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  • 1. A Relative Ranking of 15 Country LocationsOUTSOURCING TO AFRICAOUTSOURCINGTOAFRICAARelativeRankingof15CountryLocations
  • 2. OUTSOURCING TO AFRICAA Relative Ranking of 15 Country Locations02_Africa_Report09_FR.indd Sec3:i02_Africa_Report09_FR.indd Sec3:i 2/26/09 12:14:04 PM2/26/09 12:14:04 PM
  • 3. OUTSOURCINGTOAFRICADisclaimerThis comparative ranking report and the following fifteen country reports provide a general overview ofcurrent activities and issues related to ICT Outsourcing in the country. The data presented here shouldbe regarded as illustrative rather than exhaustive. ICT Outsourcing is at a particularly dynamic stage inAfrica; new developments and announcements are happening almost on a daily basis somewhere on thecontinent.Therefore, these reports should be seen as ‘snapshots’ that were current at the time they weretaken; it is expected that certain facts and figures presented may become outdated very quickly.The findings, interpretations and conclusions expressed herein are a faithful representation of the respond-ents of the interviews and secondary data collected. Strict analytical analysis has been carried out with theminimal influence of the authors/team members. References to data sources have been made as far aspossible. In the case of the detailed data parameters used for scores and ranking, the same data sourceand timeline has been used for all the fifteen countries compared. In the descriptive section of the countryreports, all data received from the individual country has been used in order to give a complete assess-ment. Thus, countries that have provided more information have a better coverage than those that havenot been able to provide data to the research team.Board of Executive Directors of the CBC or CyberMedia cannot guarantee the accuracy of the dataincluded in this work. The boundaries, colours, denominations, and other information shown on any mapin this work do not imply on the part of the CBC and CyberMedia any judgment of the legal status ofany territory or the endorsement or acceptance of such boundaries.Neither the firm nor its directors, employees, agents or representatives shall be liable for any damages,whether direct or indirect, special or consequential including lost revenue or profits that may arise from orin connection with the use of this information. The information is in review and will be subject to changeand amendments as appropriate.“The content of this report is of a general nature and is not intended to address the circumstances ofany particular individual or entity. Although we endeavour to provide accurate information, there can be noguarantee that such information is accurate as of the date it is received or that it will continue to beaccurate in the future. No one should act on such information without appropriate examination of theparticular situation.”Any clarifications/queries on the information should be addressed to CyberMedia.02_Africa_Report09_FR.indd Sec3:ii02_Africa_Report09_FR.indd Sec3:ii 2/26/09 12:14:05 PM2/26/09 12:14:05 PM
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  • 5. OUTSOURCINGTOAFRICADEDICATIONDevelopment and education have come to many African nations but have the aspirationsof all the African people been met? How many have employment opportunities matchingtheir capabilities? How many people of African origin have reached the top positions in therest of the world?This study is dedicated to the youth in developing African nations, where unemployment ishigh and employment opportunities are low.Although the central theme of outsourcing of services is cost-cutting, outsourced ICT tasks toyouth at IT-enabled service centers in developing nations, is an opportunity to give dignifiedemployment to the educated youth. Such experience in work done remotely in Africa toserve the developed world enable the youth to obtain skills, experience and fierce competi-tive capabilities to face the challenging global world.This study focuses on what all the African nations covered in this study could do to improveand leverage the benefits that outsourcing can offer.Arindam BoseResearch Advisor Global ServicesCyberMedia India02_Africa_Report09_FR.indd Sec3:iii02_Africa_Report09_FR.indd Sec3:iii 2/26/09 12:14:05 PM2/26/09 12:14:05 PM
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  • 7. vOUTSOURCINGTOAFRICAForeword by Director General CBC viiPreface by Chairman CyberMedia ixIn This Study 1Methodology 1Scope and Definitions 2Project Team 21. Africa Situation Overview 31.1. Introduction 31.2. Overview of the Fifteen African Countries as Outsourcing Destinations 61.3. Outsourcing Attractiveness Overall Scores and Ranking 71.4. Infrastructure, People & Skills and Business Environment Scores and Ranks 92. Methodology 232.1. Geographical Coverage 232.2. Research Framework and Design 242.3. Normalization and Calculation 252.4. Definitions of Lower Level Abstraction, Constructs, and Major Data Points 282.5. Definitions of Data Parameters, Units of Measurements, and Source 34Glossary 37Appendix I: Infrastructure Data Table 40Appendix II: People and Skills Data Table 42Appendix III: Business Environment Data Table 44Appendix IV: Fifteen Africa Country Profiles 47TABLE OF CONTENTS02_Africa_Report09_FR.indd Sec3:v02_Africa_Report09_FR.indd Sec3:v 2/26/09 12:14:05 PM2/26/09 12:14:05 PM
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  • 9. viiOUTSOURCINGTOAFRICAI am delighted to present this report on the outsourcing potential of Africa, which is thefirst of its kind to outline the key issues that face the continent. Whilst there are dominantnations in the outsourcing arena such as India, Philippines, Mexico, and China, there is astrong case emerging for African nations. With vastly improved connectivity; proximity to keymarkets; multi-lingual skills; lower wage costs and suitable time-zones, many African nationsare now vying for a share of the global outsourcing business.Having been given the mandate from the Commonwealth Heads of Government in 1997 toinvolve the private sector in the promotion of trade and investment within the Common-wealth, the Commonwealth Business Council set out its vision for “sharing global prosperityby making globalisation work for all”. Since then, CBC has pursued its mission through thepromotion of global trade and investment with an enhanced role for the private sector.The Commonwealth Business Council is committed to pursuing the agenda on outsourcingin Africa. This report, as well as providing a clear picture of the current state of play withregard to infrastructure, society and economics, should act as a springboard for identifyingnew areas for projects to flourish. I sincerely hope that governments and the private sectorfind this report useful.We look forward to working together to achieve our common goals for economic growthand sustainable development in Africa.FOREWORDby Dr Mohan Kaul, Director General, CBC02_Africa_Report09_FR.indd Sec3:vii02_Africa_Report09_FR.indd Sec3:vii 2/26/09 12:14:05 PM2/26/09 12:14:05 PM
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  • 11. ixOUTSOURCINGTOAFRICAPREFACEby Mr. Pradeep Gupta, Chairman, CyberMediaThe world of outsourcing is going through major changes with a number of countries emerg-ing as challengers to grab a share of the rapidly expanding pie. CyberMedia has witnessed,chronicled and catalyzed the growth of the Indian outsourcing industry. CyberMedia waspart of the World Bank funded study in 1992, which looked into India’s competitiveness inIT services. At that time, India’s total exports were under $150mn. In seventeen years, thisfigure has risen to a stupendous $17bn. As part of the Steering Committee of that study, Isaw how seeds of an idea can be converted into strategy and executed to make a completetransformation of an industry and indeed a nation.Africa is ready to chart this journey. Of course, the path followed by India, will not worktoday. A new strategy has to evolve relevant for a mature market with formidable players.It is with this background that CyberMedia became the knowledge partner with Common-wealth Business Council in putting together this report that compares 15 African nationsand provides pointers and data for their growth into the outsourcing area.This is merely the first step. I am sure the Africans nations covered in the study will evolvetheir future strategies on the strength of this report.02_Africa_Report09_FR.indd Sec3:ix02_Africa_Report09_FR.indd Sec3:ix 2/26/09 12:14:06 PM2/26/09 12:14:06 PM
  • 12. 1OUTSOURCINGTOAFRICAMethodologyThe attractiveness of a nation as an outsourcing destination depends on the ICT and othersupporting infrastructure available, the skill levels of the people and their availability, andthe business environment.In this study, a framework comprising of qualitative and quantitative assessment was followed.Parameters pertaining to outsourcing were carefully selected from reputed international stud-ies. The data collected was converted to merit scores for Infrastructure, People and Skills andBusiness Environment and sub elements of these aspects. This unique ‘CyberMedia ResearchMethodology’ used to calculate the scores are described in chapter two of this report.Multi-faceted observations, which cannot be directly measured, were observed. The followingqualitative aspects important in attracting a potential investor coming to the country to setup an outsourcing operation have been analysed by survey of literature—Internet searchand limited country visits and telephonic interviews:Country, Political and Economic Profile.Principal Government Officials.Foreign Relations.Living, Security, and Safety Perceptions.ICT Policy, ICT Infrastructure and Service.ICT and BPO Industry Environment.Human Resource Efficiency and Cost.Legal and Enforcement Issues.Labour and Expatriate Worker’s Permits.Revenue, Tax, and Repatriation Issues.Investment Policy and Incentives.Government Agencies Giving Support to Outsourcing.In case of the detailed data parameters used for scores and ranking, the same data sourceand timeline has been used in order to give as complete an assessment as possible, for ranksand scores. The ‘Infrastructure’ scores are calculated on the various infrastructure-relatedparameters, and thereafter scores are divided into three bands i.e. ‘Ready’, ‘Upcoming’,and ‘Yet to be ready’, for becoming an attractive outsourcing destination. In ‘Outsourcing••••••••••••IN THIS STUDY02_Africa_Report09_FR.indd Sec1:102_Africa_Report09_FR.indd Sec1:1 2/26/09 12:14:06 PM2/26/09 12:14:06 PM
  • 13. 2OUTSOURCINGTOAFRICAAttractiveness Index’, there are two abstraction levels—‘People and Skills’ and ‘BusinessEnvironment’, having equal weightage in overall rankings of index.The final outsourcing attractiveness index is produced keeping infrastructure rankings as thebase; only the countries which are able to qualify in infrastructure bands are placed higherin the outsourcing attractiveness index.Scope and DefinitionsWhilst there are dominant nations in the outsourcing arena such as India, Philippines,Mexico, and China, etc., there is a strong case emerging for African nations.With improving connectivity, proximity to key markets, multi-lingual skills, lower wage costsand physical infrastructure costs, and suitable time-zones many African nations are now vyingfor a share of the global outsourcing business.To make the best of this emerging opportunity, the Commonwealth Business Council (CBC)with Global Services (GS), a CyberMedia (India) group company, is presenting the firstever ‘African Outsourcing Summit’ in 2009. This summit will bring representatives fromover fifteen African nations together with key decision makers and other stakeholders fromEuropean and global outsourcing industry.This research effort by CyberMedia-Global Services (India) benchmarks fifteen African coun-tries on many different parameters that will help decision makers in matching the rightoutsourcing destinations with outsourcing needs. This report is the background paper forthe summit.Project TeamMr. Kamal Vohra, Assistant Manager, CyberMedia IndiaMr. Kapil Dev Singh, Senior Vice-President, CyberMedia IndiaMr. Arindam Bose, Research Advisor, CyberMedia IndiaMr. Hoshie Ghaswalla, President, CyberMedia IndiaMs. Keerthi Nair, Sr. Manager (Editorial), CyberMedia India (Editorial Support)Mr. Bhupendra Bhanu, GM, CyberMedia India (Production Co-ordinator)Mr. Satish Khankriyal, Manager (R&D), CyberMedia India (Design & Layout)Mr. Ashimendu Dey, Associate Art and Ms. Poonam Ujjainwal, Sr. Illustrator,CyberMedia India (Illustrations)Mr. Raj Kishore, Graphic Designer, CyberMedia India (Cover Design) This Study02_Africa_Report09_FR.indd Sec1:202_Africa_Report09_FR.indd Sec1:2 2/26/09 12:14:06 PM2/26/09 12:14:06 PM
  • 14. 3OUTSOURCINGTOAFRICA1.1. IntroductionThis research effort by CyberMedia-Global Services (India) benchmarks fifteen African coun-tries on many different parameters that will help decision makers in matching the rightoutsourcing destinations with outsourcing needs.Whilst there are dominant nations in the outsourcing arena such as India, Philippines,Mexico, and China, there is a strong case emerging for African nations.With improving connectivity, proximity to key markets, multi-lingual skills, lower wage costsand physical infrastructure costs, and suitable time zones many African nations are now vyingfor a share of the global outsourcing business.Africa is vast and varied and, thus, to begin, the diversity and commonality of these fifteencountries is presented.Diversity: Africa is vast and diverse, but perhaps the greatest variation is in the wealthand population of different countries. It is worth looking at these absolute figures forthe countries in this study.GDP per capita (USD)70006000500040003000200010000* GDP below USD 2000Egypt*MauritiusSouthAfricaTunisiaMorocco*BotswanaGhana*Zambia*NamibiaKenya*Senegal*Mozambique*NigeriaTanzania*Uganda*Source: CyberMedia, Global Services, CBCFigure 1: GDP per capita (USD)•1. AFRICA SITUATION OVERVIEW02_Africa_Report09_FR.indd Sec1:302_Africa_Report09_FR.indd Sec1:3 2/26/09 12:14:06 PM2/26/09 12:14:06 PM
  • 15. 41. Africa Situation OverviewOUTSOURCINGTOAFRICAEgypt**Mauritius**SouthAfricaTunisia**Morocco**BotswanaGhana**Zambia**NamibiaKenyaSenegalMozambiqueNigeria**Tanzania**Uganda**60.00Population unemployed (% of labour...)50.0040.0030.0020.0010.000** Unemployment below 20%Source: CyberMedia, Global Services, CBCFigure 2: Population unemployedThe gross national per capita income, population, population density, un-employment,poverty, and other major characteristics are very diverse and at times seemingly contra-dictory. All possible combinations are there across these fifteen nations, namely:Low GDP* and Low Unemployment**: Egypt, Morocco, Tanzania, Uganda,Ghana, and Zambia.High GDP and Low Unemployment: Mauritius, Nigeria, and Tunisia.Low GDP and High Unemployment: Kenya, Mozambique, and Senegal.High GDP and High Unemployment: Botswana, South Africa, and Namibia.Commonality: There is one aspect common to Africa and specially sub-Saharan Africa—severe limitations in broadband connectivity. This diagram shows the severe limitationsof this continent with reference to all other continents.Fiber in use as of year-end 2004>500 500 50 10GbpsSource: TeleGeography Research @ 2006 PriMetrica.lnc.Figure 3: Existing broadband connectivity to Africa•02_Africa_Report09_FR.indd Sec1:402_Africa_Report09_FR.indd Sec1:4 2/26/09 12:14:06 PM2/26/09 12:14:06 PM
  • 16. 1. Africa Situation Overview5OUTSOURCINGTOAFRICAAttempts to improve this situation are in progress and will take till 2011 to materializewith the following systems coming up to connect African countries:SeacomEast Coast.13 700 km undersea cable.To connect Southern and East Africa.To India and Europe via Madagascar, Mozambique, Tanzania, Kenya.Complete by June 2009.To provide low-cost broadband.EASSyEast Coast.10 000 km.To connect South Africa, Mozambique, Madagascar, Somalia, Djibouti, Sudan.To be complete by end of 2010.Financed by World Bank and DBSA.InfracoWest Coast to UK.To be complete by first half of 2010.Originally built by State Companies Eskom and Transnet—both shareholders atNeotel.This is the expected scenario by 2011.Source: CyberMedia, Global Services, CBCFigure 4: Anticipated broadband scenario by 2011•••••••••••••••••02_Africa_Report09_FR.indd Sec1:502_Africa_Report09_FR.indd Sec1:5 2/26/09 12:14:06 PM2/26/09 12:14:06 PM
  • 17. 61. Africa Situation OverviewOUTSOURCINGTOAFRICAConsequently the cost of connectivity is extremely high—negative to outsourcingefforts; the figure below shows the comparison of connectivity costs of African coun-tries with others.South AsiaUS$per100kbps(2006)Middle East &North AfricaEurope &Central AsiaLatin America& CaribbeanEast Asia &PacificSub-SaharanAfrica020406080100120Comparison of Regional Average Broadband Retail PricesSource: ITU 2007a. World Bank staff analysisFigure 5: Broadband connectivity costs by regionWith the developments expected this situation should improve. This graph clearly shows anadvantage that North Africa has over sub-Saharan, central, and southern Africa on outsourc-ing infrastructure. Still, Africa is far disadvantaged as compared to East Asia, Pacific, andeven Latin America and the Caribbean.1.2. Overview of the Fifteen African Countries asOutsourcing DestinationsOutsourcing has arrived in Africa. This report quantitatively shows what is possible. In spiteof the negative perceptions that Africa has only places like Somalia with pirates, Congo fullof rebels, Nigeria the citadel of cyber crime, and South Africa the hotbed of carjacking andWild West type of shootouts, Africa has the most peaceful, clean, and serene locations. Todaymost ‘Bollywood’1and even some ‘Hollywood’ movies are shot in Africa. Thus outsourcinghas come for good, and it is for the African nations to come together and spread the rightmessage to propagate the right image of Africa as an outsourcing destination.The findings reveal that Africa has arrived in outsourcing with North Africa leading andSouth Africa close behind. The broadband connectivity projects in hand due to be com-pleted in the next few years will make parts of Africa, more tranquil, sparsely populated, andenvironmentally clear and clean—the next preferred outsourcing destination.1Citadel of the Indian Cinema Industry—Hollywood of India02_Africa_Report09_FR.indd Sec1:602_Africa_Report09_FR.indd Sec1:6 2/26/09 12:14:07 PM2/26/09 12:14:07 PM
  • 18. 1. Africa Situation Overview7OUTSOURCINGTOAFRICAMorocco *MoroccoTunisia *Geographical Coverage and RankTunisiaEgypt *EgyptSenegal *SenegalGhanaGhanaNigeriaNigeriaUgandaUgandaKenyaKenyaTanzaniaTanzaniaZambiaZambiaMozambique MozambiqueBotswanaBotswanaNamibiaNamibiaSouthAfricaSouth AfricaMauritiusAfrica*Non-Commonwealth CountriesMauritiusSource: CyberMedia, Global Services, CBCFigure 6: Map of Africa showing the countries in the three bands—Ready,Upcoming, and Yet to be ready Infrastructure Status1.3. Outsourcing Attractiveness’ Overall Scores and RankingThe overall outsourcing attractiveness depends primarily on the infrastructure readiness fol-lowed by a combination of people and skills and business environment. The countries arefirst categorized in bands depending on infrastructure readiness followed by ranking withinthe bands based on the sum of the people and skills and business environment scores. Peopleand skills and business environment have equal importance, hence equal weightage.Outsourcing Attractiveness IndexCountries are ranked within their bands based on theirBE + People & Skill ScoresCountries are ranked within their bands based on their:People & Skills ScoresplusBusiness Environment ScoresSource: CyberMedia, Global Services, CBCFigure 7: Deriving outsourcing attractiveness ranking02_Africa_Report09_FR.indd Sec1:702_Africa_Report09_FR.indd Sec1:7 2/26/09 12:14:07 PM2/26/09 12:14:07 PM
  • 19. 81. Africa Situation OverviewOUTSOURCINGTOAFRICAThe following final ranks and scores emerge:Outsourcing Attractiveness RankGhanaKenyaBotswanaSenegalMozambiqueNamibiaZambiaUPCOMMINGBotswanaGhanaZambiaNamibiaKenyaSenegalMozambique6.576.325.915.915.825.795.351234567NigeriaTanzaniaUganda1236.305.685.68InfrastructureBand CountryTunisiaSouth AfricaEgyptMoroccoMauritiusREADYBE + People & SkillsRanks Country ScoreEgyptMauritiusSouth AfricaTunisiaMorocco123457.187.086.986.776.43NigeriaTanzaniaUgandaYET TOBE READYSource: CyberMedia, Global Services, CBCFigure 8: Outsourcing attractiveness rankingEgypt turns out as the most attractive location in Africa. Egypt will have strong competitionfrom all the others in the infrastructure ready band as all are working hard to improve. Egypthas an edge because ICT is supported and believed in by the leadership and all actions arecoordinated. Further with the close coordination between different departments, especially theInformation Technology Industry Development Agency (ITIDA) and the General Authority forInvestment and Free zones (GAFI), makes a real single window service for any industry comingin to Egypt. An additional strength is the serious and coordinated efforts that the governmentand other stakeholders are making to maintain a steady supply of trained human resources ona continuing basis. Egypt is first in the people and skills score in this study. Egypt will howeverhave to look at cyber laws, tax rates, and general living conditions and infrastructure to maintainthis position. Again, in January 2009, Egypt has done very well according to a study completedby Gartner. The biggest challenge that Egypt will face is strong competition from South Africa,Morocco, Tunisia, and Mauritius. South Africa will soon overtake all others in banking, finance,and sensitive operations that need a strong security base. Also South Africa will forge closer tieswith the United Kingdom and United States of America than any other in the region.In the next band Botswana is topping and may jump soon if the promises made in various poli-cies and programmes are kept. The Botswana Innovation Hub and how it actually works andkeeps up the announced promises will pave the future as far as Botswana’s position is concerned.If Botswana does jump to the ‘Ready’ band it may well overtake some of the current leaders.In the Yet to be ready band Nigeria falls just short of the required infrastructure score. IfNigeria improves to enter the infrastructure upcoming band it will be within the top threein that band; thus there is potential to be taken advantage of here. Nigeria currently is thebest out of the fifteen in export of ICT services.02_Africa_Report09_FR.indd Sec1:802_Africa_Report09_FR.indd Sec1:8 2/26/09 12:14:08 PM2/26/09 12:14:08 PM
  • 20. 1. Africa Situation Overview9OUTSOURCINGTOAFRICA1.4. Infrastructure, People & Skills and BusinessEnvironment Scores and RanksA. Infrastructure ReadinessThe ‘Infrastructure Readiness’ of a nation is the most important factor in the nation becom-ing an attractive outsourcing destination. This readiness is in terms of the availability andpenetration on one side, and the infrastructure cost on the other. The two infrastructureconstruct scores come from the major data points of availability/penetration of infrastruc-ture and cost of infrastructure.To access the Infrastructure Data Table for all these fifteen countries, please see Appendix I. Country Score123457. AfricaEgyptMoroccoMauritiusNigeriaUgandaTanzaniaReady Scores of at least 6.5Scores of between 5.5 and 6.5Scores of at least 5.4UpcomingYet to be readySource: CyberMedia, Global Services, CBCFigure 9: ‘Infrastructure Readiness’ scores and rankingOn the infrastructure readiness, Tunisia is far ahead of other countries with 7.8; SouthAfrica is following with a score of 7.2. Egypt, Morocco and Mauritius also easily passed inthe infrastructure to the ready category/band. The upcoming band contains Ghana, Kenya,Botswana, Senegal, Mozambique, Namibia, and Zambia. The countries scoring very low oncurrent infrastructure state are, Tanzania, Nigeria, and Uganda ranking fifteen, fourteen,and thirteen, respectively, out of the list of fifteen African countries.Infrastructure—Availability & Penetration and CostThere are two main factors that lead to the complete infrastructure score; infrastructureavailability and penetration and infrastructure cost. In the case of the outsourcing needs,the first is critical and time consuming and thus has a greater role. Infrastructure cost isimportant but second to the first as large outsourcing operators have the negotiating advan-tage of large volume and can manage better costs.02_Africa_Report09_FR.indd Sec1:902_Africa_Report09_FR.indd Sec1:9 2/26/09 12:14:08 PM2/26/09 12:14:08 PM
