was unveiled in 2019, Orange announced that it was aiming for €900m ($986m) in revenue from mobile money on the continent. However, this forecast dates from before the arrival of the start-up Wave, which is shaking up the West African markets by slashing prices.

Orange Money is a real success story. Launched in 2018 in 17 countries, it has 70 million open accounts and 400,000 points of sale. There is still tremendous potential in this area. In sub-Saharan Africa, 80% of people do not have bank accounts. Obviously, when there is so much potential, it attracts other investors. The arrival of fintechs in this market is quite normal and helps us to improve as well.

Wave’s model is disruptive because it is financed by venture capital funds, which are not concerned with short-term profitability. They invest money in the hope that the start-up will be able to take over the whole market and then they can sell their share and get back 10 or 15 times their initial investment. It’s like the Amazon model: you burn cash – the e-commerce site has been doing this for over a decade – in the hopes of eliminating the competition.

We at Orange have decided to put up a fight by dividing the price by three or four and developing applications so that we can be just as digital as Wave. Nevertheless, our customers must understand that we could not have done this before.

Why is that?

Through Orange Money, Orange has created tens of thousands of jobs thanks to the network of distributors we have developed to bring our services closer to our customers. Half of the revenue was going to them. Wave cost them 50% of their revenue. Some 20,000 jobs have been destroyed in Senegal, and perhaps just as many will be lost elsewhere. That’s why this disruption couldn’t come from Orange.

It’s been less talked about due to the Covid-19 pandemic and the war in Ukraine, but the duel between the US and China is not over. One of the telecoms sector’s losers so far is the Chinese equipment manufacturer Huawei, as it suffered a nearly 30% drop in turnover in 2021. In Africa, have you redirected some of your purchases to other suppliers?

Our strategy on the continent in terms of relations with equipment manufacturers has always been to ensure that we are not dependent on any one of them. That’s why, in the early 2000s, we integrated Huawei. Today, although the Chinese group has perhaps 65-70% of the market share in Africa, it was starting from scratch 20 years ago.

When they arrived in the market, prices dropped by 40%. Internet penetration in Africa would not be the same without Chinese equipment manufacturers. That said, the rule remains the same: you don’t want to be dependent on one equipment manufacturer, so you have to do everything you can to preserve a market on the continent for equipment manufacturers other than Huawei.

When it comes to political stability, Africa is not exactly a foolproof insurance policy. In 2011, you had the Arab Spring in Tunisia and Egypt. Today, there have been coups in Mali, Guinea and Burkina Faso. How do you deal with this issue as an investor?  

Between 2009 and 2018, Orange experienced an average annual growth in revenue in Africa of 4.2%. It has never been negative throughout the course of this decade. This is a continent where there has been an Arab Spring, a 90% devaluation of the Egyptian pound, crisis in the UEMOA (West African Economic and Monetary Union) zone and the events in Côte d’Ivoire.

Despite everything, our African business has demonstrated resilience And this is still true in recent years. In 2019, our growth was 6.2%, and in 2020 it was 4.2% despite Covid-19 and the recession. Last year it was in double digits. That said, coups do pose security problems, but their economic impact is not significant.

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