Mo Ibrahim : “There’s no renewal process for capitalism”

By Patrick Smith

Posted on June 9, 2017 10:09

The billionaire philanthropistand founder of the eponymous foundationtalks to The Africa Report about inequality across the globe and the challenges leaders face when tackling the impacts of globalisation

It is a piercing warning bell for the apostles of corporate power and free-market economics when a man who revolutionised the telecoms industry – earning billions in the process – concludes that Western capitalism has passed its sell-by date. “I think the heydays of capitalism are behind us,” says Mo Ibrahim, who follows international economic shifts as keenly as his foundation monitors standards of governance in Africa. Talking to The Africa Report at his London headquarters, Ibrahim argues that the choppier waters in global politics would prove even more demanding for African economies.

“Strangely enough, the great time for capitalism was during the confrontation between the Eastern bloc and Western bloc,” says Ibrahim. “After 1990 when the Berlin wall fell, people thought we won […] it’s the end of history. They became complacent. There’s no renewal process for capitalism.”

Surveying economic and political ills around the globe, Ibrahim dates the current malaise to some critical errors two decades ago. “Things started to go downhill from 1990 onwards when the ugly face of capitalism started to assert itself […] [There were] abuses […] The rise of the hedge funds, the rise of the ‘masters of the universe’. That’s the problem, and that’s why inequality started to increase.”

Unlike many critics, Ibrahim has done time inside the belly of the beast. A radical in his twenties, he joined the Sudanese Communist Party. After that, he rose meteorically, getting an engineering doctorate in the 1970s then leading a team of engineers pioneering Britain’s first cellphone network. And then he went on to corporate superstardom, building up Celtel in more than 15 African countries, then cashing out in 2002.

Rich get richer

For Ibrahim, the Achilles heel of capitalism is a kind of tone-deaf arrogance that has allowed galloping inequality. “The average chief executive in America now probably earns 500 times the average wage of his employee. […] Some years ago it was 70 or 80 times.”

It’s a decade since Ibrahim used his corporate winnings to set up a foundation for better governance in Africa. It has become a leading provider and collator of data. A key part of Africa’s data revolution, it gives ammunition to critics and champions alike.

Ibrahim criticises the growing corporate influence on political life, not least in the US where a real estate magnate, who has never held elective office, won last year’s presidential elections. That’s not a trend with which Ibrahim has much sympathy: “Running a company is a very complex thing. But whether a businessman – just because he’s a businessman – can be fit to run a country, that’s totally another question.”

On a self-effacing note, Ibrahim adds: “I have been a businessperson. I’m involved now in advocacy for better governance but definitely, I’m not fit to run a country. I will never try to do that.” Having made that clear, Ibrahim argues that many political movements lack effective responses to globalisation and technological change.

“Globalisation and trade will always produce winners and losers in different sectors. But in the past all the losers were concentrated in the developing countries or the colonies […] those guys had no voice, so it didn’t matter.” On the face of it, all that has changed with China emerging as the cheerleader for globalisation. But such global shifts could prove less transformative for Africa unless it diversifies its economies away from commodities.

Marchof the robots

Ibrahim also doubts whether China’s model of low wages and export-led companies can be repeated in Africa given developments such as robotics and artificial intelligence. “Technology is going to eat up jobs. Artificial intelligence is unstoppable,” according to Ibrahim. That, together with the balkanisation of Africa’s markets, will preclude a straightforward transfer of China’s industrial strategy. “The question is whether one day robots are going to take over. It’s an existential threat to the human race. […] There is some stage where we have to provide a universal wage because not everybody can have a job.”

Accordingly, he says, Africa will have to be more innovative and adaptive. The continent has not begun to tap the strength of its land and farmers, he argues. “Computers cannot feed people. The internet is of no use. Food needs to grow out of soil. We have a huge amount of land which is arable. Land cultivated in Africa is producing at maybe 20% of the efficiency of Australia or the US.”

City lights

More-productive farms and food-processing operations could boost jobs and spending power. Ibrahim’s foundation does extensive research on the rapid growth of cities, as well as Africa’s spiralling youth population. “Migration is not determined by philosophical arguments, it’s determined by need. If you live in a rural area and have no schooling for your kids or no hospital to deal with your ailing mother; if farming there’s so dismal that you cannot make a living […] you up sticks and go to the nearest town. Young people are attracted by the lights of the city, the music, the fun. These material resources act like a magnet. We’re not prepared for it. We have some of the largest slums in the world.”

One reason for neglect of the countryside in the past was political. Historically, governments courted the cities where people could organise opposition. That’s changing. Now in countries such as Russia and Turkey, authoritarian leaders are winning support from conservative rural voters and ignoring – sometimes cracking down hard on – dissidents in the cities.

“I’m really struggling to try to understand this new fascination with strong men.” For the first time in the conversation, Ibrahim seems genuinely perplexed. “How come we never learn? We had this fascination in the 1930s […] Hitler, Mussolini. You see where we ended up with that. A new herd mentality is being developed […]. How we could move in that direction when we thought people now are becoming more enlightened?” It sounds like the tidal wave of autocracy and nationalism might just provide a subject for the next Mo Ibrahim Foundation research project.

From the June 2017 print edition

Understand Africa's tomorrow... today

We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.