  • 21. 101. Africa Situation OverviewOUTSOURCINGTOAFRICAInfrastructure availability and penetrationThis construct score is made up of the major data point (MDP) scores Network Readi-ness, Internet Bandwidth, Electricity Availability, and the Road and Rail Network.Infrastructure Availability & Penetration5.554.543.532.521.510.50EgyptMauritiusSouthAfricaTunisiaMoroccoBotswanaGhanaZambiaNamibiaKenyaSenegalMozambiqueNigeriaTanzaniaUgandaReadyUpcomingYet to be readySource: CyberMedia, Global Services, CBCFigure 10: Infrastructure Availability and Penetration Scores and RankingInfrastructure—costThis construct score is made up of the major data point (MDP) scores coming from costof space and facilities (Africa Research Report, Knight Frank); Cost of Stay and Trans-port (UNDP rates and prevailing air fares) and data transfer costs (World Bank).3.5Infrastructure CostReadyUpcomingYet to be ready32.521.510.50TunisiaSouthAfricaMozambiqueGhanaKenyaMauritiusEgyptBotswanaSenegalMoroccoZambiaNigeriaNamibiaTanzaniaUgandaSource: CyberMedia, Global Services, CBCFigure 11: Infrastructure costs scores and rankingIt is now pertinent to look at each one of the individual ‘Major Data Points’ (MDPs)that go towards these two constructs, namely availability and cost.••02_Africa_Report09_FR.indd Sec1:1002_Africa_Report09_FR.indd Sec1:10 2/26/09 12:14:08 PM2/26/09 12:14:08 PM
  • 22. 1. Africa Situation Overview11OUTSOURCINGTOAFRICAInfrastructure—availability/penetration-network readinessEgyptMauritiusSouthAfricaTunisiaMoroccoBotswanaGhanaZambiaNamibiaKenyaSenegalMozambiqueNigeriaTanzaniaUgandaReadyUpcomingYet to be readyNetwork Readiness9. CyberMedia, Global Services, CBCFigure 12: Network readiness ‘MDP’ scoresIn this MDP score all the fifteen countries are scoring between 5.79 (for Mozambique)and 7.78 (for Tunisia, which is the best).Infrastructure—availability/penetration-international Internet bandwidthReadyUpcomingYet to be readyMoroccoZambiaTunisiaKenyaSouthAfricaMozambiqueMauritiusGhanaNigeriaEgyptSenegalBotswanaNamibiaUgandaTanzaniaInternational Internet Bandwidth12.0010. CyberMedia, Global Services, CBCFigure 13: International Internet bandwidthIt is important to recognise that all these will improve as soon as broadband connectionfrom all the new projects are complete in 2009 to 2011.••02_Africa_Report09_FR.indd Sec1:1102_Africa_Report09_FR.indd Sec1:11 2/26/09 12:14:08 PM2/26/09 12:14:08 PM
  • 23. 121. Africa Situation OverviewOUTSOURCINGTOAFRICAInfrastructure—availability/penetration-electricity availabilityReadyUpcomingYet to be readySouthAfricaTunisiaMozambiqueGhanaKenyaMauritiusEgyptBotswanaSenegalMoroccoZambiaNigeriaNamibiaTanzaniaUganda12.00Electricity Availability10. CyberMedia, Global Services, CBCFigure 14: Electricity availabilityThe availability of electricity is crucial for any industry to set up and flourish. And forthe offshore outsourcing where downtime is crucial for make or break, electricity avail-ability plays a major role.South Africa with a weighted ‘MDP’ score of 9.80 out of ten is topping the list inelectricity quality and availability, which is followed by Egypt, Morocco, Mozam-bique, Zambia, Ghana, Kenya, Namibia, Nigeria, and Tunisia.The rest of the countries like Botswana, Tanzania, Mauritius, Senegal, and Uganda,having scored below half the maximum score, need to improve their electricityinfrastructure to make themselves world standard.At the same time there is a likehood of acute electricity shortages in South Africaand the southern African region with the demand increasing and supply remain-ing the same. This shortage of power appears to be a satire as the region is a richcoal bed with investors ready to put in power plants if they can arrange economiesof scale by negotiating long-term power purchase agreements with more than onecountry in the region.Botswana, currently scoring low in this data point, is one country that could takeadvantage of this opportunity both in terms of an outsourcing destination as wellas a supplier of power from its abundant reserves of coal and exploitation of theabundant solar radiation.•••••02_Africa_Report09_FR.indd Sec1:1202_Africa_Report09_FR.indd Sec1:12 2/26/09 12:14:09 PM2/26/09 12:14:09 PM
  • 24. 1. Africa Situation Overview13OUTSOURCINGTOAFRICAInfrastructure—availability/penetrationEgyptMauritiusSouthAfricaTunisiaMoroccoBotswanaGhanaZambiaNamibiaKenyaSenegalMozambiqueNigeriaTanzaniaUgandaReadyUpcomingYet to be readyRoad/Rail Network and Air Travel9. CyberMedia, Global Services, CBCFigure 15: Road and rail networkMore than half the countries score high in this major data point (MDP) withTunisia, Namibia, and Botswana leading, though Botswana and Namibia are in theUpcoming band.Infrastructure cost—rental and cost of commercial premisesThe rental and cost of commercial premises is a Major Data Parameter (MDP) thathelps in calculating overall cost of rental (per sq ft) and cost of ownership of premisesfor commercial activity. It is worth remembering that a higher score means a morecost-effective space and facilities. Thus space and facilities in Botswana are more costeffective than those in South Africa or Egypt.EgyptMauritiusSouthAfricaTunisiaMoroccoBotswanaGhanaZambiaNamibiaKenyaSenegalMozambiqueNigeriaTanzaniaUgandaReadyUpcomingYet to be readyRental and Cost of Commercial Premises12.0010. CyberMedia, Global Services, CBCFigure 16: Costs of inputs in terms of space and facilities••02_Africa_Report09_FR.indd Sec1:1302_Africa_Report09_FR.indd Sec1:13 2/26/09 12:14:09 PM2/26/09 12:14:09 PM
  • 25. 141. Africa Situation OverviewOUTSOURCINGTOAFRICAInfrastructure cost—stay and travel ‘MDP’ scoresTravel and stay costs of the people travelling to support the outsourcing industriesfrom countries that buy these services need to be considered. This ‘MDP’ is based onthe UNDP travelling allowance rates and prevailing cost of tickets from London to thedestination country as the detailed data points.ReadyUpcomingYet to be readyTunisiaSenegalMoroccoBotswanaEgyptZambiaGhanaMauritiusNigeriaNamibiaMozambiqueSouthAfricaTanzaniaKenyaUganda8.00Cost of Stay & Travel6. CyberMedia, Global Services, CBCFigure 17: Costs of inputs in travel and stayInfrastructure cost—telecom/data transfer ‘MDP’ costThe Telecom/Data Transfer Cost major data parameters is based on the detailed dataparameter for call charges (mobile/landline) to major world cities and the Internet/data transfer tariff per month. South Africa has the lowest telecom and data transfercost and is topping the list of fifteen African countries; it is followed closely by Egyptand Tunisia. Namibia, Tanzania, Uganda, Botswana, and Kenya have to improve theefficiency of their telecom infrastructure in this sector to lower the cost.ReadyUpcomingYet to be readySouthAfricaMoroccoNigeriaMauritiusGhanaTanzaniaEgyptKenyaUgandaTunisiaSenegalZambiaMozambiqueBotswanaNamibia8.009.00Telecom/Data Transfer Cost6. CyberMedia, Global Services, CBCFigure 18: Costs of inputs in terms of telecom/data transfer••02_Africa_Report09_FR.indd Sec1:1402_Africa_Report09_FR.indd Sec1:14 2/26/09 12:14:09 PM2/26/09 12:14:09 PM
  • 26. 1. Africa Situation Overview15OUTSOURCINGTOAFRICAB. People and SkillsThis lower level abstraction covers the resources in terms of people and skills-set require-ments that go into an outsourcing engagement from the point of view of people and avail-able skill sets to successfully operate outsourcing operations. People and skills lower levelabstraction score emerges from the construct scores related to availability, suitability and HRCosts and is based on the following MDP’s:Quantity and Working Satisfaction.Quality.ICT Exposure and Education.Language and Domain Skills.Personnel Compensation and Cost of Living.3.2153.1733.0092.9642.9482.9332.88467891011121314152.8792.8672.640Ranks Country Score123453.6203.5433.4913.4473.385BotswanaMoroccoKenyaUgandaTanzaniaNamibiaZambiaEgyptGhanaSouth AfricaTunisiaMauritiusNigeriaSenegalMozambiqueReadyUpcomingYet to be readySource: CyberMedia, Global Services, CBCFigure 19: People and skills—ranking and scoresTo access the People and Skills Data Table for all these fifteen countries, please seeAppendix II.In people and skills rankings, Egypt is leading the list with a weighted score of 3.620 out of10, closely followed by Ghana and South Africa with a weighted score of 3.543 and 3.491,respectively. Although the total population of Tunisia and Mauritius is much lower than theSouth Africa, Ghana, Nigeria, Morocco but the high availability of educated skilled work-ing population and their capability to cater to the niche of outsourcing market helped intheir favour.In the lower band of People and Skills rankings, Uganda, Tanzania, Namibia, Zambia,Nigeria, Senegal, and Mozambique have to improve their teaching standards, quality andsupply of human resources for the human intensive outsourcing industry.•••••02_Africa_Report09_FR.indd Sec1:1502_Africa_Report09_FR.indd Sec1:15 2/26/09 12:14:10 PM2/26/09 12:14:10 PM
  • 27. 161. Africa Situation OverviewOUTSOURCINGTOAFRICABotswana, Morocco, Kenya, Uganda and Tanzania are in the mid ranks and can improveby improving the ICT exposure and by adopting better teaching standards suitable for out-sourcing industry.To conclude, the variation in this lower level abstraction covering people and skills is notso great among all the fifteen countries.The contributing factors to these findings are illustrated in the next section in graphs thatshow the scores achieved by each country in a given contributing parameter.People and skills—availabilityThis construct gives a score that indicates the availability of human resources requiredfor an outsourcing destination. The major data points are the quantity and workingsatisfaction in the country. Quantity is based on a number of detailed data parametersrelated to population, literacy, education levels, and unemployment rates.The findings for the fifteen countries are shown as under.People & Skills — AvailabilityTunisiaSouthAfricaMozambiqueGhanaKenyaMauritiusEgyptBotswanaSenegalMoroccoZambiaNigeriaNamibiaTanzaniaUgandaReady1. Satisfaction QuantityUpcoming Yet to be readySource: CyberMedia, Global Services, CBCFigure 20: People and skills availabilityIt is interesting to observe that with diverse population figures from as low as 1.1 mil-lion to figures as high as 141 million all countries do contribute. The study has comeup with tangible scores for all countries. The variation of the scores among the diversecountries is not so great. This shows that all fifteen countries have potential, and ourmethodology caters for such a fair assessment in such diversity.•02_Africa_Report09_FR.indd Sec1:1602_Africa_Report09_FR.indd Sec1:16 2/26/09 12:14:10 PM2/26/09 12:14:10 PM
  • 28. 1. Africa Situation Overview17OUTSOURCINGTOAFRICAPeople and skills—suitabilityThe detailed data points relevant data from international sources as indicated in themethodology. The findings for the fifteen countries are shown as under.EgyptMauritiusSouthAfricaTunisiaMoroccoBotswanaGhanaZambiaNamibiaKenyaSenegalMozambiqueNigeriaTanzaniaUgandaPeople & Skills—SuitabilityICT Exposure QualityEducation, Languages, and Domain skills0. Upcoming Yet to be readySource: CyberMedia, Global Services, CBCFigure 21: People and skills suitabilityThis construct assesses the suitability of the human resources available in the countryfor outsourcing operations. The major data parameters include ICT exposure, educa-tion, language and domain skills, and quality.The graph shows that there is a relatively large variation in ICT exposure among thedifferent countries with the countries in the infrastructure ready and upcoming bandsleading. In the case of education and quality all countries are comparable.People and skills—human resource costsThis construct assesses the human resource cost factor in outsource operations and isbased on scores for personnel compensation and the cost of living. The detailed dataparameters used are from the UNDO local salary rates and cost of living index fromWorld Bank World Development indicators. The findings from the fifteen countries arepresented in the graph below. It is important to remember that a low score for the costof living indicates an expensive country and similarly a high personal compensationscore represents a lower salary rate. Thus Botswana, Ghana, and Tanzania are morecompetitive than South Africa or Tunisia.••02_Africa_Report09_FR.indd Sec1:1702_Africa_Report09_FR.indd Sec1:17 2/26/09 12:14:10 PM2/26/09 12:14:10 PM
  • 29. 181. Africa Situation OverviewOUTSOURCINGTOAFRICAPeople & Skills—HR CostHR Cost — Personal compensation10. of livingTunisiaSouthAfricaMauritiusEgyptMoroccoMozambiqueGhanaKenyaBotswanaSenegalZambiaNamibiaNigeriaTanzaniaUgandaReady Upcoming Yet to be readySource: CyberMedia, Global Services, CBCFigure 22: People and skills—HR costsC. Business EnvironmentThis lower-level abstraction covers a large number of factors that go into making a businessoperation successful in the country especially with reference to outsourcing. Factors likethe economic outlook, corruption perception, rule of law, government policies related tooutsourcing, tax policies, risk factors, and financial aspects are considered in this data set.3.3263.2613.0262.9762.9272.8132.78167891011121314152.7352.7132.711Ranks Country Score123453.6953.5583.4863.4193.357TunisiaMoroccoZambiaNamibiaSenegalKenyaGhanaMauritiusEgyptSouth AfricaNigeriaBotswanaTanzaniaUgandaMozambiqueReadyUpcomingYet to be readySource: CyberMedia, Global Services, CBCFigure 23: Business environment—scores and rankingThe Business Environment lower-level abstraction score emerges from five constructscores indicated:02_Africa_Report09_FR.indd Sec1:1802_Africa_Report09_FR.indd Sec1:18 2/26/09 12:14:11 PM2/26/09 12:14:11 PM
  • 30. 1. Africa Situation Overview19OUTSOURCINGTOAFRICABusiness Environment Index.ICT Industry Activeness.Economic Outlook.Risk Parameter.Tax and Financial Incentives.The detailed framework links the lower level abstraction with the constructs and major datapoints covered in Chapter 2 (Methodology).To access the Business Environment Data Table for all the fifteen countries, please seeAppendix III.In the business environment rankings, Mauritius is leading the list with weighted score of3.695 for its business-positive environment. Egypt is at second position with a weighted scoreof 3.558; closely following is South Africa with weighted score of 3.486. Startlingly, the rank-ings of Tunisia and Morocco are trailing the list at sixth and seventh positions with weightedscores of 3.326 and 3.261, respectively.The contributing factors to these findings are illustrated in the next section in graphs thatshow the scores achieved by each country in a given contributing parameter.Contributing Constructs and Major Data PointsBusiness environment—ease of doing business scoreThis construct gives a score and a measure of the steps that need to be completedbefore starting a business. This is determined by one Major Data Parameter ‘Ease ofDoing Business’ derived from considering detailed data parameters that include proce-dures to start a business, protecting investors, and corruption perception index.TunisiaSouthAfricaMozambiqueGhanaKenyaMauritiusEgyptBotswanaSenegalMoroccoZambiaNigeriaNamibiaTanzaniaUgandaReady Upcoming Yet to be ready0.400.350.300. of Doing BusinessSource: CyberMedia, Global Services, CBCFigure 24: Business environment—ease of doing business score••••••02_Africa_Report09_FR.indd Sec1:1902_Africa_Report09_FR.indd Sec1:19 2/26/09 12:14:11 PM2/26/09 12:14:11 PM
  • 31. 201. Africa Situation OverviewOUTSOURCINGTOAFRICAMauritius, South Africa, and Botswana are leading and are closely, followed by Egypt,though in practice Egypt is perhaps doing much better after the establishment of theGeneral Authority for Investment and Free Zones (GAFI) as a true single window;in the case of outsourcing industry in Egypt, the Information Technology IndustryDevelopment Agency (ITIDA) supports the GAFI. The time and effort were found tohave really improved as a result of this initiative. South Africa and Mauritius have simi-lar agencies in place working for the last few years, and once the Botswana InnovationHub (BIH) is operational Botswana would improve further.Business environment—ICT industry attractiveness scoreThe ICT industry attractiveness has been determined by the ICT Legislation andenforcement procedures in place and the magnitude of ICT in exports.ICT Industry Attractiveness0.450.40.350. Security; Cyber Laws and IPR Scores Expot & Share of ICTReady Upcoming Yet to be readyMoroccoSource: CyberMedia, Global Services, CBCFigure 25: Business environment—ICT industry attractiveness scoreIn ICT laws and its enforcement South Africa and Kenya lead (most banks do theirback-office processing there). Even Egypt, Botswana, Morocco, and Tunisia need toimprove. Nigeria has a moderate score here, but this is a bit of a surprise as cybercrime literature reports that most cyber crime and related negative actions originate inNigeria. Further, Nigeria has the highest score of ICT exports; however, it is in the Yetto be ready band. Perhaps this is due to the population of 141 million and several Nige-rians working abroad. It is a case of ‘Buddy Shopping’ like in the old days in India.•02_Africa_Report09_FR.indd Sec1:2002_Africa_Report09_FR.indd Sec1:20 2/26/09 12:14:11 PM2/26/09 12:14:11 PM
  • 32. 1. Africa Situation Overview21OUTSOURCINGTOAFRICABusiness environment—economic outlook scoreThis is based on economic and trade parameters.TunisiaSouthAfricaMozambiqueGhanaKenyaMauritiusEgyptBotswanaSenegalMoroccoZambiaNigeriaNamibiaTanzaniaUgandaReady Upcoming Yet to be ready0.400.350.300. OutlookShare of Services in GDP, Economy Size and Growth, InflationShare of Exports, Share of Services in ExportsCountry Forex ReservesSource: CyberMedia, Global Services, CBCFigure 26: Business Environment—economic outlook scoreAs per the report, South Africa, Mauritius, and Botswana lead with Egypt and Tunisiafollowing close behind.Business environment—risk parameter scoreThis factor is determined from the perceived risk in the country from geopolitical,currency fluctuation, and legislative risk.Business Environment—Risk Parameter0.600.500.400.300.200.100.00TunisiaSouthAfricaMauritiusEgyptMoroccoMozambiqueGhanaKenyaBotswanaSenegalZambiaNamibiaNigeriaTanzaniaUgandaGeo-Political Risk Currecy Risk Legislative RiskReady Upcoming Yet to be readySource: CyberMedia, Global Services, CBCFigure 27: Business environment—risk parameter score••02_Africa_Report09_FR.indd Sec1:2102_Africa_Report09_FR.indd Sec1:21 2/26/09 12:14:11 PM2/26/09 12:14:11 PM
  • 33. 221. Africa Situation OverviewOUTSOURCINGTOAFRICAEgypt, Tunisia, and Morocco lead with the least risk in all three factors followed bySouth Africa and Botswana in all aspects except the currency risk where South Africa,Botswana, and Namibia (all ties to the rand basket) are the worst in Africa.Business environment—tax and financial incentive scoresThis is based on the overall tax on profit and cost of finance.Business Environment—Tax & Financial Incentive0.350.500.450.400.300. Rate Easy & Cost of financeReady Upcoming Yet to be readySource: CyberMedia, Global Services, CBCFigure 28: Business environment—tax and financial incentive scoresIn tax benefits Botswana and Zambia lead with South Africa and Mauritius not farbehind. Egypt, Tunisia, and Morocco fall far behind.In the cost of finance South Africa leads with Botswana and Egypt following.Although there is a vast variation in tax rates across the fifteen countries, the costof finance is comparable.••••02_Africa_Report09_FR.indd Sec1:2202_Africa_Report09_FR.indd Sec1:22 2/26/09 12:14:12 PM2/26/09 12:14:12 PM
  • 34. 23OUTSOURCINGTOAFRICA2. METHODOLOGYThis part of the report describes the research methodology followed2.1. Geographical CoverageIn this report, fifteen African nations shown in the following map have been covered.Morocco *Tunisia *Egypt *Senegal *Ghana NigeriaUgandaKenyaTanzaniaZambiaMozambiqueBotswanaNamibiaSouthAfricaMauritiusAfrica*Non-Commonwealth CountriesSource: CyberMedia, Global Services, CBCFigure 29: Geographical coverage02_Africa_Report09_FR.indd Sec1:2302_Africa_Report09_FR.indd Sec1:23 2/26/09 12:14:12 PM2/26/09 12:14:12 PM
  • 35. 24OUTSOURCINGTOAFRICA2.2. Research Framework and DesignCyberMedia Research FrameworkIn this research the broad framework shown in the following diagram has been followed.A multi-faceted concept,which cannot be directlymeasuredSub aspects of theabstraction flow fromthe topSpecific measurableaspects, more clear thanabstraction but still broadVariables actuallymeasure the entitieson the basis of definedscaleMeasurementScaleLower LevelAbstractionDetailed Date Parameters andOperational Variables (DDP’s)Constructs, Sub-Constructs, MajorDate Points (MDP’s)AbstractionSource: CyberMedia, Global Services, CBCFigure 30: Research approachAbstraction: At this level, multi-faceted observations which cannot be directly measuredare observed. The following aspects, important in attracting a potential investor com-ing to the country to set up an outsourcing operation, have been analysed by survey ofliterature, Internet search, and limited country visits and telephonic interviews.Country Political and Economic Profile.Principal Government Officials.Foreign Relations.Living, Security, and Safety Perceptions.ICT Policy, ICT Infrastructure and Service.ICT and BPO Industry Environment.Human Resource Efficiency and Cost.Legal and Enforcement Issues.Labour and Expatriate Worker’s Permits.Revenue, Tax, and Repatriation Issues.Investment Policy and Incentives.Government Agencies Giving Support to Outsourcing.Lower-level abstraction: At this level the qualitative aspects augment the quantitativescores coming up from the scores at the ‘Construct’ and ‘Major Data Point’ levels. As••••••••••••••2. Methodology02_Africa_Report09_FR.indd Sec1:2402_Africa_Report09_FR.indd Sec1:24 2/26/09 12:14:12 PM2/26/09 12:14:12 PM
  • 36. 25OUTSOURCINGTOAFRICAthe scores have to be added in a weighted sum depending on the relative importanceof each data point, a careful normalisation and calculation method has been evolved.The weightage is defined in detailed research framework charts. These are explainedin the next sections.Constructs: These are specific and more measurable aspects, broad but clearer, than thelower level abstraction. The construct scores are derived by a weighted sum of ‘MajorData Points’. The principles are the same as indicated for lower level abstracts.Major data points: These are more specific and more measurable aspects. The ‘Major DataPoints’ scores are derived by the average of all the ‘Detailed Data Points’ allotted to that‘Major Data Point’. The principles are the same as indicated for lower level abstracts.Detailed data points: These are variables actually measured on the basis of unit and skill.In this research, such data has been collected from reliable internationally recognisedand published reports. The data that has been used is in two forms:Rating Scores representing the result of any extensive survey and study conductedby a recognised board like World Economic Forum’s Global Information TechnologyReport or Global Competitiveness Report, the United Nations Human DevelopmentsReports. Such scores are in a skill of one to ten, one to seven, or zero to one.Absolute values of data like number of procedures to start a business, total tax as apercentage of profit (World Bank doing Business Report or International InternetBandwidth [Bits per person]).2.3. Normalization and CalculationNormalizationAll the scores need to be added, averaged, or proportionately averaged; thus normalisationis necessary. Thus scores for the ‘Detailed Data Points’ are determined as follows:All rating scores in the range of zero to one, one to seven, or one to ten are normalisedproportionately to a range of one to ten across all the data. All scores used further arethus in the range of one to ten before the weightage specified in the detailed frame-work are applied.All data in the form of absolute values are normalised to a score by using the follow-ing formulaeScore = Score = 1+ ((LOG10 (Actual Value)-LOG10 (Min Value))/(LOG10 (Max Value)-LOG10 (Min Value)))*9CalculationThe calculations are done as follows:‘Lower Level Abstract’ Score = Weighted Average of contributing ‘Constructs’ Scores.‘Construct’ Scores = Weighted Average of contributing ‘Major Data Point’ Scores.•••••••••2. Methodology02_Africa_Report09_FR.indd Sec1:2502_Africa_Report09_FR.indd Sec1:25 2/26/09 12:14:13 PM2/26/09 12:14:13 PM
  • 37. 26OUTSOURCINGTOAFRICA‘Major Data Point’ Scores = Average of contributing ‘Detailed Data Point’ Scores.‘Detailed Data Point’ Score = the normalised value of the score as per the rule andformulae given above.The overall ‘Outsourcing Attractiveness Index’ is determined by the following method:People and Skills(50%)BusinessEnvironment (50%)OutsourcingAttractivenessRankLower Level AbstractionDetailed FrameworkSource: CyberMedia, Global Services, CBCFigure 31: Detailed framework—outsourcing attractivenessOutsourcing Attractiveness IndexCountries are ranked within their bands based on theirBE + People & Skill ScoresCountries are ranked within their bands based on their:People & Skills ScoresplusBusiness Environment ScoresSource: CyberMedia, Global Services, CBCFigure 32: Components leading to outsourcing attractivenessA. Infrastructure BandsThe ‘Infrastructure’ lower level abstraction score is calculated as per the detailed frame-work and the normalisation and calculation method indicated above.The countries with an infrastructure score greater than 6.5 are placed in the ‘Ready’band.••••2. Methodology02_Africa_Report09_FR.indd Sec1:2602_Africa_Report09_FR.indd Sec1:26 2/26/09 12:14:13 PM2/26/09 12:14:13 PM
  • 38. 27OUTSOURCINGTOAFRICAThe countries with an infrastructure score between 5.5 and 6.5 are placed in the‘Upcoming’ band.The countries with an infrastructure score less than 5.5 are placed in the ‘Yet to beready’ band.B. People & Skills and Business Environment ScoresThe ‘People and Skills’ lower level abstraction score is calculated as per the detailedframework and the normalisation and calculation method indicated above.The ‘Business Environment’ lower level abstraction score is calculated as per the detailedframework and the normalisation and calculation method indicated above.C. Overall Outsourcing Attractiveness Scores and RanksThe ‘Outsourcing Attractiveness’ score of the country is determined for countries ineach band. This is the sum of the ‘People and Skills’ score and ‘Business Environment’score.The rankings are made in each band using this total score.The following diagram shows this approach graphically.The ApproachPolitical Economic Social Technology People✓Attractiveness in terms of Outsourcing✓Characteristics of a countrySkill-setsBusiness Environment People & SkillsReady/UpcomingYet to be ReadyInfrastructureSource: CyberMedia, Global Services, CBCFigure 33: Detailed framework—outsourcing attractiveness••••••2. Methodology02_Africa_Report09_FR.indd Sec1:2702_Africa_Report09_FR.indd Sec1:27 2/26/09 12:14:13 PM2/26/09 12:14:13 PM
  • 39. 28OUTSOURCINGTOAFRICA2.4. Definitions of Lower Level Abstraction, Constructs,and Major Data PointsLower-Level AbstractionInfrastructure: This ‘Infrastructure Ready/Upcoming/Yet to be ready Decision’ scoresare calculated on a separate scale and cover all the important parameters needed to set-up the facility for outsourcing work. This scale would judge the nation’s infrastructureon a scale denoted by Ready/Upcoming/Yet to be ready. These parameters includetwo major ‘Constructs’: Availability/Penetration and Cost.People and skills: This ‘Lower level abstraction’ covers the extent to which the humanresource needs of the outsourcing engagement are met by the country in terms ofnumber of personnel available, their suitability for outsourcing, and the cost of person-nel meeting these needs. There are three constructs: availability, suitability, and cost.Business environment: This has five constructs that cover various aspects of the businessenvironment that make a country favourable or otherwise to attract an outsourcingoperation.Constructs and Major Data PointsInfrastructureInfrastructureInfrastructure Cost (40%)Availability/Penetration (60%)Lower Level Abstraction ConstructsDetailed Framework—InfrastructureMajor Data PointsNetwork Readiness Index (33%)International Internet Bandwidth (34%)Electricity Availability (16%)Road/Rail Network, Air Travel (16%)Rental, Cost of Commercial Premises (25%)Cost of stay, Travel Cost (25%)Telecom/Data Transfer Cost (50%)Source: CyberMedia, Global Services, CBCFigure 34: Detailed framework—infrastructure readinessThe major data points come from a number of carefully selected detailed data points.•••2. Methodology02_Africa_Report09_FR.indd Sec1:2802_Africa_Report09_FR.indd Sec1:28 2/26/09 12:14:13 PM2/26/09 12:14:13 PM
  • 40. 29OUTSOURCINGTOAFRICAInfrastructure—availability/penetration: This ‘Construct’ gives a score that covers thepenetration of IT communication network by using the ‘Network Readiness Index’, andavailability of other resources like Internet bandwidth, electricity, commercial space,railways, and air travel; the four ‘Major Data Points’ are as follows:Network readiness index: This ‘Major Data Point’ is based on a report produced bythe World Economic Forum in cooperation with INSEAD, published for the seventhconsecutive year with record coverage of 127 economies worldwide, the report hasbecome the world’s most comprehensive and authoritative international assessmentof the impact of ICT on the development process and the competitiveness of nations.This index is a standard measure of the availability and penetration of ICT infra-structure in a country. This is updated annually. In this case no separate detaileddata parameters will be considered as this ‘Network Readiness Index’ will be takenas it is (33 per cent weightage).International Internet bandwidth: This ‘Major Data Point’ is based on World Develop-ment Indicators produced by the World Bank. This is indication of availability of Inter-national Internet Bandwidth in mbps in each country (34 per cent weightage).Electricity availability: This ‘Major Data Point’ is based on ‘Detailed Data Parameters’like electricity production, consumption and import. (5 per cent weightage).Road/Rail/Air travel: This ‘Major Data Point’ is based on few ‘Detailed Data Param-eters’ like number of major railway stations, length of rail network (in km), lengthof road network (in km); number of major airports, connectivity with major citiesof the world, frequency of flights, etc. (16 per cent weightage).Infrastructure cost (40 per cent weightage): This ‘Construct’ will give us a score thatincludes the entire infrastructure cost incurred by business to acquire infrastructureresources, i.e., Communication, Electricity, Transportation, Railways, Air-Travel, etc.The three ‘major data points’ are as follows:Rental and cost commercial premises: This ‘major data point’ is based on ‘DetailedData Parameters’ that is used in calculating overall cost of rental (per sq. ft.) andcost of ownership of premises for commercial activity (25 per cent weightage).Cost of stay and travel: This ‘Major Data Point’ is based on ‘Detailed Data Parameters’that helps calculating the cost of stay for the expatriate executive; it includes boardand lodging charges and travel costs to major countries where the outsourcingmarket exists (25 per cent weightage).Telecom/Internet service cost: This ‘Major Data Point’ is based on ‘Detailed DataParameters’ like call charges (mobile/landline) to major world cities, Internet/datatransfer tariff per month, etc. (50 per cent weightage).•••••••••2. Methodology02_Africa_Report09_FR.indd Sec1:2902_Africa_Report09_FR.indd Sec1:29 2/26/09 12:14:14 PM2/26/09 12:14:14 PM
  • 41. 30OUTSOURCINGTOAFRICAPeople and SkillsH R Cost (30%)People and SkillsAvailability (40%)Suitability (30%)Quantity (75%)Working Satisfaction (25%)ICT Exposure (53%)Education, Languages, and Domain Skills (33%)Quality (14%)Personnel Compensation at Various Levels (66%)Cost of Living (34%)Detailed Framework—People and SkillsLower Level Abstraction Constructs Major Data PointsSource: CyberMedia, Global Services, CBCFigure 35: Detailed framework—merit of people and skillsPeople and skills—availability: This ‘Construct’ gives a score that gives us an idea ofthe quantity of personnel available along with the attrition rates of available person-nel leaving; this will give a score to assess the availability of personnel in the country.(40 per cent weightage). The two ‘Major Data Points’ thus are as follows:Quantity: This ‘Major Data Point’ is based on a number of ‘detailed data parameters’like population, education, qualified personnel available, ease of meeting shortfalls byexpatriate employment, unemployment rate, and so on (75 per cent weightage).Working satisfaction: This major data point is derived from the UNDP human develp-ment report 2008. This HDI Index, a number from 0 to 1, indicates the overallsatisfaction in working in that country. (See Table B of section 2.5, S. No. 9 tounderstand it better.)People and skills suitability: This ‘Construct’ gives a score that gives us an idea of thecompatibility of personnel to the outsourcing work, based on quality of personnel, theirlanguage skills, and exposure to the cultures of other countries that are the outsourcedservice markets, (30 per cent weightage). The four ‘Major Data Points’ are as follows:ICT exposure: This ‘Major Data Point’ will give an idea of the familiarity that thepeople or the available work force has to ICT. Detailed data parameters like densityof PCs, mobile phones, Internet, etc., among the people will be used to assess thisfactor (53 per cent weightage).Education, languages, and domain skills: This ‘Major Data Point’ is based on a few‘detailed data parameters’ like knowledge of European languages, management, andICT/domain skills relevant to outsourcing operations. The level of accreditation••••••2. Methodology02_Africa_Report09_FR.indd Sec1:3002_Africa_Report09_FR.indd Sec1:30 2/26/09 12:14:14 PM2/26/09 12:14:14 PM
  • 42. 31OUTSOURCINGTOAFRICAof these skills and qualifications to international standards will also be considered(33 per cent weightage).Quality: This ‘Major Data Point’ is based on a few ‘detailed data parameters’ likethe attitude of people towards work, health conditions affecting efficient operations,and related issues (14 per cent weightage).People and skills—HR cost: This ‘Construct’ gives a score that gives us an idea of thecost of personnel doing the outsourcing work (30 per cent weightage). The two ‘MajorData Points’ are as follows:Compensation at various levels: This ‘Major Data Point’ is based on a few ‘detaileddata parameters’ like the cost of a fresh graduate, cost of a professional with fiveyears’ experience, average cost of all other personnel, and related parameters(66 per cent weightage).Consumer price index: This ‘Major Data Point’ is based on a few ‘detailed dataparameters’ like the cost of living index, cost of medical insurance, cost of children’seducation, and similar factors (34 per cent weightage).Business EnvironmentBusinessEnvironmentBusiness Environment Index (10%)ICT Industry Attractiveness (20%)Economic Outlook (20%)Risk Parameter (30%)Tax & Financial Incentives (20%)Lower Level Abstraction ConstructsDetailed Framework–Business EnvironmentSource: CyberMedia, Global Services, CBCFigure 36: Detailed framework—merit of business environment••••2. Methodology02_Africa_Report09_FR.indd Sec1:3102_Africa_Report09_FR.indd Sec1:31 2/26/09 12:14:14 PM2/26/09 12:14:14 PM
  • 43. 32OUTSOURCINGTOAFRICAICT IndustryAttractiveness (20%)Economic Outlook(20%)Business EnvironmentIndex (10%)Ease of Doing Business (100%)ICT Security, Cyber Laws ans IPR (66%)Exports and Share of ICT (34%)Share of Services in GDP, Size and Growth, Inflation (40%)Share of Exports, Share of Services in Exports (40%)Foreign Exchange/Gold Reserves (20%)Constructs Major Data PointsDetailed Framework—Business EnvironmentSource: CyberMedia, Global Services, CBCFigure 37: Detailed framework—components of business environmentRisk Parameter (30%)Tax & Financial Incentive (20%)Geopolitical Risk (33%)Currency Risk (33%)Legislative Risk (34%)Tax Rate (50%)Ease & Cost of Finance (50%)Constructs Major Data PointsDetailed Framework—Business EnvironmentSource: CyberMedia, Global Services, CBCFigure 38: Detailed framework—components of business environmentBusiness Environment—business environment index: This ‘Construct’ will give us ascore that covers all the important parameters needed for positive business environ-ment of a nation. This data will be taken from the World Bank ‘Ease of Doing Business’research that examines a number of factors like starting a business, licences, employingworkers, property, taxes, credit, protecting investors, enforcing contracts, trading acrossborders, and closing a business (10 per cent weightage).Business Environment—ICT industry attractiveness: This ‘Construct’ will give us a scorethat covers all the important parameters needed for ICT Industry Attractiveness of anation (20per cent weightage). It includes the following ‘Major Data Points’:••2. Methodology02_Africa_Report09_FR.indd Sec1:3202_Africa_Report09_FR.indd Sec1:32 2/26/09 12:14:14 PM2/26/09 12:14:14 PM
  • 44. 33OUTSOURCINGTOAFRICASecurity/IPR law: This ‘major data point’ will be based on ‘Detailed Data Param-eters’ like IPR laws, Cyber laws, etc. (66 per cent weightage).Export and share of ICT industry: This ‘major data point’ will be based on ‘DetailedData Parameters’ that helps us estimate the ICT industry size of a nation. It will alsocover factors like total export/import of services, telecommunication revenue, etc.(34 per cent weightage).Business Environment—economic outlook: This ‘Construct’ will give us a score thatcovers all the important parameters needed to define Economic Outlook of a nation(20 per cent weightage). It includes the following ‘Major Data Points’:Percentage of services of GDP, size and growth and inflation: This ‘Major Data Point’will be based on ‘Detailed Data Parameters’ like Total GDP, percentage of share ofServices, increase of GDP, and Economic Growth, Inflation of a nation (40 per centweightage).Percentage share of exports and share of services: This ‘major data point’ is basedon ‘Detailed Data Parameters’ like percentage of Exports in overall economy of anation (40 per cent weightage).Foreign exchange/gold reserves: This ‘major data point’ is based on ‘DetailedData Parameters’ like foreign exchange/gold reserves of a nation, etc. (20 per centweightage).Business Environment—risk parameters: This ‘Construct’ gives us a score that cov-ers all the important risk parameters needed to define the risk to operate a business(30 per cent weightage). It includes the following ‘Major Data Points’:Geo-political risk: Political risk, also known as ‘geopolitical risk’—the risk that aninvestment’s returns could suffer as a result of political changes or instability in acountry. This ‘major data point’ is based on instability affecting investment returnscould stem from a ‘Detailed Data Parameters’ like change in government, otherforeign policy makers, or military control, factors in enforcement of contracts, etc.(33 per cent weightage).Currency risk: The risk that a business’ operations or an investment’s value is affectedby changes in exchange rates. This ‘major data point’ is based on ‘Detailed DataParameters’ like rate of currency fluctuation, changes in the value of the currencyrelative to the American dollar, total loss or gain on the investment when the moneyis converted back, etc. (33 per cent weightage).Legislative risk: The risk that a new law or a change in an existing law, cost, andefforts in the enforcement of a contract could have a significant impact on an invest-ment. This ‘Major Data Point’ is based on ‘Detailed Data Parameters’ like stability inlegislative reform, judicial independence, etc. (34 per cent weightage).Business Environment Tax and Financial Incentive (20 per cent weightage): This ‘Con-struct’ gives us a score that covers the entire imperative parameters needed to computethe financial depth of a nation. It includes the following ‘Major Data Points’:Tax rate (per cent of profit): This ‘Major Data Point’ is based on ‘Detailed DataParameters’ like corporate tax rates, VAT, property tax, stamp duty on advertisements,••••••••••••2. Methodology02_Africa_Report09_FR.indd Sec1:3302_Africa_Report09_FR.indd Sec1:33 2/26/09 12:14:15 PM2/26/09 12:14:15 PM
  • 45. 34OUTSOURCINGTOAFRICAtax on insurance premiums, social security contributions, tax concessions for IT-enabled services exports, etc. (50 per cent weightage).Ease and cost of finance: This ‘Major Data Point’ will be based on ‘Detailed DataParameters’ like bank interest on finances necessary for setting up outsourced serviceindustry, Financial market sophistication, extent, and effect of taxation, etc. (50 percent weightage).2.5. Definitions of Data Parameters, Units of Measurements,and SourceTable A. Infrastructure Data PointsS. No. Detailed Data Parameter and Units SourceAvailability/PenetrationNetwork readiness1 Network Readiness Index (Score from one toseven)WEF Global ITInternational Internet bandwidth2 International Internet Bandwidth(Bits/Person)WDIElectricity availability3 Electricity Consumption (Bn KWH) CIA Fact Sheet4 Electricity Production (Bn KWH) CIA Fact Sheet5 Electricity Import (Bn KWH) CIA Fact Sheet6 Quality of electricity supply WEFRoad/Rail network, air travel7 Quality of railroad infrastructure (Score from oneto seven)Global Competitiveness Report2008, WEF8 Quality of roads (Score from one to seven) Global Competitiveness Report2008, WEF9 Quality of air transport infrastructure (Score fromone to seven)Global Competitiveness Report2008, WEFInfrastructureCostRental, cost of commercial premises10 Average rent per month (USD/sq. meter) Africa Property Research Report2007: Knight Frank11 Average cost of Commercial space (USD/sq. meter) Africa Property Research Report2007: Knight FrankCost of stay & travel12 Hotel tariff (USD) UN Travel Allowance13 Other Charges (USD) UN Travel Allowance14 Cost of Air Travel (USD) (London—Nearest Int.Airport)Prevailing Ticket RateTelecom/Data transfer cost15 Call rate for US (USD/3 min) World Bank16 Internet Service Cost/Month (USD) World Bank•2. Methodology02_Africa_Report09_FR.indd Sec1:3402_Africa_Report09_FR.indd Sec1:34 2/26/09 12:14:15 PM2/26/09 12:14:15 PM
  • 46. 35OUTSOURCINGTOAFRICATable B. People and Skills Data PointsS. No. Detailed Data Parameter SourceAvailabilityTotal scoreQuantity1 Total population (in Millions) UNDP HDR 20082 Population in urban areas/100 UNDP HDR 20083 Population over 15 yrs./100 UNDP HDR 20084 Adult literacy/100 UNDP HDR 20085 Population educated at school/100 UNDP HDR 20086 Population educated at tertiary/100 UNDP HDR 20087 Availability of educated at science & engineeringgraduates (Score from one to seven)WEF Global IT8 Population unemployed (% of labour force) UNDP HDR 2008Working satisfaction9 Overall satisfaction in working in that country (HDIIndex from zero to one)UNDP HDR 2008 (HDI*100)SuitabilityICT exposure10 Proportion of households with a computer (%) World Bank Indicators11 Internet Users/1000 UNDP HDR 200812 Landline/1000 UNDP HDR 200813 Mobile/1000 UNDP HDR 200814 Internet Access in Schools WEF Global ITEducation, languages, and domain skills15 Quality of Scientific Institution (Score from one toseven)WEF Global IT16 Quality of Education System (Score from one toseven)WEF Global IT17 Extent Staff Training (Score from one to seven) WEF Global IT18 Quality of Math’s & Science education (Score fromone to seven)WEF Global IT19 Quality of Management Schools (Score from one toseven)WEF Global IT20 University - Industry research collaboration (Scorefrom one to seven)WEF Global ITQuality21 Business Impact of HIV (Score from one to seven) Global Competitiveness Report2008, WEF22 Business Impact of TB (Score from one to seven) Global Competitiveness Report2008, WEF23 Business Impact of Malaria (Score from one toseven)Global Competitiveness Report2008, WEF2. Methodology02_Africa_Report09_FR.indd Sec1:3502_Africa_Report09_FR.indd Sec1:35 2/26/09 12:14:15 PM2/26/09 12:14:15 PM
  • 47. 36OUTSOURCINGTOAFRICAS. No. Detailed Data Parameter SourceHRCostPersonnel compensation at various levels24 Cost of fresh graduate Agent (USD per yr) Local UN Salary Rates25 Cost of experienced Agent Local UN Salary Rates26 Cost of Executives Local UN Salary Rates27 Cost of Manager Local UN Salary RatesCost of living28 Consumer price index (2000=100) WDITable C. Business Environment Data PointsS. No. Detailed Data Parameter SourceBEIndexEase of doing business1 No. of procedures to start a business Global Competitiveness ReportWEF 20082 Protecting Investors (Score from one to ten) Doing Business3 Corruption Perception Index (zero least desirableto ten most desirable)Africa Development Indicators,World BankICTIndustryAttractivenessICT security, Cyber laws and protection ofintellectual property rights4 Laws Related to ICT (Score from one to seven) WEF Global IT5 Intellectual Property Protection (Score from one toseven)WEF Global IT6 Accessibility of digital content (Score from one toseven)WEF Global ITExports and share of ICT7 Computer, Communication, and other services(% of commercial service imports)WDI8 Computer, Communication, and other services(% of commercial service exports)WDI9 Telecommunication Revenue (% of GDP) WDIEconomicOutlookShare of services in GDP, economy sizeand growth, inflation10 Total GDP (USD Bn) UNDP HDR 200811 Share of Services in GDP CIA Fact Book12 GDP per capita (USD) UNDP HDR 200813 GDP growth rate UNDP HDR 200814 Inflation Rate CIA Fact BookShare of exports, share of services in exports15 Exports (USD Bn) CIA Fact Book16 Share of export in GDP (% of GDP) UNDP HDR 200817 Total export of services (% of Export) CIA Fact BookForeign exchange/gold reserves18 Foreign exchange/gold reserves (USD Bn) CIA Fact Book2. Methodology02_Africa_Report09_FR.indd Sec1:3602_Africa_Report09_FR.indd Sec1:36 2/26/09 12:14:15 PM2/26/09 12:14:15 PM
  • 48. 37OUTSOURCINGTOAFRICAGLOSSARYCost of Living This measure will give an estimate of the overall cost of living for thecountry taking the cost of living index, expenses on children’s education, medical insurancecosts, and so on.Cost of Stay and Travel The cost of stay and of travel to the outsourcing facility in thehost country/city from the major world cities for the expatriate executive; it includes board-ing and lodging charges.Cultural Exposure A score or rating that will give an idea of the exposure of the availablework force to the cultures of European and Western countries where the outsource servicemarket exists.Detailed Data Parameter The parameters measured and used by Global InformationTechnology Report produced by WEF would be used as such.Ease and Cost of Finance It provides a measure of ease of availability of finance andeasy tax rates.Education, Languages, and Domain Skills A score or rating that will give an idea of thereadiness of the work force to language, ICT, and other skills to make an outsource opera-tion successful.Electricity Cost The cost of electricity for the commercial establishment.Foreign exchange/Gold Reserves It gives us a measure of stability of the government bycomputing the debt and foreign exchange/gold reserves of a nation.Geopolitical Risk It gives measure of geopolitical risk that could cause an instability affect-ing the investment returns.Human Development Index A score or rating that will give an idea of the number ofpersonnel at various levels that leave an organisation for better prospects or better livingconditions after gaining experience and contacts in an outsourcing assignment.ICT Exposure A score or rating that will give an idea of the exposure of the PC, Internet,and mobile connectivity to the people and work force available in the country.ICT Industry Size This score will be an estimate of the ICT Industry size of a nation,Import/export of ICT services, and telecommunication revenue.ICT Security, Cyber Laws and Protection of Intellectual Property Rights This scorewill give an estimate of the trust that can be placed on transactions and interactions overICT and cyber space. It relates to enactment implementation, enforcement, and executionof Cyber, IPR, and related Laws.02_Africa_Report09_FR.indd Sec1:3702_Africa_Report09_FR.indd Sec1:37 2/26/09 12:14:15 PM2/26/09 12:14:15 PM
  • 49. 38OUTSOURCINGTOAFRICAInternational Internet Bandwidth A standard measure of availability International Inter-net Bandwidth (in mbps) throughout the country prepared annually by the World Develop-ment Indicators by World Bank.Legislative Risk It provides a measure of how frequently law changes to the extent thatbusiness and investors are affected by it.Network Readiness Index A standard measure of availability and penetration of ICTInfrastructure throughout the country prepared annually by the World Economic Forum(WEF) Report (The Global Information Technology Report 2006–07).Personnel Compensation at Various Levels Direct cost to the outsourcing business forthe personnel recruited for this purpose.Quality Attitude of people towards work, health conditions affecting efficient operationsand related issues.Quantity A score or rating that will give an idea of the number of personnel at variouslevels who will be available for an organisation wishing to start outsource operations in thecountry .Rental, Cost of Commercial Premises A month’s cost to take a commercial space (in sq.feet) on rent for business activity.Share of Exports in GDP, Share of Services in Exports It is measure of share of exportsin total GDP and percentage share of services in the total export by a nation.Share of Services in GDP, Economy Size and Growth, Inflation It denotes the percent-age share of services in total GDP, the total size of economy, GDP of the country.Telecom/Internet Service Cost The cost of data transfer and call rate from the Africannation to the Europe, Americas, and Australia.Glossary02_Africa_Report09_FR.indd Sec1:3802_Africa_Report09_FR.indd Sec1:38 2/26/09 12:14:15 PM2/26/09 12:14:15 PM
  • 50. OUTSOURCINGTOAFRICAAPPENDICESAppendix I: Infrastructure Data TableAppendix II: People and Skills Data TableAppendix III: Business Environment Data TableAppendix IV: Fifteen Africa Country Profiles02_Africa_Report09_FR.indd Sec1:3902_Africa_Report09_FR.indd Sec1:39 2/26/09 12:14:15 PM2/26/09 12:14:15 PM
  • 51. Availability/PenerationNetworkReadiness1NetworkReadinessIndex(Scorefrom1to7)WEFGlobalIT3.594.053.743.493.343.963.672.823.333.323.463.174.333.063.02InternationalInternetBandwidth2InternationalInternetBandwidth(Bits/Person)WDI161912692115337711811030.01126411ElectricityAvailability3ElectricityConsumption(BnKWH)CIAFactSheet2.6241926.94.4220.679.12.816.881.81.1911.171.67864ElectricityProduction(BnKWH)CIAFactSheet0.9126411775.52.3521.3713.171.6822.52.151.8812.851.988.855ElectricityImport(BnKWH)CIAFactSheet1.7511.320.1680.4610.280.010.8029.51.560.010.010.1360.010.010.4656QualityofelectricitysupplyWEF3.,AirTravel7Qualityofrailroadinfrastructure(Scorefrom1to7)GlobalCompetitivenessReport2008,WEF3.63.531.,WEF4.,WEF4. Parameter andUnitsSourceBotswanaSouthAfricaGhanaEgyptMauritiusKenyaMoroccoMozambiqueNamibiaNigeriaSenegalTanzaniaTunisiaUgandaZambiaAPPENDIXIINFRASTRUCTUREDATATABLE02_Africa_Report09_FR.indd Sec1:4002_Africa_Report09_FR.indd Sec1:40 2/26/09 12:14:15 PM2/26/09 12:14:15 PM
  • 52. InfrastructureCostRental,CostofCommercialPremises10Averagerentpermonth(USD/sq.metre)AfricaPropertyResearchReport2007:KnightFrank14162514101520121525201912161911AveragecostofCommercialspace(USD/sq.metre)AfricaPropertyResearchReport2007:KnightFrank7008001250700500750100060075012501000950600800950CostofStay&Travel12Hoteltariff(USD)UNTravelAllowance111147147.994156158158891351481561419419615613OtherCharges(USD)UNTravelAllowance6170107.15386979787211221136990688414CostofAirTravel(USD)(London—NearestInt.Airport)PrevailingTicketRate3971372119413450346828599134471447137212260361096338744471Telecom/DataTransferCost15CallrateforUS(USD/3min)WorldBank2.880.791.451.9931.591.691.1751.4913.1723.211.4116InternetServiceCost/Month(USD)WorldBank18.211.651215.816.22732.948.711.325.8363.199.633.302_Africa_Report09_FR.indd Sec1:4102_Africa_Report09_FR.indd Sec1:41 2/26/09 12:14:16 PM2/26/09 12:14:16 PM
  • 53. AvailabilityTotalScoreQuantity1Totalpopulation(inmillions)UNDPHDR20081.8047.9072.8022.5035.601.2630.5020.502.00141.4011.8038.5010.1028.9011.502Populationinurbanareas/100UNDPHDR200857.4059.3042.8047.8020.7042.4058.7034.5035.1048.2041.6024.2065.3012.6035.003Populationover15years/100UNDPHDR200864.4067.9066.7041.0057.4076.7069.7055.8060.9055.7057.8055.6074.0050.6054.304Adultliteracy/100UNDPHDR200881.2082.4071.4057.9073.6084.3052.3038.7085.0069.1039.3069.4074.3066.8068.005Populationeducatedatschool/100UNDPHDR200860.0062.0082.0037.0042.0082.0035.007.0039.0027.0017.001.3965.0015.0026.006Populationeducatedattertiary/100UNDPHDR200817.0020.0035.0026.0029.0026.0021.0024.006.1110.185.4024.0031.0010.002.337Availabilityofeducatedatscience&engineeringgraduates(Scorefrom1to7)WEFGlobalIT3.333.625.003.793.484.574.893.082.694.174.304.005.654.053.988Populationunemployed(%oflabourforce)UNDPHDR200823.8026.6011.0011.0040.009.6011.0021.0033.804.9048.005.1014.203.2012.00WorkingSatisfaction9Overallsatisfactioninworkinginthatcountry(HDIIndexfrom0to1)UNDPHDR2008(HDI*100)0.6540.6740.7080.5530.5210.8040.6460.3840.650.470.4990.4670.7660.5050.434SuitabilityICTExposure10Proportionofhouseholdswithacomputer(%)WorldBankIndicators68.5140.61.424.22.51.412. ParameterSourceBotswanaSouthAfricaGhanaEgyptMauritiusKenyaMoroccoMozambiqueNamibiaNigeriaSenegalTanzaniaTunisiaUgandaZambiaAPPENDIXIIPEOPLEANDSKILLSDATATABLE02_Africa_Report09_FR.indd Sec1:4202_Africa_Report09_FR.indd Sec1:42 2/26/09 12:14:16 PM2/26/09 12:14:16 PM
  • 54. SuitabilityEducation,Languages,andDomainSkills15QualityofScientificInstitution(Scorefrom1to7)WEFGlobalIT3.774.73.43.593.744.573.583.093.013.953.94.124.414.293.3216QualityofEducationSystem(Scorefrom1to7)WEFGlobalIT3.782.842.313.13.84.423.082.632.583.473.333.225.253.433.6817ExtentStaffTraining(Scorefrom1to7)WEFGlobalIT3.765.023.543.484.683.93.623.373.893.62.983.354.563.542.5118QualityofMaths&Scienceeducation(Scorefrom1to7)WEFGlobalIT3.782.353.,WEF2.62.2643.,WEF3.93.664.44.36.553.,WEF4. Sec1:4302_Africa_Report09_FR.indd Sec1:43 2/26/09 12:14:16 PM2/26/09 12:14:16 PM
  • 55. APPENDIXIIIBUSINESSENVIRONMENTDATATABLEBEIndexEaseofDoingBusiness1No.ofprocedurestostartabusinessGlobalCompetitivenessReportWEF20081187111266101091012101962ProtectingInvestors(Scorefrom1to10)DoingBusiness685.3657.7365.35.7353.745.33CorruptionPerceptionIndex(0leastdesirable-10mostdesirable)AfricaDevelopmentIndicators,WorldBank5.,CyberLawsandProtectionofIntellectualPropertyRights4LawsRelatedtoICT(Scorefrom1to7)WEFGlobalIT2.994.753.293.394.233.343.192.563.,Communication,andotherservices(%ofcommercialserviceimports)WDI2524292020292936316426172130398Computer,Communication,andotherservices(%ofcommercialserviceexports)WDI172316171516193048247111323169TelecommunicationRevenue(%ofGDP)WDI384244515392433S.No.DetailedData ParameterSourceBotswanaSouthAfricaGhanaEgyptMauritiusKenyaMoroccoMozambiqueNamibiaNigeriaSenegalTanzaniaTunisiaUgandaZambia02_Africa_Report09_FR.indd Sec1:4402_Africa_Report09_FR.indd Sec1:44 2/26/09 12:14:16 PM2/26/09 12:14:16 PM
  • 56. EconomicOutlookShareofServicesinGDP,EconomySizeandGrowth,Inflation10TotalGDP(USDBn)UNDPHDR200826239.589.410.718.714.2751.66.66.62068.,ShareofServicesinExports15Exports(USDBn)CIAFactBook5.579.1940.384.24.14.412.750.2382.9261.791.652.2215.151.684.5916ShareofexportinGDP(%ofGDP)UNDPHDR200851273013.5275736414653271748131617Totalexportofservices(%ofExport)CIAFactBook14.815.8572638.842.24112.215.68.827.843.84.431.27.2Foreignexchange/GoldReserves18Foreignexchange/goldreserves(USDBn)CIAFactBook9.7932.9831.372.23.353.124.721.40.8951.331.662.917.852.561.09RiskParameterGeo-PoliticalRisk19TransparencyofGovernmentpolicymakers(Scorefrom1to7)GlobalCompetitivenessReportWEF20084. Sec1:4502_Africa_Report09_FR.indd Sec1:45 2/26/09 12:14:17 PM2/26/09 12:14:17 PM
  • 57. 02_Africa_Report09_FR.indd Sec1:4602_Africa_Report09_FR.indd Sec1:46 2/26/09 12:14:17 PM2/26/09 12:14:17 PM
  • 58. 47Here’s the flow for each one of the fifteen countries:1. Country Overview2. Country Outsourcing Attractiveness Profile3. Country Political and Economic Profile4. Principal Government Officials5. Foreign Relations6. Living, Security, and Safety Perceptions7. ICT Policy, ICT Infrastructure, and Service8. ICT and BPO Industry Environment9. Human Resource Efficiency and Cost10. Legal and Enforcement Issues11. Labour and Expatriate Worker’s Permits12. Revenue, Tax, and Repatriation Issues13. Investment Policy and Incentives14. Government Agencies Giving Support to Outsourcing15. Recommendations16. Contact DetailsOUTSOURCINGTOAFRICAAPPENDIX IVFIFTEEN AFRICA COUNTRY PROFILES02_Africa_Report09_FR.indd Sec1:4702_Africa_Report09_FR.indd Sec1:47 2/26/09 12:14:17 PM2/26/09 12:14:17 PM
  • 59. 02_Africa_Report09_FR.indd Sec1:4802_Africa_Report09_FR.indd Sec1:48 2/26/09 12:14:17 PM2/26/09 12:14:17 PM
  • 60. 49OUTSOURCINGTOAFRICACountry Report for EgyptDisclaimerThis short country report, a result of a larger survey of ICT outsourcing in Africa, provides a general over-view of the current activities and issues related to ICT outsourcing in the country.The data presented hereshould be regarded as illustrative rather than exhaustive. ICT outsourcing is at a particularly dynamic stagein Africa with new developments and announcements happening on a daily basis somewhere or the otheron the continent.Therefore, these reports should be seen as ‘snapshots’ that were current at the time theywere taken; it is expected that certain facts and figures presented may become outdated very quickly.The findings, interpretations, and conclusions expressed herein are a faithful representation of the respondentsof the interviews and secondary data collected from the countries and published literature. Strict analysishas been carried out with the minimal influence of the authors/team members. References to data sourceshave been made as far as possible. In the case of the detailed data parameters used for scores and rankingthe same data source and timeline has been used for all the fifteen countries compared. In the descriptivesection of the country reports, all data received from the individual country have been used in order to giveas complete an assessment as possible. Thus those countries that have provided more information have abetter coverage than those who have not been able to provide data to the research team.Board of Executive Directors of CBC or Cyber Media cannot guarantee the accuracy of the data includedin this work. The boundaries, colours, denominations, and other information shown on any map in thiswork do not imply on the part of the CBC and Cyber Media any judgement of the legal status of anyterritory or the endorsement or acceptance of such boundaries.It is expected that individual country reports from the survey of ICT outsourcing in Africa will be updatedin an iterative process over time on the basis of additional research and feedback received through CBCand Cyber Media website.LIBYAMediterranean SeaWest BankGaza StripDeadSeaBanï SuwayfAl MinyãAsyutAl KharijahLakeNasserCAIROAlGhardaqahBurSafãjahSharmashShaykhRedSeaSAUDIARABIASuezCanalSuezSinaiNileLuxorAswanHalaibTriangleMarsáMatruhS wahAlexandriaDamietta Port SaidISRAELJORDANS U D A NTantaAl J zah0 100 200 km0 100 200 mi‚ ‚ ‚ ‚¯¯1¯1¯¯ ¯¯´03_Africa_Report09_Egypt.indd 4903_Africa_Report09_Egypt.indd 49 2/25/09 4:18:17 PM2/25/09 4:18:17 PM
  • 61. 50Country Report for EgyptOUTSOURCINGTOAFRICA1. OverviewEgypt is located in Northern Africa, bordering the Mediterranean Sea, between Libya andthe Gaza Strip, and the Red Sea north of Sudan, and includes the Asian Sinai Peninsula.Egypt is the most populous country in the Arab world and the second-most populous on theAfrican Continent. Nearly all of the country’s 79 million people live in Cairo and Alexandria;elsewhere on the banks of the Nile; in the Nile delta, which fans out north of Cairo; andalong the Suez Canal. These regions are among the world’s most densely populated, con-taining an average of over 3,820 persons per square mile (1,540 per sq km), as comparedto 181 persons per sq mi for the country as a whole.Egypt borders the Mediterranean Sea to the north, the Gaza Strip and Israel to the north-east, the Red Sea to the east, Sudan to the south, and Libya to the west.The great majority of its estimated 82 million live near the banks of the Nile River, in anarea of about 40,000 sq km (15,000 sq m), where the only arable agricultural land is found.The large areas of the Sahara Desert are sparsely inhabited. About half of Egypt’s residentslive in urban areas, with the majority spread across the densely populated centres of greaterCairo, Alexandria, and other major cities in the Nile Delta.Egypt is famous for its ancient civilisation and some of the world’s most famous monuments,including the Giza pyramid complex and its Great Sphinx. The southern city of Luxor con-tains numerous ancient artefacts, such as the Karnak Temple and the Valley of the Kings.Egypt is widely regarded as an important political and cultural nation of the Middle East.Egypt, sometimes referred to as the ‘Motherland of the World’ and the ‘Land of Civilisa-tions,’ is famous throughout the world for its ancient civilisation and 7,000-year history alongthe Nile River. It is an important political and cultural centre of the Middle East.2. Egypt’s Position in Africa’s Fifteen CountriesEgypt is the first in the ready band of countries from the outsourcing attractiveness point ofview. The map and table below show where Egypt is positioned among the fifteen studiedcountries.03_Africa_Report09_Egypt.indd 5003_Africa_Report09_Egypt.indd 50 2/25/09 4:18:17 PM2/25/09 4:18:17 PM
  • 62. Country Report for Egypt51OUTSOURCINGTOAFRICAMorocco *MoroccoTunisia *Geographical Coverage and RankTunisiaEgypt *EgyptSenegal *SenegalGhanaGhanaNigeriaNigeriaUgandaUgandaKenyaKenyaTanzaniaTanzaniaZambiaZambiaMozambique MozambiqueBotswanaBotswanaNamibiaNamibiaSouthAfricaSouth AfricaMauritiusAfrica*Non-Commonwealth CountriesMauritiusContributing scores and ranks are as under.OverallBand Score (PS & BE) RankReady 7.18 FirstInfrastructureScore Rank Band6.8 3 ReadyWhile achieving the third position in score for ‘Infrastructure’, Egypt is second in electric-ity availability and telecommunications and data-transfer costs, fourth in network readiness,seventh in infrastructure cost, third in availability and penetration, and sixth in the roadsand rail network.People and Skills (PS)Score Rank3.620 1Egypt is the best in the case of ‘People and Skills,’ being first in quantity, second in quality, andthird in working satisfaction and ICT exposure; it has scored seven in human resource costs. Atthe other end it has fallen to thirteenth position in education, language, and domain skills.03_Africa_Report09_Egypt.indd 5103_Africa_Report09_Egypt.indd 51 2/25/09 4:18:18 PM2/25/09 4:18:18 PM
  • 63. 52Country Report for EgyptOUTSOURCINGTOAFRICABusiness Environment (BE)Score Rank3.558 2Egypt ranked second in this lower level abstraction. In achieving this position it has comefifth in ICT security, Cyber and IPR laws, and share of services in GDP. Egypt has the thirdhighest foreign exchange reserves and ranks seventh in ease and cost of finances. Egypt hascome in the sixth position for legislative risk and in the eighth for share of ICT in exports.In the tax rate, Egypt is twelfth and in the share of services in exports it has come fifth.Also, Egypt is fifth and first, respectively, in geopolitical risk and currency risk.3. Country, Political, and Economic ProfileGeographyAt 1,001,450 sq km (386,660 sq m), Egypt is the world’s thirty-eighth-largest country. In termsof land area, it is approximately the same size as all of Central America, twice the size ofFrance, four times the size of the United Kingdom, and equals the combined size of the U.S.states of Texas and California. Nevertheless, due to the aridity of Egypt’s climate, populationcentres are concentrated along the narrow Nile Valley and Delta, meaning that approximately99 per cent of the population uses only about 5.5 per cent of the total land area.Alexandria is Egypt’s second largest city. Egypt is bordered by Libya to the west, Sudan tothe south, and by the Gaza Strip and Israel to the east. Egypt’s important role in geopoliticsstems from its strategic position. Its coast line is along the Mediterranean Sea and the RedSea; a transcontinental nation, it possesses a land bridge (the Isthmus of Suez) betweenAfrica and Asia, which in turn is traversed by a navigable waterway (the Suez Canal) thatconnects the Mediterranean Sea with the Indian Ocean via the Red Sea.To summarise the data:Area: 1,001,450 sq km (386,000 sq mi); approximately equal to Texas and New Mexicocombined.Cities: Capital—Cairo (pop. estimated at 16 million).Other cities: Alexandria (6 million), Aswan, Asyut, Port Said, Suez, Ismailia.Terrain: Desert, except Nile valley and delta.Climate: Dry, hot summers; moderate winters.PeopleNationality: Egyptian(s).Population (July 2007 est.): 80,335,036.Annual growth rate (2007 est.): 1.72 per cent.03_Africa_Report09_Egypt.indd 5203_Africa_Report09_Egypt.indd 52 2/25/09 4:18:18 PM2/25/09 4:18:18 PM
  • 64. Country Report for Egypt53OUTSOURCINGTOAFRICA Ethnic groups: Egyptian, Bedouin Arab, Nubian.Religions: Muslim 90 per cent, Coptic Christian 9 per cent, other Christian 1 per cent.Languages: Arabic (official), English, French.Education: Years compulsory—ages six to fifteen; Literacy—total adult 58 per cent.Health Infant mortality rate (2006 est.): 31.33 deaths/1,000 live births.Life expectancy (2006 estimate): Seventy-one years.GovernmentType: Republic.Independence: 1922.Constitution: 1971.Branches: Executive—President, Prime Minister, Cabinet; Legislative—People’s Assembly (444elected and ten presidentially appointed members) and Shura (consultative) Council (176elected members, eighty-eight presidentially appointed).Administrative subdivisions: Twenty-six governorates.Principal political parties: National Democratic Party (ruling); Principal opposition parties—NewWafd Party, Liberal Party, National Progressive Unionist Grouping (Tagammau), and Nasserite Party.Suffrage: Universal at eighteen.EconomyGDP (2007 est.): $118-120 billion.Annual growth rate (2007 est.): 7.2 per cent.Per capita GDP (2007 est.): $5,400.Natural resources: Petroleum and natural gas, iron ore, phosphates, manganese, limestone,gypsum, talc, asbestos, lead, zinc.Agriculture: Products—cotton, rice, onions, beans, citrus fruits, wheat, corn, barley, sugar.IndustryTypes: Food processing, textiles, chemicals, petrochemicals, construction, light manufacturing,iron and steel products, aluminium, cement, military equipment.Trade (FY 2005): Exports—$27.4 billion: petroleum, clothing and textiles, cotton, fruits andvegetables, manufactured goods.Major markets: EU, United States, Middle East, Japan.Imports: $40.48 billion—machinery and transport equipment, petroleum products, livestock, foodand beverages, paper and wood products, chemicals. Major suppliers: EU, United States, China.Political and National ConditionsEgypt has been a republic since 18 June 1953. President Mohamed Hosni Mubarak has been thepresident of the republic since 14 October 1981, following the assassination of former President03_Africa_Report09_Egypt.indd 5303_Africa_Report09_Egypt.indd 53 2/25/09 4:18:18 PM2/25/09 4:18:18 PM
  • 65. 54Country Report for EgyptOUTSOURCINGTOAFRICAMohammed Anwar El-Sadat. Mubarak is currently serving his fifth term in office. He is theleader of the ruling National Democratic Party. Prime Minister Dr. Ahmed Nazif was sworn inas prime minister on 9 July 2004, following the resignation of Dr. Atef Ebeid from his office.Although power is ostensibly organised under a multi-party semi-presidential system, wherebythe executive power is theoretically divided between the president and the prime minister,in practice it rests almost solely with the president who traditionally has been elected insingle-candidate elections for more than fifty years. Egypt also holds regular multi-party par-liamentary elections. The last presidential election, in which Mubarak won a fifth consecutiveterm, was held in September 2005.In late February 2005, President Mubarak announced in a surprise television broadcast thathe had ordered the reform of the country’s presidential election law, paving the way formulti-candidate polls in the upcoming presidential election. For the first time since the 1952movement, the Egyptian people had an apparent chance to elect a leader from a list of vari-ous candidates. The president said his initiative came out of “my full conviction of the needto consolidate efforts for more freedom and democracy”. However, the new law placed dra-conian restrictions on the filing for presidential candidacies, designed to prevent well-knowncandidates such as Ayman Nour from standing against Mubarak, and paved the road for hiseasy re-election victory. Concerns were once again expressed after the 2005 presidential elec-tions about government interference in the election process through fraud and vote rigging,in addition to police brutality and violence by pro-Mubarak supporters against oppositiondemonstrators. After the election, Egypt imprisoned Nour, and the US government statedthe ‘conviction of Mr. Nour, the runner-up in Egypt’s 2005 presidential elections, calls intoquestion Egypt’s commitment to democracy, freedom, and the rule of law.’As a result, most Egyptians are sceptical about the process of democratisation and the roleof the elections. Less than 25 per cent of the country’s 32 million registered voters (out of apopulation of more than 72 million) turned out for the 2005 elections. A proposed changeto the constitution would limit the president to two seven-year terms in office.Thirty-four constitutional changes voted on by parliament on 19 March 2007 prohibit par-ties from using religion as a basis for political activity; allow the drafting of a new antiter-rorism law to replace the emergency legislation in place since 1981, giving police widepowers of arrest and surveillance; give the president power to dissolve parliament; and endjudicial monitoring of election. As opposition members of parliament withdrew from votingon the proposed changes, it was expected that the referendum would be boycotted by agreat number of Egyptians in protest of what has been considered a breach of democraticpractices. Eventually it was reported that only 27 per cent of the registered voters went tothe polling stations under heavy police presence and tight political control of the rulingNational Democratic Party. It was officially announced on 27 March 2007 that 75.9 per centof those who participated in the referendum approved of the constitutional amendmentsintroduced by President Mubarak, and this was endorsed by opposition free parliament,thus allowing the introduction of laws that curb the activity of certain opposition elements,particularly Islamists.Thus Egypt is a safe and secure destination.03_Africa_Report09_Egypt.indd 5403_Africa_Report09_Egypt.indd 54 2/25/09 4:18:19 PM2/25/09 4:18:19 PM
  • 66. Country Report for Egypt55OUTSOURCINGTOAFRICA4. Principal Government OfficialsPresident: Mohamed Hosni Mubarak.Prime Minister: Dr. Ahmed Nazif (former Minister MCIT).Minister of Foreign Affairs: Ahmed Aboul Gheit Minister MCIT1: Dr. Tarek Kamel.First Deputy MCIT: Dr. Hoda Baraka.5. Foreign RelationsGeography, population, history, military strength, and diplomatic expertise give Egypt exten-sive political influence in the Middle East and within the Non-Aligned Movement. The ArabLeague headquarters is in Cairo, and the Secretary General of the League is traditionallyan Egyptian. Former Egyptian Foreign Minister Amr Moussa is the present secretary generalof the Arab League. President Mubarak has often chaired the African Union (formerly theOrganization of African Unity). Former Egyptian Deputy Prime Minister Boutros Boutros-Ghali served as secretary general of the United Nations from 1991 to 1996.Egypt has maintained friendly diplomatic and trade Relations with USA, EU, UK, France,India and Japan. Egypt has maintained strong partnership agreements with India, UK, andUSA in the areas of ICT, science and technology. Similarly there are strong industry-govern-ment partnerships with multinationals. Several Joint ICT Related Projects with Internationaland United Nations Agencies6. Living, Security, and Safety PerceptionsThe crime rate in Egypt is low. While incidents of violence are rare, purse snatching, pickpocketing and petty theft does occur. Travellers are strongly cautioned not to leave valu-ables such as cash, jewellery, and electronic items unsecured in hotel rooms or unattendedin public places. There have been instances of terrorism in the bordering areas, but thereis no reason to be alarmed. There is a need to be cautious while travelling by road andpublic transport. Proper medical insurance is necessary. Living conditions are moderate.7. ICT Policy, Infrastructure, and ServiceThere has been an ICT Policy in place since 1999 resulting in the setting up of the Ministryof Communication and Information Technology (MCIT). A positive strategy has been inplace to implement the policy, and the strategy and master plans are reviewed and updatedregularly; the current strategy is from 2007 to 2010. All departments and ministries workharmoniously in matters relating to ICT. The strategy is providing all that is needed for apositive growth of Egypt’s ICT Sector. The ICT infrastructure and services are of a very high-quality coverage and service levels have been fixed at a reasonable cost.1Ministry of Communications and Information Technology03_Africa_Report09_Egypt.indd 5503_Africa_Report09_Egypt.indd 55 2/25/09 4:18:19 PM2/25/09 4:18:19 PM
  • 67. 56Country Report for EgyptOUTSOURCINGTOAFRICAAn important goal of Egypt’s ICT Policy & Strategy is to create state of art ICT Infrastructurethat gives an enabling environment for Government and business to link globally in an effi-cient and cost effective way.A vibrant and export-oriented ICT Industry promotes Public Private Partnerships, enablessociety to absorb the benefits from expanding sources of information, creates a learningcommunity that exploits its own potential fully, support the developments of skills neededby the ICT Industry, and gives support for research and innovation in the field of ICT.In Egypt the ICT Sector has grown at 25% as compared to 7% overall growth in all sectorsof the Egyptian economy as a whole. Self-sustaining human resource base of 250,000 plus,ratification of necessary Telecommunication, e-signature, and related Cyber Laws make ICTand cyberspace safer; high Foreign Direct Investent(FDI) in the ICT sector, subscription-freeinternet access at the cost of local calls for all Egyptians, and low-cost PCs for all hostingglobal policy dialogues on related issues like Internet governance.Physical InfrastructureOffice market: The Cairo office market operates in a number of key locations acrossthe city reflecting its enormous geographical and demographic scale including the fiveareas known as Downtown, Ma’adi, Heliopolis, Mohandiseen, and Nasr City. The newring road has made areas around the city accessible. An out-of-town market developingin the three areas is known as sixth October, Smart Village, and Emaar’s New Cairo.Retail market: There are a number of shopping malls in Cairo, including Arkadia, FirstMall, Talaat Harb Center, and City Stars, which is the largest shopping mall in NorthAfrica. Western retailers were historically slow to open in Cairo due to trade issues;however, there are now international retailers in the city including Toys ‘R’ Us, Versace,Timberland, and Habitat. The market is destined to grow on the back of developmentsproposed by Emaar and Damac.Industrial market: There has been a growing trend for industrial users to move out ofthe city to areas where there is less congestion and communications are better—sixthOctober City. However, due to the success of this area, traffic congestion issues areincreasingly affecting the new occupiers.Residential market: Traditionally the best residential areas have been on the islandof Zamalek and in Ma’adi. Due to issues with pollution and quality of life, however,the trend is for housing to be concentrated in out-of-town areas like Pyramids andKatameya Heights. A recent phenomenon in the market is the entry of some of themajor UAE developers including Emaar and Damac who are proposing to constructon a scale previously unseen in the Cairo market.Prime rents Prime yieldsOffices US$ 11 per sq m per month 11%Retail US$ 35 per sq m per month 9%Industrial US$ 7 per sq m per month 12%Residential US$ 6,000 per month* 8%*Four bed room executive house—prime location••••03_Africa_Report09_Egypt.indd 5603_Africa_Report09_Egypt.indd 56 2/25/09 4:18:19 PM2/25/09 4:18:19 PM
  • 68. Country Report for Egypt57OUTSOURCINGTOAFRICA8. ICT and BPO Industry EnvironmentThese is a positive ICT environment conducive to healthy growth of the ICT Industry—magnitude of Egyptian ICT 1 per cent of GDP, involving 1,700 companies, staff of 49,000and generated taxes of 77 million USD in 2007; ICT sector growth 25 per cent in compari-son to 7 per cent for the rest of the economy. Positive and healthy growth of the BPO andoutsourcing industry as witnessed by the following:Ranked the best location by the British National Outsourcing Association (NOA).Several Multinational Companies operating outsourcing operations in the ICT Parksin Egypt.Egypt concentrating on the following Niche areas:Global R&DEngineering designGlobal Knowledge Process Outsourcing (KPO).Global IT localisation, Arab content management.Global BPO, Global technical support centre.Global contact centre management.IT product exports (emerging markets).Global IT (Software and It services).Strong Parallels between Egypt, India, and ChinaLiteracyRate(in Per cent )Per cent ofPopulation2004 to2005 AnnualGrowth Rate(in Per cent)CurrentNumberof CollegeGraduates(in Thousands)AverageAge ofPopulation(in Years)Services (e.g.Value-Added)Share of GDP(in Per cent)Total Population* MalesRural Population Unemployment RateEgypt India ChinaEgypt India ChinaEgypt India ChinaEgypt India ChinaFemales100808070605040302010060402010 60504086420403530252015105032313029282726252423220Source: The World Bank, United Nations Statistics Division, MCIT, TRAI, and Yankee Group, 2007*Total population includes individuals aged15-years old and older.9. Human Resource Efficiency and CostA government-funded university intervention program in Cairo is dedicated to getting stu-dents ready for employment each year and through the Edu Egypt initiative—a collaboration•••••••••••03_Africa_Report09_Egypt.indd 5703_Africa_Report09_Egypt.indd 57 2/25/09 4:18:19 PM2/25/09 4:18:19 PM
  • 69. 58Country Report for EgyptOUTSOURCINGTOAFRICAbetween the Ministry of Communications and Technology and the Ministry of Higher Educa-tion and Scientific Research—Egypt is able to equip undergraduates with soft skills, languageabilities, and technical competences that will secure Egypt’s future workforce. Also, with anannual graduate talent pool of around 330,000 students, Egypt is now globally associatedwith learning, dialogue, and tolerance (UNESCO, 2007).Egypt’s dense population produces an attractive labour supply, where English is fluentlyspoken by university graduates and where proficiency in many other European languagesis high. Secondary school enrolment is historically high, and the corresponding output willfeed university systems in the future, ensuring a constant flow of capable and ambitiousemployees. Among the graduating labour pool, 100,000 students will have chosen commerce,science, or engineering degrees, which are highly desirable disciplines, producing excellentcandidates for jobs in the ICT and engineering sectors in Egypt and worldwide. Additionally,Egypt ranks in the top ten for its IT skills in emerging markets (A.T. Kearney).As a result of its professional pool of graduates, Egypt has become one the world’s mostattractive and fast growing locations for global outsourcing. The country has twenty techni-cal institutes with 17,000 engineering graduates entering the marketplace each year; addedto which are leading institutes such as Al-Azhar University, Cairo University, and Ain ShamsUniversity. The Egyptian Education Initiative was set up to improve ‘employability’ in Egypt,and is supported by leading multinational companies such as CISCO, HP, IBM, and Intel. Themajority of training costs are covered as part of a wider government program, supported bythe Ministry of Communications and Technology (link to MCIT website), to develop its skilledworkforce—creating one of the best IT industry, enabling environments in the world.Egypt has abundant human resource base of qualified graduates with multi-lingual capabilities.Egypt has a reasonable salary and wage structure. Government provides subsidy in training pro-grammes to support the outsourcing industry. Egypt almost provides universal Internet accessdue to the subscription-free internet accounts available to all Egyptians. Egypt perhaps has thestrongest localisation policy with one expatriate permitted for every nine Egyptians employed.Egypt is the best among the fifteen countries covered in terms of human resources.Egypt has an abundant and sustainable pool of talented, technologically skilled, and multi-lingual university graduates.As a result of its professional pool of graduates, Egypt has become one the world’s mostattractive and fast growing locations for global outsourcing. The country has twenty techni-cal institutes with 17,000 engineering graduates entering the marketplace each year; addedto which are leading institutes such as Al-Azhar University, Cairo University, and Ain ShamsUniversity.One of the main benefits is its low average wage costs (2,076 USD per annum) whencompared with Eastern European countries; only India (1,416 USD) and the Philippines(1,776 USD) have lower average wages (source: EIU 2007). For IT programmers, very cost-competitive salaries are rewarded, for example, Egyptians received an average of 9,126 USDin 2006, while 20,966 USD was the service norm in Morocco (A. T. Kearney 2007 GlobalService Location Attractiveness).03_Africa_Report09_Egypt.indd 5803_Africa_Report09_Egypt.indd 58 2/25/09 4:18:20 PM2/25/09 4:18:20 PM
  • 70. Country Report for Egypt59OUTSOURCINGTOAFRICAThe research team visited and witnessed concrete educational programmes and institutionsdesigned and run to support a strong outsourcing industry on a sustained basis.10. Legal and Enforcement IssuesCopyright and Cyber Laws are being strengthened at high priority in Egypt. World BankDoing Business report cited that enforcing contracts is a lengthy procedure in Egypt.Time taken: 1010 days.Number of procedures: Forty-two.Cost: 26.2 per cent.In comparison, in Singapore it would take only 150 days. This is not as directly applicableto an outsourcing scenario as enforcement problems would not be a fully local issue.The research team was exposed to the initiatives being taken to strengthen the ICT Securityand Cyber law enforcement mechanisms in Egypt.11. Labour and Expatriate Worker’s PermitsEgypt has a very strong Localisation Policy. One expatriate is permitted for every nineEgyptians employed. Given this stated and announced guideline, getting permits is nota problem and Egyptian General Authority for Investment and Free Zones (GAFI) isa single window department that takes care of all permits. The cost of removing is anemployee equivalent to132 weeks’ salary (in comparison to zero in New Zealand or fourin Jordan).12. Revenue, Tax, and Repatriation IssuesThere are no foreign exchange controls in Egypt. The corporate tax is now a flat 20 percent, but with other taxes the total tax on profit comes out to be 46 per cent.13. Investment Policy and IncentivesSpecial Tax Concessions are given to important infrastructure projects. Minimum invest-ment have reduced to L.E. 1000 from L.E. 50,000 (Egyptian Pounds). Government paysfor training of Local Personnel to come upto International Standards. Egypt has a singlewindow authority (GAFI) for all approvals. Egypt has introduced antitrust and unified taxlaws to reduce software piracy, and tariffs on imports, and address legislative trade andnon-trade barriers to ICT industry. Egypt is the second best in terms of overall businessenvironment.03_Africa_Report09_Egypt.indd 5903_Africa_Report09_Egypt.indd 59 2/25/09 4:18:20 PM2/25/09 4:18:20 PM
  • 71. 60Country Report for EgyptOUTSOURCINGTOAFRICA14. Government Agencies Giving Support to OutsourcingInformation Technology Industry Development Agency ITIDA Egyptian General Authority on Investment and Free Zones (GAFI)http://www.gafinet.orgThe charter and responsibility of these two organisations is to support a potential Investorin the area of ICT or outsourcing at each and every step from conception to commission-ing their operations.15. Overall Assessment and RecommendationsEgypt should maintain this momentum, enhance human resource development and workattitudes, improve living conditions, improve infrastructure in terms of roads and livingareas, spread ICT and outsourcing operations out of Cairo into cities like Alexandria.16. Contact DetailsInvestment Promotion Single Window AgenciesInformation Technology Industry Development AgencySmart Village, Building (BS)Cairo–Alexandria Desert RoadGiza, EgyptTel: (+202) 3534-5132; Fax: (+202) 3534-5157Website:; http://www.itida.egGeneral Authority for Investment and Free ZonesSalah Salem Road, FairgroundsNasir City, Cairo, 11562EgyptTel: (+202) 240-55452; Fax: (+202) 240-55425Website: http://www.gafinet.orgEmbassy of Egypt in China, France, Germany, India, UK, and United StatesChicago (Consulate General)Head of Mission Consul General/Mona Nafisa Soaad Soody Mission500 N. Michigan Ave. Suite 1900Chicago, IL 60611•••03_Africa_Report09_Egypt.indd 6003_Africa_Report09_Egypt.indd 60 2/25/09 4:18:20 PM2/25/09 4:18:20 PM
  • 72. Country Report for Egypt61OUTSOURCINGTOAFRICA Tel: (+312) 8289164-8289163-8289162; Fax: (+312) 8289167Telex: N/AMail Box: N/AWebsite: (Consulate General)Head of Mission Consul General El-Husseini Muhammad Abdul WahabConsulate General of Egypt in Houston 5718 Westheimer Suite 1350Houston Texas, 77057Tel: (+1713) 9614915-9614916-9614407; Fax: (+1713) 9613868Telex: N/AMail Box: N/AWebsite: York (Consulate General)Head of Mission Consul General/Housin Abd E1 Karim Mobark1110 Second Avenue New Yorl # 201New York 10022Tel: (+1212) 7597120–7597121–7597122; Fax: (+1212) 3087643Telex: N/AMail Box: N/AE-mail: info@egyptnyc.netWebsite: Francisco (Consulate General)Head of Mission Consul General Hisham E1 Nakeb3001 Pacific Ave. San FranciscoCalifornia 94115–1013Tel: (+1415) 3469700–3469702-3467352; Fax: (+1415) 3469480;Telex: N/AMail Box: N/AWebsite: (Embassy)Head of Mission Ambassador /Sameh Hasan Shokry Salim3521 International CT. N.WWashington D.C. 20008Tel: (+202) 8955400; Fax: 23964196 EgyptTelex: 23964196 EgyptMail Box:Website: 6103_Africa_Report09_Egypt.indd 61 2/25/09 4:18:21 PM2/25/09 4:18:21 PM
  • 73. 62Country Report for EgyptOUTSOURCINGTOAFRICA London (Embassy)Head of Mission Ambassador Gehad Refaat Mohamed Maddy Mission26 South Street, MayfairLondon W1Y 6DD.Tel: (+44207) 4992401; Fax: (+44207) 4911542Telex: N/AMail Box: N/AE-mail: etembuk@hotmail.comWebsite: (Consulate General)Head of Mission Consul General/Amr Wafik E1 Henawy2 Lowndes StreetLondon SW1 X9ETTel: (+4420) 72359777; Fax: (+4420) 72355684Telex: N/AMail Box: N/AE-mail: (Embassy) serves as a non-resident mission to MongoliaHead of Mission Ambassador Mahmoud Allam Mohamed AllamNo. 2, Ri Tan Dong Lu, BeijingTel: (+8610) 65321825–65322541; Fax: (+8610) 65325365Telex: N/AMail Box: N/AE-mail: eg_emb_bj@yahoo.comWebsite: Kong (Consulate General)Head of Mission Consul General Magda Hosni NasrSuite 2201, Sino Plaza, 255-257 Gloucester Road, Causeway BayHong KongTel: (+852) 28270668–28270952; Fax: (+852) 28272100Telex: 73030 Zafar HXMail Box: N/AE-mail: egyptcg@netvigator.comShanghai (Consulate General)Head of Mission Consul General Khaled Mohamed Abd EL Salam1375 Huai Zhong Road, Qihua Building–19thFloor A&BTel: (+8621) 64331020–64330622–64330502; Fax: (+8621) 6433004903_Africa_Report09_Egypt.indd 6203_Africa_Report09_Egypt.indd 62 2/25/09 4:18:21 PM2/25/09 4:18:21 PM
  • 74. Country Report for Egypt63OUTSOURCINGTOAFRICA Telex: N/AMail Box: N/AE-mail: egyconsh@sh163.netMumbai (General Consulate)Head of Mission Consul/Nabila Ibrahim Salama FarhanaFlat No. 101 Benhur Apartments, 32 Narayan Dabholkar RoadMumbai-400006Tel: (+9122) 23676422–2367607; Fax: (+9122) 23634558Telex: N/AMail Box: N/AE-mail: N/ANew Delhi (Embassy)Head of Mission Ambassador Muhammad Abdul Hameed Hijazi1-50 M, Niti Marg, ChanakyapuriNew Delhi-110021Tel: (+9111) 26114096–26114097; Fax: (+9111) 26885355Telex: 31 72245 egnd inMail Box: N/AE-mail: of Mission Ambassador/E1 Sayed Ramzi Ez E1 Din RamziStauffenberg Str.6-7, 10785 BerlinTel: (+4930) 4775470; Fax: (+4930) 4771049Telex: N/AMail Box: N/AE-mail: embassy@egyptian-embassy.deWebsite: http://www.egyptian-embassy.deFrankfurt (Consulate General)Head of Mission Consul General Mahmoud Gameel Ahmed EldeebEysseneck str.34Frankfurt Main D-60322Tel: (+49-69) 95513410/15/17/30/24; Fax: (+4969) 5972131Telex: N/AMail Box: 60322E-mail: N/AWebsite: (Consulate General)Head of Mission Consul General Hala Aboul Fatah E1 Ghanam03_Africa_Report09_Egypt.indd 6303_Africa_Report09_Egypt.indd 63 2/25/09 4:18:21 PM2/25/09 4:18:21 PM
  • 75. 64Country Report for EgyptOUTSOURCINGTOAFRICA Mittelweg 183, D-20148HamburgTel: (+4940)411332610 Switch–41332626 Secretary; Fax: (+4940) 41332619Telex: N/AMail Box: 20149 HamburgE-mail: gen-kons-hh@gmx.deWebsite: (Consulate General)Head of Mission Consul General Hoda Mamdouh Othman Naguib166 Avenue De Hambourg, 13008Tel: (+33) 491250404–Dir. 491250070–Mob. 630079752; Fax: (+33) 491737931Telex: N/AMail Box: 13008E-mail: consulategypte@orange.feWebsite: (Embassy)Head of Mission Ambassador Nasser Ahmed Kamel56, Avenue D Iena, 75116 ParisTel: (+3301) 53678830; Fax: (+3301) 47230643Telex: 645297Mail Box: N/AE-mail: emb/Paris/embassy/fr-FRParis (Consulate) (Consulate General)Head of Consul/Ahmed Muhammad Ezat Abdul Hakam112/114 rue de la Boetie75008 ParisTel: (+33) 145009989–145007427–145007710; Fax: (+33) 145003528Telex: N/AMail Box: N/AE-mail: Paris_Con@mfa,gov.egWebsite: LinksWhy Egypt?ITIDA. 6403_Africa_Report09_Egypt.indd 64 2/25/09 4:18:21 PM2/25/09 4:18:21 PM
  • 76. Country Report for Egypt65OUTSOURCINGTOAFRICA Smart Village, Cairo Contact Center Park and InitiativesEgyptian Education Initiative. Egypt. Capacity Building ProgramEgypt PC 2010. Engineering Competence Center (SECC). Information Society Technologies. University. UniversityCairo University. Shams University. Universities Network.http://www.eun.egAmerican University in Cairo. 6503_Africa_Report09_Egypt.indd 65 2/25/09 4:18:21 PM2/25/09 4:18:21 PM
  • 77. 66Country Report for EgyptOUTSOURCINGTOAFRICA Other Related Ministry SitesMinistry for Communications and Information Technology (MCIT). Egyptian General Authority for Investment and Free Zones (GAFI). of Education. (Arabic)Ministry of Higher Education and Scientific Research. (Arabic)Egypt & Middle East Information Technology (Emeit)http://www.emeint.netOutsourcing Related SitesEuropean Outsourcing Association.–National Outsourcing Association. France.http://www.eoafrance.comInternational Association of Outsourcing Professionals. OrganisationsNational Telecommunication Regulatory Authority (NTRA). Postal Authority (NPA). Technology Institute. Telecommunication Institute.http://www.nti.sci.egCultNat.http://beta.cultnat.org03_Africa_Report09_Egypt.indd 6603_Africa_Report09_Egypt.indd 66 2/25/09 4:18:22 PM2/25/09 4:18:22 PM
  • 78. Country Report for Egypt67OUTSOURCINGTOAFRICA The World Fact book 2007. around the World; Egypt. US Department of Education.; Republic of Egypt, Ministry of Education. Education for All Report 2003. Cairo. Internet Usage and Marketing Report. Internet World Stats. Internet usage and Marketing Report. Internet World Stats.“Arab Higher Education and Development: An Overview.” Almishkat Center for Research.Cairo.Mashali, S.A. Education Program Director, Ministry of Communications and InformationTechnology. 6703_Africa_Report09_Egypt.indd 67 2/25/09 4:18:22 PM2/25/09 4:18:22 PM
  • 79. 03_Africa_Report09_Egypt.indd 6803_Africa_Report09_Egypt.indd 68 2/25/09 4:18:22 PM2/25/09 4:18:22 PM
  • 80. 69OUTSOURCINGTOAFRICACountry Report for MauritiusDisclaimerThis short Country Report, a result of a larger survey of ICT Outsourcing in Africa, provides a general over-view of the current activities and issues related to ICT Outsourcing in the country. The data presented hereshould be regarded as illustrative rather than exhaustive. ICT Outsourcing is at a particularly dynamic stagein Africa with new developments and announcements happening on a daily basis somewhere or the otheron the continent. Therefore, these reports should be seen as ‘snapshots’, that were current at the time theywere taken; it is expected that certain facts and figures presented may become outdated very quickly.The findings, interpretations, and conclusions expressed herein are a faithful representation of the respond-ents of the interviews and secondary data collected. Strict analysis has been carried out with the minimalinfluence of the authors/team members. References to data sources have been made as far as possible. Inthe case of the detailed data parameters used for scores and ranking, the same data source and timelinehas been used for all the fifteen countries compared. In the descriptive section of the country reports alldata received from the individual country has been used in order to give as complete an assessment aspossible. Thus those countries that have provided more information have a better coverage than thosewho have not been able to provide data to the research team.Board of Executive Directors of the CBC or Cyber Media cannot guarantee the accuracy of the dataincluded in this work. The boundaries, colours, denominations, and other information shown on any mapin this work do not imply on the part of the CBC and Cyber Media any judgement of the legal status ofany territory or the endorsement or acceptance of such boundaries.It is expected that individual Country Report from the Survey of ICT Outsourcing in Africa will be updatedin an iterative process over time, based on additional research and feedback received through the CBCand Cyber Media website.PORT LOUISIndianOceanIndian OceanTrioletGoodlandsreefAgalega Islands, CargadosCarajos Shoals, andRodrigues are not shown.reefreefQuatre BomesCurepipeTamarinCheminGrenierSouillacMahébourgCentrede Flacq0 2.5 5 km0 2.5 5 mi04_Africa_Report09_Mauritius.ind69 6904_Africa_Report09_Mauritius.ind69 69 2/25/09 4:19:00 PM2/25/09 4:19:00 PM
  • 81. 70Country Report for MauritiusOUTSOURCINGTOAFRICA1. Country OverviewMauritius is an island nation with a population of about 1.2 million. Since independencein 1968, the country has grown from a low-income agriculture-based economy to a middle-income diversified economy with growing industrial, financial, and tourist sectors. Sinceindependence, annual growth has been around 5 per cent to 6 per cent, life expectancy hasrisen, infant mortality has been lowered, and the infrastructure has improved.Following the model of the Singaporean experience, the Mauritian government has beenvisionary in its promotion of its country as a ‘cyber island’, a hub for the southern Africanregion with a diversified economy. Mauritius has attempted to promote ICTs in schools sincethe late 1990s which is reflected in its national ICT policy, a segment of which is dedicatedto education. Mauritius is an investment heaven and has considered outsourcing as one ofits major economic diversification efforts.2. Mauritius’s Position in Africa’s Fifteen CountriesMauritius is the second in the ready (highest) band of countries from the outsourcing attrac-tiveness point of view. The map and table below show where Mauritius is positioned.Morocco *MoroccoTunisia *Geographical Coverage and RankTunisiaEgypt *EgyptSenegal *SenegalGhanaGhanaNigeriaNigeriaUgandaUgandaKenyaKenyaTanzaniaTanzaniaZambiaZambiaMozambique MozambiqueBotswanaBotswanaNamibiaNamibiaSouthAfricaSouth AfricaMauritiusAfrica*Non-Commonwealth CountriesMauritius04_Africa_Report09_Mauritius.ind70 7004_Africa_Report09_Mauritius.ind70 70 2/25/09 4:19:01 PM2/25/09 4:19:01 PM
  • 82. Country Report for Mauritius71OUTSOURCINGTOAFRICAContributing scores and ranks are as under.OverallBand Score (PS & BE) Rank in BandReady 7.08 SecondInfrastructureScore Rank Band6.5 5 ReadyWhile achieving this score for ‘Infrastructure’, Mauritius has been second in the Interna-tional Internet Bandwidth, third in network readiness, and fifth in the overall infrastructureavailability and penetration. At the other end, Mauritius has scored eleventh and thirteenthout of fifteen in the costs of stay, travel, and electricity availability.People and Skills (PS)Score Rank3.385 5In the case of ‘People and Skills’ Mauritius has done very well by being first in ICT exposureand working satisfaction; second in quality and education, language, and domain skills; ithas scored fifth in human resource costs. At the other end Mauritius has positioned itselfas a platform for the free movement of labour.The issuance of an occupation permit (a combined work and residence permit valid for threeyears) in three years is a concrete example of the scalability of labour quantity in Mauritius.Business Environment (BE)Score Rank3.695 FirstTopping this lower level abstraction, Mauritius is first in ease and cost of finances, secondin contribution of services in GDP and exports, third in tax rates, fourth in geopolitical andcurrency risk, and fifth in legislative risk. Mauritius has an unmatched regulatory frameworkdetailed below:An appropriate legal framework has been put into place to enable international ICT play-ers to successfully conduct business from Mauritius. In this perspective, the Information•04_Africa_Report09_Mauritius.ind71 7104_Africa_Report09_Mauritius.ind71 71 2/25/09 4:19:01 PM2/25/09 4:19:01 PM
  • 83. 72Country Report for MauritiusOUTSOURCINGTOAFRICAand Communication Technologies Act 2001, Computer Misuse and Cyber crime Act2003 are some of the legislations that have been enacted to secure the transfer andprocessing of personal and confidential data.Furthermore, the promulgation of the Data Protection Act and eventually the adequacyfinding with EU will position Mauritius as an ‘Adequate Country’. This will create the‘right’ environment for the transfer of sensitive data from EU to Mauritius.3. Country, Political, and Economic ProfileSalient features are as follows:GeographyArea: 1,865 sq km (720 sq mi), about the size of Rhode Island; 500 miles east of Madagascar, inthe Indian Ocean.Dependencies: Rodrigues Island, the Agalega Islands, and Cargados Carajos Shoals; Mauritiusalso claims sovereignty over the Chagos Archipelago, part of the British Indian Ocean Territory,where US Naval Support Facility at Diego Garcia is located.Cities: Port Louis (pop. 146,319) (Capital).Other cities: Beau Bassin and Rose Hill (105,377), Vacoas-Phoenix (101,789), Curepipe(82,756), Quatre Bornes (77,145).Terrain: Volcanic island surrounded by coral reefs. A central plateau is rimmed by mountains.Climate: Tropical; cyclone season mid-December-April.PeopleNationality: Mauritian.Population (2008): 1.26, including Rodrigues, Agalega, and St Brandon.Density: 612/sq km.Avg. annual population growth (2008): 0.8%.Ethnic groups: Indo-Mauritians 68%, Creoles 27%, Sino-Mauritians 3%, Franco-Mauritians 2%.Religions: Hindu 48%, Roman Catholic 23.6%, Muslim 16.6%, other Christian 8.6%, other 2.5%.Languages: Creole (common), French, English (official), Hindi, Urdu, Hakka; there are otherlanguages such as Tamil, Telugu, Bojpuri.Education: Years compulsory 11 (primary school).Attendance (primary school): virtually universal.Literacy: Adult population 85%; school population 90%.Health (2008): Infant mortality rate—12.56 per 1000.Life expectancy: male—70.28 years; female—77.4 years.Work force (2005, 543,900): Manufacturing—19.8%; construction—9.7%; trade and tourism—22.3%; government services—16.6%; agriculture and fishing—9.6%; other—31.7%.•04_Africa_Report09_Mauritius.ind72 7204_Africa_Report09_Mauritius.ind72 72 2/25/09 4:19:02 PM2/25/09 4:19:02 PM
  • 84. Country Report for Mauritius73OUTSOURCINGTOAFRICAGovernmentType: Republic.Independence: 12 March, 1968 (became a republic in 1992).Constitution: 12 March, 1968.Branches: Executive—President (head of state), Prime minister (head of government), Councilof Ministers; Legislative—unicameral National Assembly. Judicial—Supreme Court.Administrative subdivisions: 10.Major political parties: MSM (Militant Socialist Movement), MMM (Mauritian MilitantMovement), and the Social Alliance (made up of several parties, including the MauritianLabour Party).Suffrage: Universal over 18.Defence (2006): 1.7% of GDP.EconomyGDP (2007, official exchange rate): $14.27 billion.Real growth rate (2007): 5.4%.Per capita income (2007, purchasing power parity): $5957.Avg. inflation rate (2007): 8.8%.Natural resources: Mauritius is ideally situated to exploit a five-century old stream of water ofexceptional quality flowing at a depth of one thousand metres a few kilometers off the west coatof the island.Agriculture (4.8% of GDP) products: sugar, sugar derivatives, tea, tobacco, vegetables, fruits,flowers, and fishing.Manufacturing, including export processing zone (20% of GDP): Types—labour-intensivegoods for export, including textiles and clothing, watches and clocks, jewellery, optical goods,toys and games, and cut flowers.Tourism sector (8.5% of GDP): Main countries of origin—France, including nearby Frenchisland Reunion, South Africa, and western European countries.Financial services: 10.3% of GDP.Trade (2007): Exports—$2.218 billion; textiles and clothing, sugar, canned tuna, watches andclocks, jewellery, optical goods, toys and games, and flowers. Major markets—Europe and theUS Imports—$3.628 billion: meat, dairy products, fish, wheat, rice, wheat flour, vegetable oil,petroleum products, iron and steel, cement, fertilisers, machinery and transport equipment, andtextile industry raw materials.Major suppliers: South Africa, France, China, India, Bahrain, Finland, UK, Japan, Australia, andGermany.Fiscal year: July 1–June 30.04_Africa_Report09_Mauritius.ind73 7304_Africa_Report09_Mauritius.ind73 73 2/25/09 4:19:02 PM2/25/09 4:19:02 PM
  • 85. 74Country Report for MauritiusOUTSOURCINGTOAFRICA4. Principal Government OfficialsThe current leadership till the next elections in 2010President: Sir Anerood Jugnauth.Vice-President: Angidi Chettiar.Prime Minister: Navinchandra Ramgoolam.Minister Information and Communication Technology: Mohammed Asraf Ally Dulull.5. Foreign RelationsMauritius has strong and friendly relations with the West as well as with India and the coun-tries of southern and eastern Africa. It is a member of the African Union (AU), World TradeOrganization (WTO), the Commonwealth, La Francophone, the Southern Africa Devel-opment Community (SADC), the Indian Ocean Commission, Community of Eastern, andSouth African States (COMESA), and the recently formed Indian Ocean Rim Association.In 2004, then-Prime Minister Berenger became chairman of SADC for a one-year term.Trade, commitment to democracy, colonial and cultural ties, and the country’s small sizeare the driving forces behind Mauritian foreign policy. The country’s political heritage anddependence on Western markets have led to close ties with the European Union and itsmember states, particularly the United Kingdom and France, which exercises sovereigntyover neighbouring reunion.Considered part of Africa geographically, Mauritius has friendly relations with other Africanstates in the region, particularly South Africa, by far its largest continental trading part-ner. Mauritian investors are gradually entering African markets, notably Madagascar andMozambique. Mauritius coordinates much of its foreign policy with the Southern AfricaDevelopment Community and the African Union.Relations with India are strong for both historical and commercial reasons. Foreign embas-sies in Mauritius include Australia, the United Kingdom, China, Egypt, France, India,Madagascar, Pakistan, Russia, South Africa, and the United States.6. Living, Security, and Safety PerceptionsIn general it is an extremely safe place by African or Asian Standards. There is a respectfor law, and the police are honest and strict. There is complete communal harmony wherepeople of different origins, and religions live in harmony, mix socially, and inter communitymarriage is readily accepted by society.Although violent crimes are uncommon, petty crime is present. There is potential for pickpocketing and purse snatching, especially in crowded areas. Residential break-ins are reportedfrequently on the island. Most break-ins are surreptitious and do not involve violence; how-ever, some burglars have brandished weapons, such as knives or machetes. Although very04_Africa_Report09_Mauritius.ind74 7404_Africa_Report09_Mauritius.ind74 74 2/25/09 4:19:02 PM2/25/09 4:19:02 PM
  • 86. Country Report for Mauritius75OUTSOURCINGTOAFRICAuncommon, there have been reports of armed robbery and assault. All individuals shouldexercise caution on beaches and poorly lit or deserted areas at night.Medical facilities are available and are of a moderate quality. The general cleanliness andhygiene of the public places is of a high order; for example, it is compulsory for all foodvendors, even those on the streets, to wear a cap and gloves while selling food. While publichospitals and clinics provide free care, many visitors may choose to be treated by privatedoctors and hospitals. Service Aide Medicale Urgence (SAMU) is a government organisationthat provides ambulance and emergency assistance in response to calls to 114. Mega Careis a private organisation that provides assistance to subscribers only; Tel: 116; 464-6116). Itis advisable to have a medical insurance cover as medical treatment is expensive. Outbreaksof the mosquito-borne Chikungunya virus have occurred in recent years; however, very fewcases have been reported since 2006.In conclusion Mauritius is a safe and healthy place to stay, work, or live.7. ICT Policy, Infrastructure, and ServiceEarly Government Initiatives in ICT InfrastructureThe Government of Mauritius has actively promoted ICT since 1989. Since then it alsoproposed a national ICT policy modelled on the Singaporean experience. The Mauritiusstrategy involved creating instruments to support the liberalisation of its telecommunicationssector, creating an ICT literate workforce, improving the capacity of public institutions toharness ICTs, and positioning Mauritius to be a key player in ICTs by creating enablingenvironment and robust infrastructure. In 1989 the government set up four institutions: theNational Computer Board, the Central Informatics Bureau, the State Informatics Limited,and the State Informatics Training Centre Limited.The Ministry of Information Technology and Telecommunications has the responsibility offormulation and implementation of government policies in the ICT sector. The NationalInformation and Communication Technology Strategic Plan (NICTSP) was first adopted in1998 and was accompanied by the launch of a number of projects in policy formulation,ICT awareness, human resources development, government computerisation, and standardsetting. The Mauritius Parliament also passed an Electronic Transaction Act in July 2000 toprovide an appropriate legal environment for electronic transactions covering electroniccontracts, and ensuring establishment of a number of certification authorities and standardsto combat forgery and fraud in electronic business. The policy’s vision is to make Mauritius a‘cyber island’ in which ICT would become the fifth pillar of the economy after sugar, textile,tourism, and financial services as well as a regional ICT hub.Current Status of ICT InfrastructureThe current state of the ICT Infrastructure is very high and well recognised by the WorldEconomic Forum, ITU, and World Bank surveys.04_Africa_Report09_Mauritius.ind75 7504_Africa_Report09_Mauritius.ind75 75 2/25/09 4:19:02 PM2/25/09 4:19:02 PM
  • 87. 76Country Report for MauritiusOUTSOURCINGTOAFRICAAccording to the World Economic Forum Global Information Technology Report, Mauritiusranks forty-fifth out of 115 economies in terms of its network readiness index, an indicator ofthe degree of preparation of a nation to participate in and benefit from ICT developments.The following tables provide a snapshot of the state of national ICT infrastructure inMauritius.ICT Infrastructure 2000 2001 2002 2003 2004 2005 20061. Fixed-line telephone serviceproviders (number)1 1 1 1 1 1 22. Mobile cellular service provider(number)2 2 2 2 2 2 33. Internet service providers(number)1 2 2 2 3 6 74. Percentage of populationcovered by mobile telephony (%)92.0 93.0 94.0 95.0 96.0 97.0 98.05. Internet hosts (number) 3,275 3,126 3,462 3,985 4,819 4,974 9,6546. Internet hosts per 10,000inhabitants (number)27.4 25.9 28.5 32.5 38.9 39.8 76.87. International Internet bandwidthcapacity (Megabits per second)Incoming 10.0 12.0 36.0 63.0 71.0 153.0 192.0Outgoing 10.0 12.0 36.0 63.0 71.0 116.0 153.08. International Internet bandwidth(bits per second per inhabitant)Incoming 8.4 10.0 29.6 51.3 57.4 122.5 152.8Outgoing 8.4 10.0 29.6 51.3 57.4 92.9 121.8Source: Information and Communication Technologies Authority (ICTA) and National ComputerBoard (NCB)Type of Internet subscribers 2003 2004 2005 2006TOTAL SUBSCRIBERS 61,252 78,023 128,555 137,479Narrowband Internet subscribers (dial-up) 60,052 75,237 77,160 56,410Broadband1Internet subscribers 1,200 2,786 51,395 81,069Fixed (including wireless) 1,200 2,786 8,339 19,948DSL (Digital Subscriber Line) 1,200 2,786 8,114 10,582Wireless na na ... 9,125Other na na 229 241Mobile na ... 43,056 61,121GPRS na ... 40,804 44,4713G na ... 2,252 16,6501Broadband Internet refers to connection to the Internet at a speed equal to or greater than128 kbps, as the sum of capacity in both directionsna: Not applicable... Nil or negligibleSource: Information and Communication Technologies Authority (ICTA)04_Africa_Report09_Mauritius.ind76 7604_Africa_Report09_Mauritius.ind76 76 2/25/09 4:19:03 PM2/25/09 4:19:03 PM
  • 88. Country Report for Mauritius77OUTSOURCINGTOAFRICA2000 2001 2002 2003 2004 2005 20061. Number ofestablishments152 47 61 71 91 111 1162. Employment1(number) 4,360 4,430 4,800 5,560 6,240 7,640 8,180Male (2,750) (2,750) (2,900) (3,490) (3,780) (4,350) (4,600)Female (1,610) (1,680) (1,900) (2,070) (2,460) (3,290) (3,580)3. Employment in the ICTsector as a % of totalemployment1.5 1.5 1.6 1.9 2.1 2.6 2.84. Value added in the ICTsector (Rs Million)4,490 5,170 6,010 6,832 7,701 8,740 10,4605. Value added in the ICTsector as a % of GDP4.3 4.4 4.8 5.0 5.1 5.4 5.86. Growth rate in the ICTsector (%)— 6.4 12.1 12.8 23.6 18.0 11.27. Imports of ICT goods andservices (Rs Million)— — 4,701 4,463 5,563 12,944 14,641goods (c.i.f) 3,266 2,932 3,395 3,627 4,811 12,277 13,599services — — 1,306 836 752 667 1,0428. Exports of ICT goods andservices2(Rs Million)— — 1,733 1,635 2,336 9,485 11,402goods (f.o.b) 301 360 644 849 1,549 8,484 9,887services — — 1,089 786 787 1,001 1,5159. Imports of ICT goods andservices as a % of totalimports— — 5.6 5.1 5.9 10.6 9.710. Exports of ICT goodsand services as a % oftotal exports— — 2.0 1.8 2.2 7.4 7.21Large establishments, that is employing 10 or more persons— not available2Source: Bank of MauritiusThus Mauritius is considered to be in the league of top performers in the global economy.The country has accelerated the liberalisation of its telecommunications sector by an earlytermination of the exclusivity of the incumbent operator as of 1 January 2003. Mauritius wasamong the sixty-nine signatories to the General Agreement on Trade in Services (GATS) in1997. In 2001 it introduced the ICT Act which provided the legal framework for liberalisa-tion, and a subsequent amendment in 2002 brought forward the liberalisation in early 2003.Because of the small geographic size of the country, coverage of telecommunications facili-ties is easy with all localities having access to telephone services. Almost the entire popula-tion is in the range of a cellular phone signal; the high level of universal access is attributedto subsidisation of home telephone costs as well as increase in household incomes whichmake telephony more affordable. There are also plans by a local company, ADB Networks,to make Mauritius the first national coast-to-coast hot spot, offering wireless Internet accessacross the island. Currently only 60 per cent of the island is covered, and only 70 per centof the population has access.04_Africa_Report09_Mauritius.ind77 7704_Africa_Report09_Mauritius.ind77 77 2/25/09 4:19:03 PM2/25/09 4:19:03 PM
  • 89. 78Country Report for MauritiusOUTSOURCINGTOAFRICAAs of 2009, Emtel Ltd is offering wireless Internet through its WiMAX network and mobileADSL solution. Another Internet service provider, Data Communications Ltd (DCL), is con-templating provision of wireless Internet access through a WiMAX network by mid 2009.Revised National ICT Strategic Plan 2007–2011A revised strategy was approved by the government in February 2006 following a review ofthe first five years of the NICTSP. This revised strategy revolves around focusing on nichemarkets in the ICT industry, developing strategic partnerships with ICT leaders, investingin a world-class physical and telecommunications infrastructure, emphasising ICT culturedevelopment, providing for an adequate supply of human resources, and establishing afavourable business environment.It has three key focus areas:The establishment of an ICT industry comprising the cyber city and business parkssupported by telecommunications infrastructure for wealth and job creation.Attracting and maintaining a high calibre of ICT experts in Mauritius to increase localavailability of trained manpower in ICT.Creating a favourable business environment with a sound legal framework and attrac-tive financial incentives for foreign investors.ICT as the Fifth Pillar of the EconomyThe revised National ICT Strategic Plan sets out a strategy to realise Mauritius’s vision forICT to be the fifth pillar of the economy. Consequently in order for ICT to take the dimen-sions of a ‘pillar’ of the economy it would require interventions in the twin tracks of Infor-mation Economy and Information Society.The former calls for measures which, significantly, enable the ICT sector to contributeinto the GDP of Mauritius, lead to the ICT sector employing more Mauritians, makefor a sustained availability of skilled manpower to power the sector, facilitate contribu-tion from the ICT sector into the Mauritian export basket.The latter takes initiative to create an information society that revolves around theinstilling of a ‘technology temper’ in Mauritians to bring about increased adoptionand usage of ICT, and ICT-enabled knowledge networking among citizens, generallyaccepting ICT as a stream of professional persuasion at par with others.Mauritius as a Regional HubMauritius must follow a two-fold strategy to transform itself into a Regional ICT Hub.It must emerge as a leader in some identified select areas of ICT where expertise doesnot substantially exist in the region and, more generally, it must increasingly be seenas a preferred centre of ICT skills, expertise, and employment in the region.••••••04_Africa_Report09_Mauritius.ind78 7804_Africa_Report09_Mauritius.ind78 78 2/25/09 4:19:04 PM2/25/09 4:19:04 PM
  • 90. Country Report for Mauritius79OUTSOURCINGTOAFRICAThe latter requires Mauritius to cooperate with other countries of the region to boostits availability of skilled ICT manpower. In fact, Mauritius’ partnership with the othercountries in the region must transcend the mere fulfilment of its manpower requirementto a larger geopolitical win-win exercise that, even as it aims at bolstering Mauritius’sown ICT manpower availability, also makes for the cooperating countries’ economicprogress. Partnering countries stand to benefit, for instance, by remittances of incomeacquired by their peoples trained and employed in Mauritius, return of trained man-power to their respective countries to be absorbed gainfully there, and by the spill overof investment from Mauritius into those countries. Getting increasingly discussed invarious forums is the potential of Africa to emerge as a prominent epicentre of eco-nomic activity, including ICT, in the years to come. Mauritius stands to gain enormouslyfrom its sustained kinship with countries of the East, particularly India and China,through serving as a geo-cultural bridge between these countries and nation states ofAfrica. Mauritius can serve as a springboard for countries desirous of investment intothe region—a ‘Gateway’ as it were.Early Successes for MauritiusToday, there is practically no domain of socio-economic activity in Mauritius that is com-pletely bereft of ICT. Equally importantly, there are few realms within ICT itself in whichMauritius is uninitiated. Regular hosting of ICT events at the regional level has also engen-dered a perception of Mauritius being significantly active in the ICT arena. However, initia-tives taken up so far have been largely isolated ones and not an outcome of any collaborativeand coordinated all-round planning. Encouraging achievements, though, have been madein many areas, including:in IT Enabled Services and IT services catering to offshoring nations of the world.substantial levels of uptake in sectors of economic activity, including in banking andfinancial services where it is comparable to global standards.significant degree of ICT penetration in society.reasonable levels of skills being imparted in the educational institutions.successes emerging in the sphere of e Governance with participation from the domesticICT industry.growing rate of penetration of ICT, including the Internet, in the society.Integrally associated with Mauritius, are its inherent strengths (favourable geo-climatic posi-tioning, sustained kinship with countries of Europe and nation-states in Asia, a popula-tion that enjoys equal felicity in both French and English, and an enduring state of polity),its acquired competencies (a robust telecommunication infrastructure, a society that valueseducation, reasonable placement in terms of socio-economic parameters, early successes inICT uptake in diverse domains of activity and a government strongly motivated to furtheringinterests of the ICT sector), and its emerging potential (promising gains made in ICT serv-ices exports, presence of domain skills in a few functional areas of activity and early signsof an ICT workforce build-up).•••••••04_Africa_Report09_Mauritius.ind79 7904_Africa_Report09_Mauritius.ind79 79 2/25/09 4:19:04 PM2/25/09 4:19:04 PM
  • 91. 80Country Report for MauritiusOUTSOURCINGTOAFRICAThe Way Forward—Targets to be AchievedFor the vision to be realised, Mauritius needs to ‘scale up’: to take its activities to the nextlevel that not just makes ICT truly a sector to reckon with, but also makes ICT a ubiquitousand affordable tool that profitably shapes the lives of citizens. Interventions, though, needto be holistic in scope and collaborative in approach towards building up an InformationEconomy and creating an Information Society.Identified with the vision, the primary targets to be met over a period of five years are asfollows:Information EconomyA 7 per cent contribution into Mauritius GDP from offshore ICT export services.Employment to at least 29,000 qualified individuals in the ICT sector.Employment in the ICT sector to at least 90 per cent of those who graduate in ICT.Doubling the number of foreign investors into the ICT sector in Mauritius.Memoranda of Understanding for collaborative ventures in the field of ICT with coun-tries of the region.Information SocietyIncreased preference for ICT with at least 50 per cent acceptance for services availableonline.Increase in PC ownership by at least 20,000 households and 12,000 PCs in primaryschools.150 Public Internet Access Points across the island.Internet connectivity and networking of all primary, secondary schools.At least 100 per cent increase in the enrolment at the tertiary level in ICT courses overa period of five years.Increase in Broadband Penetration by at least 250,000.Strategy to Realise the VisionHolistic interventions are required to achieve the targets associated with the vision. Essen-tially, five Strategic Thrust Areas, with their associated goals, are identified.Undertaking support measures by initiating appropriate legal, institutional, and infra-structural changes, investing in long-term educational fulfilment, fostering a culture ofsecurity and trust in ICT, and following these up with effective monitoring and evalu-ation mechanisms.••••••••••••04_Africa_Report09_Mauritius.ind80 8004_Africa_Report09_Mauritius.ind80 80 2/25/09 4:19:04 PM2/25/09 4:19:04 PM
  • 92. Country Report for Mauritius81OUTSOURCINGTOAFRICACatalysing economic activity in critical sectors of the economy by promoting e Businessadoption within and across different sectors of socio-economic activity.Accelerating ICT adoption in society by embracing electronic means of governance andby taking measures towards democratising ICT in society.Taking up leadership roles in the region through transforming itself into an ICT skillsand expertise hub in this part of the world, while at the same time identifying a fewareas in which to become a regional leader.Emerging as a global point of reference for offshored services both in the ITS and inthe ITeS domains using, among other things, advantages of bilingualism and becomingan investment nucleus for ICT and a gateway to markets of Africa.To conclude, Mauritius has a strong ICT base and has been and will be serious aboutimproving its ICT structure. Limited human resources and high population density areand will be the challenges. Mauritius is serious as the following table shows the ICTadoption influencing factors.Factors Enabling features Constraining featuresPolicy framework andimplementationMauritius has been a front runnerin an overall comprehensivenational ICT policy and liberalisedtelecommunications framework. Thenational ICT policy also includes acomponent on education.There is no comprehensivepolicy on ICT in education.Advocacy leadership The government has been at theforefront of driving ICT access anduse at all levels of society and hasimplemented projects with ambitioustargets.Gender equity The government has introduced adedicated project promoting the useof ICT by women.There is no explicit referenceto gender equality andwomen’s empowerment in thenational ICT policy.Infrastructure andaccessMauritius has a relatively good ICTinfrastructure and high levels of ICTaccess including Internet connectivity.CollaboratingmechanismsThe government has instituted somecollaborating mechanisms to co-ordinate, monitor, and manage ICTinitiatives in the country.Fiscal resources Dedicated budgets have beenallocated for various ICT projects thatpromote the vision of the government.Attitudes The leadership of the governmenthas been confident ambitiousattitude in the promotion of ICTs asa cornerstone of the economy. Thefocus appears to be on technicaltraining.•••••04_Africa_Report09_Mauritius.ind81 8104_Africa_Report09_Mauritius.ind81 81 2/25/09 4:19:04 PM2/25/09 4:19:04 PM
  • 93. 82Country Report for MauritiusOUTSOURCINGTOAFRICAPhysical InfrastructureOffice market: The Cyber Tower, located about ten km south of the capital PortLouis, is home to a number of leading IT companies, with space rented for aroundUS$ 15 per sq m per month. In the Port Louis region, mid-range offices includingJade Court, Moorgate House and Victoria House attract rents of US$ 8–10 per sq m permonth. Elsewhere, office premises such as Medine Mews and Harbour Front commandaverage rents of about US$ 14 per sq m per month.Retail market: In landmark locations such as Caudan, small shop premises of between30–50 sq m are being rented for as much as US$ 40 per sq m per month. At thePhoenix les Halles, a shopping centre of 28,000 sq m which is currently under construc-tion and due to open in August 2008, the projected rent is around US$ 16 per sq mper month for premises of above 400 sq m.Residential market: The residential market is very heterogeneous, with large differencesbetween the markets for beach front houses, Integrated Resort Scheme (IRS) proper-ties, and the mass Mauritian market. A three to four bedroom house close to the seain areas such as Grand Bay and Tamarin will command rents of about US$ 1,400–2,400.A similar house on the beach front will rent for US$ 1,600–3,200 per month. The IRSprogram, which was recently introduced by the Mauritian government, is designed toencourage foreign investors to buy luxury residential property. The first IRS project,located in Tamarin, is about to be completed.Hotel market: In 2006 there were 10,666 hotel rooms in Mauritius, with overall roomoccupancy averaging 66 per cent. Data from the Bank of Mauritius indicates that grosstourism receipts for the year amounted to over 31 billion rupees (c. US$ 1 billion).According to the Survey of Employment and Earnings, over 25,000 people are directlyemployed in the travel and tourism industry. Average room rates for 3 to 5-star hotelsrange between US$ 100–400.Prime rents Prime yieldsOffices US$ 15 per sq m per month NARetail US$ 40 per sq m per month NAIndustrial Na NAResidential US$ 3,200 per month* NA* Four bed-room executive house–prime locationSpace in Mauritius is a bit expensive—a natural phenomenon as the population density is616 persons per square kilometre. With reference to the fifteen countries it ranks six out offifteen in cost effectiveness of space and facilities. Botswana and Kenya are better, but evenEgypt and Morocco are more expensive.••••04_Africa_Report09_Mauritius.ind82 8204_Africa_Report09_Mauritius.ind82 82 2/25/09 4:19:05 PM2/25/09 4:19:05 PM
  • 94. Country Report for Mauritius83OUTSOURCINGTOAFRICA8. ICT and BPO Industry EnvironmentA strong ICT and BPO industry has already been established in Mauritius. Many multina-tionals have relocated to the Cyber Tower Complex which provides world-class infrastructureand environment for ICT companies to operate in Mauritius. ICT companies are engagedmainly in the development of computer software or in any one or more of the followingICT related services: 3-D animation and multimedia content development, Business processoutsourcing/back office operations, call centres or contact centres, data digitalisation, datadisaster recovery services and centres, electronic data processing, warehousing and manage-ment, engineering design services, online education and high-end ICT training, technicaldocumentation, website development. Thus there is a strong ICT and BPO industry presentad is growing. The diagram below shows Mauritius’s position in the global ICT scenario.231MAURITIUSANGLOPHONE FRANCOPHONEENVISAGED SCENARIO-MAURITIUS IN THE ICT WORLDMarketsCollaboratorsCompetitorsMarketsCollaboratorsCompetitorsNICTSP2007-2011Exchange of human capital andinvestments for the ICT sector betweenMauritius and Francophone AfricaExchange of human capital andinvestment for the ICT sector betweenMauritius and Anglophone AfricaMauritius as a gateway for investmentsand business in ICT into Africa123UK, US, Ireland, Norway, Sweden, Denmark,Finland, Canada, African nations with ICT spendingNamibia, Zimbabwe, Zambia, Tanzania, Kenya,Nigeria, Sierra LeoneSouth Africa, India, China, Egypt, Botswana,Philippines, Malaysia, Thailand, East EuropeFrance, Belgium, Netherland, Luxemburg, Canada,Francophone African countries with high ICT spendingMadagascar, Mauritania, Ivory Coast, Mali, Chad,Algeria, Congo, Niger, Reunion, India,ChinaMorocco, Tunisia, Senegal, Romania, VietnamREGIONAL TALENT CAPITALREGIONAL INVESTMENT NUCLEUSREGIONAL EXPERTISE HUBGATEWAY TO AFRICAThus ICT and BPO industry is here to stay and grow in Mauritius.Major international ICT players are Oracle, Microsoft, IBM, HP, CISCO, Accenture,Infosys, Hinduja Group, France Telecom, Teleforma, TNT Group.Average annual growth of 25 per cent in the Mauritian ICT industry during the pastfive years.Investment growth increased from 21 per cent in September 2006 to 114 per cent inMarch 2007.•••04_Africa_Report09_Mauritius.ind83 8304_Africa_Report09_Mauritius.ind83 83 2/25/09 4:19:05 PM2/25/09 4:19:05 PM
  • 95. 84Country Report for MauritiusOUTSOURCINGTOAFRICASome 350 companies operating in software development, multimedia, call centres,ITES/BPO, hardware, consultancy, training, website.BPO/ITES is the fastest growing segment. As of December 2008, more than 258 BPO/ITES companies employing over 10500 people.Numberofcompanies1752001501251007550250Jul-04 Nov-04 Mar-05 Jul-05 Nov-05 Mar-06 Jul-06 Nov-06 Mar-078007006005004003002001000Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07••04_Africa_Report09_Mauritius.ind84 8404_Africa_Report09_Mauritius.ind84 84 2/25/09 4:19:06 PM2/25/09 4:19:06 PM
  • 96. Country Report for Mauritius85OUTSOURCINGTOAFRICANumberofemployees800070006000500040003000200010000Jul-04 Nov-04 Mar-05 Jul-05 Nov-05 Mar-06 Jul-06 Nov-06 Mar-07Favourable time zone (GMT+4 ).Skilled and bilingual manpower (English/French).State-of-the-art telecommunications (SAFE, liberalisation of telecoms, competitive tar-iffs, EASSy) and the upcoming SEACOM cable.Quality infrastructure—ICT Parks (Cyber City, Informatics Park, ICT IncubatorCentre).Business friendly environment.Appropriate legal framework (Electronic Transaction Act, Data Protection Act, Cyber-crime and Computer Misuse Act).Strategic Hub for African-and French-speaking markets (Member of SADC, COMESA,IOR, IOC).9. Human Resource Efficiency and CostMauritius is the fifth in people and skills; its constraints have been more on quantity ratherthan quality. The human resources are of a high quality with excellent ICT exposure andwork-satisfaction levels. All this is at a reasonable cost as the human resource rank is withinthe top five. To support these findings in the study it is relevant to present some ICTtraining and digital opportunity data received from the National Statistics Department ofMauritius.•••••••04_Africa_Report09_Mauritius.ind85 8504_Africa_Report09_Mauritius.ind85 85 2/25/09 4:19:06 PM2/25/09 4:19:06 PM
  • 97. 86Country Report for MauritiusOUTSOURCINGTOAFRICA Table: Percentage distribution of population aged 12 years and above by highest IT Qualifica-tion and sex, 2006Highest IT qualification Both sexes % Male % Female %None 62.9 60.4 65.3Computer literate 30.8 33.5 28.2Ordinary level in computer studies 2.2 2.0 2.3Advanced level in computer studies 0.4 0.5 0.4Other certificate course in IT 2.8 2.6 3.0Diploma in IT or equivalent course 0.7 0.7 0.7Degree in IT or equivalent course 0.4 0.6 0.3Not stated 0.7 0.9 0.6Table: Persons aged 12 years and above using computer by place of use and sex, 2006Place of access to computer Both sexes % Male % Female %At home 63.5 63.6 63.3School/Educ institutions 33.8 31.7 36.1Work place 33.5 35.8 30.8Cybercafé 6.1 7.0 5.1Free public access facility 2.1 2.1 2.0Another person’s place 3.6 3.8 3.31Persons may report more than one answer.Source: Continuous Multi Purpose Household Survey (CMPHS)Table: Persons aged 12 years and above using Internet at home by purpose of use1and sex,2006Purpose of Internet use at home Both sexes % Male % Female %Email/chat 62.2 62.5 62.0News/search information 76.2 78.4 73.7Distance learning 9.1 9.4 8.7Internet telephone 7.7 8.1 7.3On line transactions 3.5 4.6 2.2Download games, music, software, etc. 27.3 30.2 23.91Persons may report more than one answer.Source: Continuous Multi Purpose Household Survey (CMPHS)04_Africa_Report09_Mauritius.ind86 8604_Africa_Report09_Mauritius.ind86 86 2/25/09 4:19:07 PM2/25/09 4:19:07 PM
  • 98. Country Report for Mauritius87OUTSOURCINGTOAFRICA Table: ICT usage in education, 2005–2006Educational level 2005 20061. Primary education(i) Percentage of primary schools having Internet access forstudents4.5 4.8(ii) No. of students per computer in primary schools 185 1632. Secondary education(i) Percentage of secondary schools having Internet access forstudents for study purpose (%)72.3 92.1(ii) Students per computer in secondary schools (number) 24.8 23.9(iii) Students examined in ICT at School Certificate level (number) 4,018 4,177(iv) Percentage of students examined in ICT at School Certificatelevel (%)26.0 25.0(v) Number of students examined in ICT in Higher SchoolCertificate level658 822(vi) Percentage of students examined in ICT at Higher SchoolCertificate level (%)9.0 10.23. Tertiary education1(i) Number of students enrolled in ICT or an ICT-dominated fieldat tertiary level4,134 3,971(ii) Percentage of students enrolled in ICT or an ICT-dominatedfield at tertiary level (%)14.3 12.01Includes also distance education and institutions abroad, and relates to school years 2005/2006and 2006/2007Source: Annual Survey in Primary and Secondary Schools in March, Mauritius ExaminationSyndicate (MES) and Tertiary Education Commission (TEC)Thus the people of Mauritius have adequate exposure and training in ICT and an overallassessment of all this is by the Digital opportunity index measured by the ITU.Table: Digital Opportunity Index, 2003–2006CategoryIndex2003 2004 2005 2006Opportunity 0.95 0.96 0.97 0.97Infrastructure 0.33 0.34 0.38 0.38Utilization 0.06 0.06 0.08 0.16Digital Opportunity Index 0.45 0.46 0.48 0.5004_Africa_Report09_Mauritius.ind87 8704_Africa_Report09_Mauritius.ind87 87 2/25/09 4:19:07 PM2/25/09 4:19:07 PM
  • 99. 88Country Report for MauritiusOUTSOURCINGTOAFRICA Table: Comparison of Digital Opportunity Index (DOI) for Mauritius and selected countries,2005IndexrankOpportunity Infrastructure Utilization DOIKorea Republic of 0.99 0.74 0.64 0.79 1Sweden 0.99 0.74 0.35 0.69 6United Kingdom 0.99 0.68 0.33 0.67 7Australia 0.98 0.63 0.35 0.65 12Singapore 1.00 0.68 0.27 0.64 16Mauritius 0.97 0.38 0.08 0.48 50Seychelles 0.97 0.32 0.10 0.46 54South Africa 0.90 0.18 0.05 0.38 91India 0.80 0.04 0.04 0.29 119Source: International Telecommunication Union (ITU)Thus Mauritius is in a very strong position as far as human resources are concerned; thoughthe population density is about 600 per square kilometre, the highest in the countries stud-ied, they welcome large number of expatriate workers if such an action helps a project tosucceed. This was a unique openness feature that was not found anywhere in Africa.10. Legal and Enforcement IssuesThe perception is that there is respect for the rule of law and the legislative risk is relativelylow. However, though Mauritius did take early steps in Cyber Laws and electronic transac-tion acts, there appears to be greater effort needed here to take care of the more recenttechnology developments with their associated greater risks. Thus the low score for ICTsecurity, Cyber Laws, etc.11. Labour and Expatriate Worker’s PermitsNationals of most OECD and a number of other countries do not need a visa and are givenentry for six months on arrival; visas are issued to other nationals on application—they arefree, but the process takes about one month. Mauritius does not recognise passports issuedby the Taiwan government; holders of these passports must apply for an entry permit fromthe passport and immigration officer.There is a special channel at the airport for business entrants who are involved in offshoreactivities.Work permits are necessary for non-Mauritians to be employed; there is no maximum stay assuch, but work permits are issued for a minimum period of six months and a maximum ofthree years. Permits are issued by the Prime Minister’s Office in association with the Ministryof Human Resource Development and Reform Institutions.04_Africa_Report09_Mauritius.ind88 8804_Africa_Report09_Mauritius.ind88 88 2/25/09 4:19:08 PM2/25/09 4:19:08 PM
  • 100. Country Report for Mauritius89OUTSOURCINGTOAFRICAForeigners who wish to acquire an immovable property in Mauritius must obtain approvalprior to their purchase, which will otherwise be invalid. Such approval is obtained from thePrime Minister’s Office.Acquisition of property for business purposes in Mauritius by non-citizens is regulated by theNon-Citizens (Property Restriction) Act. Accordingly, a company with foreign shareholdingsmay be authorized to purchase an immovable property to be used exclusively for businesspurposes by the Board of Investment and therefore is exempt from the requirement to seekfor a certificate from the Prime Minister’s Office.For more information on the acquisition of property for business purposes in Mauritius,please contact the Hospitality and Property Development team of the Board of Investmenton hp@investmauritius.comIt was announced in the government’s 2006 budget that investors whose businesses inMauritius have an annual turnover of MR 15 million for three consecutive years will beable to apply for permanent residence.An Occupation Permit, which is a combined work and residence permit with a validity ofthree years is obtained in three working days.12. Revenue, Tax, and Repatriation IssuesThe Mauritian currency is the rupee (MR). Exchange controls were dismantled in stagesbetween 1984 and 1994. Currently (2008) USD 1 = about MR 33. From the tax and ease offinances point of view Mauritius is at third and first position respectively, and there is also alow currency risk as the rupee is stable. All these conditions contribute to Mauritius beingthe best from the business environment point of view.13. Investment Policy and IncentivesTill June 2006 the IT Enabled Industry ITES had a tax holiday. At present there are thefollowing incentives:15% corporate tax.VAT at 15%, refundable.Tax free dividends.No capital gains tax.100% foreign ownership.Exemption from customs duty on equipment.••••••04_Africa_Report09_Mauritius.ind89 8904_Africa_Report09_Mauritius.ind89 89 2/25/09 4:19:08 PM2/25/09 4:19:08 PM
  • 101. 90Country Report for MauritiusOUTSOURCINGTOAFRICAFree repatriation of profits, dividends, and capital.No minimum foreign capital required.Electricity tariffs for ICT sector operators is at industrial rates instead of commercialrates.In comparison with other African countries studied, the incentives available in Mauritius aregood. The NICTSP has recommended a set of strong measures to promote this industry; onehas to watch the progress closely for some time before the final picture emerges.14. Agencies Giving Support to OutsourcingThe Board of Investment (contact details given in section 16) is the true single windowagency that supports the Outsourcing and ITES industry. “The National Computer Boardalso supports the Mauritius ITES/BPO industry through its efforts to catalyse the absorptionof technology by the population, businesses and the public sector.”15. RecommendationsMauritius is doing well and needs to keep up the momentum to maintain itsposition.The steps recommended and the structures proposed in the National ICT Strategicplan need to be implemented as soon as possible to do better or even to maintain thepresent position.16. Contact DetailsBoard of InvestmentMr Ken Poonoosamy, DirectorLevel 10, One Cathedral Square International Business Services Building16, Jules Koenig StreetPort LouisTel: (+230) 203-3800Website: http://www.investmauritius.comNational Computer BoardInformation and Communications Technologies AuthorityDr Krishna Oolun, Executive DirectorLevel 12, The Celicourt, 6, Sir Celicourt Antelme StreetPort LouisTel: (+230) 211-5333Website: (•••••04_Africa_Report09_Mauritius.ind90 9004_Africa_Report09_Mauritius.ind90 90 2/25/09 4:19:08 PM2/25/09 4:19:08 PM
  • 102. Country Report for Mauritius91OUTSOURCINGTOAFRICA Mauritius Revenue AuthorityEhram Court, Cnr Mgr. Gonin & Sir Virgil Naz Streets Port LouisTel: 2; Fax: (+230) 211-8099; Hotline: +2E-mail:;Website: of CompaniesCompanies Division, Les Bacha BuildingLisiet Geoffroy Street Port Louis, MauritiusTel: (+230) 208-4109/4134/2867Offshore Section: (+230)211-2846/2881; Fax: (+230) 212-6493E-mail: rocd@bow.intnet.muMinistry of Labour, Industrial Relations & EmploymentMrs V.L. Ramsamy, Permanent Secretary6th Floor, Victoria House, Cnr Barracks & St Louis StreetPort LouisTel: (+230) 207-2600Website:, High Commissions in UK, USA, Germany, France, China, and IndiaHigh Commission of Mauritius in LondonUnited Kingdom, London32/33 Elvaston PlaceLondon SW7 5NWUnited KingdomTel: (+020)(7)5810294/5; Fax: (+020)(7)8238437E-mail: londonmhc@btinternet.comEmbassy of Mauritius in Washington DC, United States4301 Connecticut AvenueNW, Suite 441Washington DC 20008City: Washington DCTel: (+202) 244-1491; Fax: (+202) 966-0983E-mail: MAURITIUS.MBASSY@prodigy.netPermanent Mission of Mauritius to The United Nations in New YorkUnited States of America211 East 43rd Street, 15th FloorNew York, NY 10017Tel: (+212) 949-0190/0191; Fax: (+212) 697-3829, 953-1233E-mail: Mauritius@un.int04_Africa_Report09_Mauritius.ind91 9104_Africa_Report09_Mauritius.ind91 91 2/25/09 4:19:09 PM2/25/09 4:19:09 PM
  • 103. 92Country Report for MauritiusOUTSOURCINGTOAFRICA Embassy of Mauritius in Paris, France127 Rue de Tocqueville 75017Paris, FranceTel: (+01) 42-27-30-19; Fax: (+01) 40-53-02-91E-mail: ambassade.maurice@online.frEmbassy of Mauritius in Berlin, GermanyBurgraf Centre 84 Kurfurstenstrasse 10787 BerlinTel: 00-49 (30) 26-39-3610; Fax: 00-49 (30) 26-55-8323E-mail: mu.embin.3@t-online.deEmbassy of Mauritius in New Delhi, India5, Kautilya Marg ChanakyapuriNew Delhi 110021 IndiaTel: (+91) 11-24102161 or (+91) 11-24102162E-mail: of Mauritius in Mumbai, IndiaMittal Tower C, Office No. 115, 11th FloorNariman Point Mumbai 400021Tel: (+91) 22-22845127, (+91) 22-22845466; Fax: (+91) 22-22845469, (+91) 22-22845468E-mail: of Mauritius in Beijing, ChinaDongzhi Men Wai Da Jie No 23Beijing 100600, ChinaTel: (+86) 10-6532 5695/96/98; Fax: (+86) 10-6532 5706/7102;E-mail: LinkThe World Fact book 2007. Wikipedia. World Bank.http://www.worldbank.orgMauritius. UNICEF. 9204_Africa_Report09_Mauritius.ind92 92 2/25/09 4:19:09 PM2/25/09 4:19:09 PM
  • 104. Country Report for Mauritius93OUTSOURCINGTOAFRICA Global Information Technology Report. Fifth Pillar: Republic of Mauritius ICT Case Study. 2004. ITU. Wikipedia. National Information & Communication Technology Strategic Plan 2007–2011. ICT Strategic Plan, Government of Mauritius and UNDP. 2006., V. and K. Goodoory. ‘ICT in Primary Schools in MauritiusPolicy and Practice.’ ICOOL. 2003. ICT Strategic Plan, Government of Mauritius and UNDP. 2006. 9304_Africa_Report09_Mauritius.ind93 93 2/25/09 4:19:09 PM2/25/09 4:19:09 PM
  • 105. 04_Africa_Report09_Mauritius.ind94 9404_Africa_Report09_Mauritius.ind94 94 2/25/09 4:19:09 PM2/25/09 4:19:09 PM
  • 106. 95OUTSOURCINGTOAFRICACountry Report for South AfricaDisclaimerThis short Country Report, a result of a larger Survey of ICT Outsourcing in Africa, provides a general over-view of the current activities and issues related to ICT Outsourcing in the country.The data presented hereshould be regarded as illustrative rather than exhaustive. ICT Outsourcing is at a particularly dynamic stagein Africa with new developments and announcements happening on a daily basis somewhere or the otheron the continent.Therefore, these reports should be seen as ‘snapshots’ that were current at the time theywere taken; it is expected that certain facts and figures presented may become outdated very quickly.The findings, interpretations, and conclusions expressed herein are a faithful representation of the respond-ents of the interviews and secondary data collected from the countries and published literature. Strictanalysis has been carried out with the minimal influence of the authors/team members. References to datasources have been made as far as possible. In the case of the detailed data parameters used for scoresand ranking, the same data source and timeline has been used for all the fifteen countries compared. Inthe descriptive section of the country reports, all data received from the individual country has been usedin order to give a complete assessment. Thus those countries that have provided more information havea better coverage than those who have not been able to provide data to the research team.Board of Executive Directors of the CBC or Cyber Media cannot guarantee the accuracy of the dataincluded in this work. The boundaries, colours, denominations, and other information shown on any mapin this work do not imply on the part of the CBC and Cyber Media any judgementent of the legal statusof any territory or the endorsement or acceptance of such boundaries.It is expected that individual Country Report from the Survey of ICT Outsourcing in Africa will be updatedin an iterative process over time based on additional research and feedback received through the CBCand Cyber Media website.0 100 200 km0 100 200 mi20 25302520 25 3025303535PRETORIAZIMBABWENAMIBIABOTSWANAJohannesburgLadysmithRichardsBayUpingtonKimberlyBloemfonteinDe AarPrince Edward Islandsnot shownNjesuthiDurbanINDIANOCEANSOUTHATLANTICOCEANCape ofGood HopeSaldanhaCape TownEastLondonPortElizabethMosselBayMessinaSwazLES.MOZ.Pietersburg05_Africa_Report09_South Africa.95 9505_Africa_Report09_South Africa.95 95 2/25/09 4:20:54 PM2/25/09 4:20:54 PM
  • 107. 96Country Report for South AfricaOUTSOURCINGTOAFRICA1. OverviewThe Republic of South Africa is located at the southern tip of the continent of Africa. TheSouth African coast stretches 2,798 kilometres and borders both the Atlantic and Indianoceans. To the north of South Africa lie Namibia, Botswana, Zimbabwe, Mozambique, andSwaziland, while the Kingdom of Lesotho is an independent enclave surrounded by SouthAfrican territory.Modern human beings have inhabited South Africa for more than 100,000 years. A centuryand a half after the discovery of the Cape Sea Route, the Dutch East India Company foundeda refreshment station at what would become Cape Town in 1652. Cape Town became aBritish colony in 1806. European settlement expanded during the 1820s as the Boers (origi-nal Dutch, Flemish, German, and French settlers) and the British 1820 settlers claimed landin the north and east of the country. Conflicts arose among the Xhosa, Zulu, and Afrikanergroups. However, the discovery of diamonds and later gold triggered the conflict known asthe Anglo-Boer War as the Boers and the British fought for the control of the South Africanmineral wealth. Although the Boers were defeated, limited independence was given to SouthAfrica in 1910 as a British dominion. Anti-British policies focused on ultimate independ-ence which was achieved in 1961 when South Africa was declared a republic. The leadingNational Party legislated for a continuation of racial segregation begun under Dutch andBritish colonial rule, Boer republics, and subsequent South African governments (and whichin 1948 became a legally institutionalized segregation known as apartheid), despite opposi-tion both in and outside of the country. In 1990, the then president FW de Klerk began todismantle this legislation, and in 1994 the first democratic election was held in South Africa.This election brought Nelson Mandela and the current ruling party, the African NationalCongress to power, and the country rejoined the Commonwealth of Nations.05_Africa_Report09_South Africa.96 9605_Africa_Report09_South Africa.96 96 2/25/09 4:20:55 PM2/25/09 4:20:55 PM
  • 108. Country Report for South Africa97OUTSOURCINGTOAFRICA2. South Africa’s Position in Africa’s Fifteen CountriesSouth Africa is the third in the ready band of countries from the outsourcing attractivenesspoint of view. The map and table below show where South Africa is positioned.Morocco *MoroccoTunisia *Geographical Coverage and RankTunisiaEgypt *EgyptSenegal *SenegalGhanaGhanaNigeriaNigeriaUgandaUgandaKenyaKenyaTanzaniaTanzaniaZambiaZambiaMozambique MozambiqueBotswanaBotswanaNamibiaNamibiaSouthAfricaSouth AfricaMauritiusAfrica*Non-Commonwealth CountriesMauritiusContributing scores and ranks are as under.OverallBand Score (PS & BE) Rank in BandReady 6.98 ThirdInfrastructureScore Rank Band7.2 Second ReadyWhile achieving the second position and this score for ‘Infrastructure’, South Africa is firstin electricity availability and telecommunications and data transfer costs, second in networkreadiness and infrastructure cost, fourth in availability and penetration, and fifth in theroads and rail network. At the other end, it has better than the tenth position in all otherscores.05_Africa_Report09_South Africa.97 9705_Africa_Report09_South Africa.97 97 2/25/09 4:20:55 PM2/25/09 4:20:55 PM
  • 109. 98Country Report for South AfricaOUTSOURCINGTOAFRICAPeople and Skills (PS)Score Rank3.491 ThirdIn the case of ‘People and Skills’, South Africa, coming third, has done well by being secondin quantity, third in education, language, and domain skills, and fourth in working satisfac-tion and ICT exposure; it has scored fifth in human resource costs. At the other end, it hasfallen to eleventh position in quality.Business Environment (BE)Score Rank3.486 ThirdIn this lower level abstraction, South Africa is third. In achieving this position it has comefirst in ICT security, Cyber and IPR laws, and share of services in GDP. South Africa hasthe second highest foreign exchange reserves and second best position in ease and cost offinances. For share of ICT in exports and legislative risk, South Africa has come third. In thetax rate and share of services in exports, South Africa has come fifth. At the other end, SouthAfrica comes eleventh and fifteenth respectively in geopolitical risk and currency risk.3. Country, Political, and Economic ProfileSouth Africa has a two-tiered economy—one rivalling other developed countries and theother with only the most basic infrastructure. It, therefore, is a productive and industrializedeconomy that exhibits many characteristics associated with developing countries, includinga division of labour between formal and informal sectors, and uneven distribution of wealthand income. The formal sector, based on mining, manufacturing, services, and agriculture,is well developed.South Africa’s government is committed to managing the country’s rich and varied naturalresources in a responsible and sustainable manner. In addition, numerous South Africannon-governmental organisations have emerged as a potent force in the public policy debateon the environment.Salient features are as follows:Area: 1.2 million sq km (470,462 sq mi).Cities: Capitals—administrative, Pretoria; legislative, Cape Town; judicial, Bloemfontein.Other cities: Johannesburg, Durban, Port Elizabeth.Terrain: Plateau, savannah, desert, mountains, coastal plains.Climate: Moderate.Nationality: South African(s).05_Africa_Report09_South Africa.98 9805_Africa_Report09_South Africa.98 98 2/25/09 4:20:56 PM2/25/09 4:20:56 PM
  • 110. Country Report for South Africa99OUTSOURCINGTOAFRICA Annual growth rate (2006 World Bank Group): 1.1%.Population (2007, 47.9 million): Composition—black 79.7%; white 9.1%; coloured 8.8%; Asian(Indian) 2.2% (official figures from 2007 South African Census).Languages: Afrikaans, English, isiNdebele, isiXhosa, isiZulu, Sepedi, Sesotho, Setswana, siSwati,Tshivenda, and Xitsonga (all official languages).Religions: Predominantly Christian; traditional African, Hindu, Muslim, Jewish.Education: Years compulsory—seven to fifteen years of age for all children.Health: Infant mortality rate (2007)—58 per 1,000 live births.Life expectancy: 52 yrs. women; 49 yrs. men (health data from 2007 Census Report).Government Type: Parliamentary democracy.Independence: The Union of South Africa was created on 31 May 1910; became sovereign statewithin British Empire in 1934; became a republic on 31 May 1961; left the Commonwealth inOctober 1968; rejoined the Commonwealth in June 1994.Constitution: Entered into force 3 February 1997.Branches: Executive—President (chief of state) elected to a five-year term by the NationalAssembly.Legislative: Bicameral Parliament consisting of 490 members in two chambers.National Assembly: (400 members) elected by a system of proportional representation.National Council of Provinces consisting of ninety delegates (ten from each province) andten non-voting delegates representing local government.Judicial Constitutional Court interprets and decides constitutional issues; Supreme Court ofAppeal is the highest court for interpreting and deciding non-constitutional matters.EconomyGDP (2007): $239.5 billion.Real GDP growth rate (2007): 5.1%.GDP per capita (2007): $5,109.Unemployment (September 2007): 23%.Natural resources: Almost all essential commodities, except petroleum products and bauxite.Only country in the world that manufactures fuel from coal.Industry types: Minerals, mining, motor vehicles and parts, machinery, textiles, chemicals,fertilizer, information technology, electronics, other manufacturing, and agro-processing.Trade (2007): Exports—$69.7 billion; merchandise exports--gold, other minerals and metals,agricultural products, motor vehicles and parts.Major markets: United States, Japan, Germany, UK, East Asia, sub-Saharan Africa.Imports: $79.7 billion--machinery, transport equipment, chemicals, petroleum products, textiles,and scientific instruments.Major suppliers: Germany, China, United States, Japan, UK.GDP composition (2007): Agriculture and mining (primary sector)—8%; industry (secondarysector)—22%; services (tertiary sector)—70%.05_Africa_Report09_South Africa.99 9905_Africa_Report09_South Africa.99 99 2/25/09 4:20:56 PM2/25/09 4:20:56 PM
  • 111. 100Country Report for South AfricaOUTSOURCINGTOAFRICAWorld’s largest producer of platinum, gold, and chromium; also significant coalproduction.Government and Political ConditionSouth Africa is a multi-party parliamentary democracy in which constitutional power isshared between the president and the parliament.The Parliament consists of two houses, the National Assembly and the National Council ofProvinces, which are responsible for drafting the laws of the republic. The National Assemblyalso has specific control over bills relating to monetary matters. The Assembly is electedby a system of ‘list proportional representation’. Each of the parties appearing on the bal-lot submits a rank-ordered list of candidates. The National Council of Provinces (NCOP)consists of ninety members, ten from each of the nine provinces. The NCOP replaced theformer Senate as the second chamber of parliament and was created to give a greater voiceto provincial interests. It must approve legislation that involves shared national and provin-cial competencies as defined by an annex to the constitution. Each provincial delegationconsists of six permanent and four rotating delegates.The president is the head of state and is elected by the National Assembly from among itsmembers. The president’s constitutional responsibilities include assigning cabinet portfolios,signing bills into law, and serving as commander-in-chief of the military. The president worksclosely with the deputy president and the cabinet. The third arm of the central governmentis an independent judiciary. The Constitutional Court is the highest court for interpretingand deciding constitutional issues, while the Supreme Court of Appeal is the highest courtfor non constitutional matters.The government is transitional at present due to President Mbeki’s resignation and themajor ruling party since independence the ANC having split. Stability is expected after thenext elections in April 2009. It has been observed that major ICT-related decisions are onhold, and there is a slight pause in the enthusiasm with which the outsourcing and BPOindustry was being promoted.4. Principal Government OfficialsIn the interim period till the elections in April 2009, the principal government officials areas follows:State President: Kgalema Petrus Motlanthe.Executive Deputy President: Baleka Mbete.05_Africa_Report09_South Africa.100 10005_Africa_Report09_South Africa.100 100 2/25/09 4:20:56 PM2/25/09 4:20:56 PM
  • 112. Country Report for South Africa101OUTSOURCINGTOAFRICAMinistersCommunications: Ivy Matsepe-Casaburri.Trade and Industry: Mandisi Mpahlwa.Finance: Trevor Manuel.Foreign Affairs: Nkosazana Dlamini-Zuma.Science and Technology: Mosibudi Mangena.Sport and Recreation: Makhenkesi Stofile.The Presidency: Manto Tshabalala-Msimang.5. Foreign RelationsSouth Africa was a founding member of the League of Nations and in 1927 established aDepartment of External Affairs with diplomatic missions in the main west European coun-tries and in the United States. After South Africa held its first non-racial election in April1994, most sanctions imposed by the international community in opposition to the systemof apartheid were lifted. On 1 June 1994, South Africa rejoined the Commonwealth, andon 23 June 1994, the UN General Assembly accepted its credentials. South Africa served asthe African Union’s (AU) first president from July 2003 to July 2004.Having emerged from the international isolation of the apartheid era, South Africa hasbecome a leading international actor. Its principal foreign policy objective is to promotethe economic, political, and cultural regeneration of Africa, through the New Partnershipfor African Development (NEPAD); to promote the peaceful resolution of conflict in Africa;and to use multilateral bodies to insure that developing countries’ voices are heard on inter-national issues. South Africa has played a key role in seeking an end to various conflictsand political crises on the African continent, including those in Burundi, the DemocraticRepublic of the Congo, and Comoros. South Africa has pursued “quiet diplomacy” in itsapproach to the crisis in Zimbabwe.On the scientific and technological scene, South Africa has collaborations with most coun-tries in Europe, USA, and Asia and is a science and technology leader in Africa.6. Living, Security, and Safety PerceptionsLiving conditions in South Africa are varied; there are safe and comfortable areas and areasnot so safe. Wherever one stays extreme caution is necessary in order to be safe. There aresuburbs that cause no concern and other areas that must be avoided. The following pointersgive an indication of the situation and hints on how to remain safe.Travellers are encouraged to be vigilant and avoid any large gathering, particularlyprotests and demonstrations.South Africa has seen a number of attacks directed at foreigners—particularlyrefugees or immigrants from other African nations. Many of the attacks were centredin Johannesburg and the province of Gauteng in low income neighbourhoods and••05_Africa_Report09_South Africa.101 10105_Africa_Report09_South Africa.101 101 2/25/09 4:20:56 PM2/25/09 4:20:56 PM
  • 113. 102Country Report for South AfricaOUTSOURCINGTOAFRICAinformal settlements, but incidents of mob violence have taken place throughout thecountry. Many individuals have been killed in these incidents, and many more, bothtargeted victims and bystanders, have been injured.Visitors and residents are advised of ongoing criminal activity involving organized crimegangs targeting individuals at shopping centres and other public places.Once a victim has been identified, he/she is followed back to his/her residence androbbed, usually at gunpoint, although the use of force is generally reserved for thoseoffering some form of resistance.These gangs tend to target people appearing to be affluent, including those drivingexpensive cars, wearing eye-catching jewellery, flashing large amounts of cash, and/ormaking high-value purchases.Private medical facilities are good in urban areas and in the vicinity of game parks, butthey may be limited elsewhere.Medical facilities are of a high standard but are expensive, and it is advisable to havevalid international medical insurance with facilities for evacuation from remote anddifficult areas.While most of South Africa is malaria-free, malaria risk exists throughout the year inrural low-altitude areas of Limpopo and Mpumalanga provinces, including KrugerNational Park and neighbouring game reserves.Since November 2008, cholera outbreaks have been reported across Zimbabwe andhave affected South Africa’s Limpopo province near the Zimbabwe border. Cholerais a potentially fatal bacterial infection of the intestine which causes severe diarrhoeaand dehydration. The disease is spread through untreated sewage and contaminateddrinking water.Approximately, one-quarter of the population of South Africa is infected with HIV, thevirus that causes AIDS.Public awareness in the country as to how to protect against infection is increasing. However,travellers are advised to exercise appropriate precautions if they become exposed to a bloodsource other than that supplied by a hospital for transfusion purposes. With a reasonableamount of caution, discrete, friendly and respectful behaviour with all communities, SouthAfrica can be a wonderful place to live in, but in any case carefully planned precautionsneed to be taken to avoid pick pocketing, mugging, car hi jacking, armed robbery, housebreak-ins or shoot-outs.7. ICT Policy, Infrastructure, and ServiceAlthough South Africa does not have an integrated National ICT Policy, discrete policies andlegislation have been in place and are efficiently implemented to ICT Projects resulting ina firm, efficient, and cost effective ICT infrastructure to be in place in most activity areas.According to the World Economic Forum (WEF) Global Information Technology Report,South Africa has one of the most modern and developed telephone systems in Africa and avibrant ICT sector with an annual investment of USD$ 9.6 billion. In terms of the networkreadiness index, it is only next to Tunisia in the African continent. According to government••••••••05_Africa_Report09_South Africa.102 10205_Africa_Report09_South Africa.102 102 2/25/09 4:20:57 PM2/25/09 4:20:57 PM
  • 114. Country Report for South Africa103OUTSOURCINGTOAFRICAfigures this is an end-to-end domestic fibre optic network with an up time of 99.99 per cent,but the does this network cover all the remote developing corners of South Africa? Theseare an international bandwidth of 120 GBPs available to the United States.Various provincial governments and municipalities in South Africa have invested significantlyin infrastructure development and will continue to do so over the next few years in the build-up to 2010 when South Africa hosts the World Cup soccer event. For example, the Gautengprovincial government is currently involved in a R50 billion (USD$ 7 billion) plan for infra-structure development in Gauteng. The plans include road and rail development as well aslocal government service delivery improvement. They will target underdeveloped zones withsecond-economy characteristics for expansion and provision of ICT infrastructure.Discrete ICT Policies including the current ICT in education policy framework has beenevolving since 1996 and is embedded within a broader national government economic,social, and development strategy which includes the following:Attention at the highest level in government to the role of ICTs in the promotion ofeconomic growth, job creation, social development, and global competitiveness.Linkages of South Africa’s strategy to a broader pan-African mandate as expressedin the commitment to the New Partnership for Africa’s Development (NEPAD) pro-gramme and its dedicated project promoting e-schooling.Overhaul in the education and skills development system at all levels.A dedicated policy on the transformation of learning and teaching through the use ofICTs, particularly in the formal schools and FET college sectors.National Government Strategy.The role of ICTs in the South African government strategy for national economic growth,social development, and job creation has received increasing prominence over time. In1996, Mr. Thabo Mbeki, then the deputy president of the country, played a prominent rolein the historic Information Society and Development (ISAD) conference which gave rise tothe African Information Society Initiative (AISI) spearheaded later by the United NationsEconomic Commission for Africa (UNECA). Since then, a host of programs and strategieshave been introduced that demonstrate central government commitment to the promotionof South Africa as an ‘information society’. These include the following:Established the Presidential National Commission on Information Society and Devel-opment (PNC on ISAD) which consists of representatives from the public and privatesectors. This commission advises government on the optimal use of ICTs to addressSouth Africa’s development challenges and enhance the country’s global economiccompetitiveness in 2001, by President Mbeki ( Presidential International Advisory Council on Information Society and Development(PIAC on ISAD) was established to advise government on addressing the digital dividewith education as a key focus area. This council consists of CEOs of major internationalcorporations and experts active in the ICT sector.•••••••05_Africa_Report09_South Africa.103 10305_Africa_Report09_South Africa.103 103 2/25/09 4:20:57 PM2/25/09 4:20:57 PM
  • 115. 104Country Report for South AfricaOUTSOURCINGTOAFRICAThe South African government has been prominent in its support as host country tothe Secretariat of the New Partnership for Africa’s Development (NEPAD) programmeof the African Union, particularly its e-Schools programme and as home to its first pan-African Parliament. ( 2005, the government launched its Accelerated and Shared Growth Initiative forSouth Africa (ASGISA), which represents a concerted national effort to accelerate skillsdevelopment and economic growth. Two priority components of ASGISA are electroniccommunications as a cornerstone to commercial and social infrastructure developmentand education and skills development. The former includes, among other elements:Implementation of a strategy to rapidly grow South Africa’s broadband network.Implementation of a plan to reduce telephony costs more rapidly Completion ofa submarine cable project that will provide competitive and reliable internationalaccess, especially to Africa and Asia ( 1999, the South African government established the State Information TechnologyAgency (SITA), which serves as a public sector ICT company focused on the effectiveand efficient provision of ICT services with government at national, provincial, andlocal levels. Its range of services includes the setting of technology standards for theuse of refurbished PCs in public education institutions. ( February 2007, a National Information Society and Development (ISAD) Plan work asa framework for building an inclusive Information Society in South Africa was adoptedby the Cabinet. Within this Plan, the vision for the country is expressed as follows:‘To establish South Africa as an advanced information society in which ICT toolsand information are key drivers.’The Cabinet also approved the establishment of a Ministerial ISAD Committeeand its corresponding Forum of South African Directors-General (FOSAD) ISADCluster. The ISAD, IGRF, and the Ministerial ISAD Committee were approved asthe National Institutional Mechanisms for building an inclusive Information Societyin South Africa16.For strategies to achieve universal access, the Department of Communications (DOC)leads all ICT initiatives in South Africa through its Electronic Communications andTransactions Act (ECA) of 2002, which is an extension of its TelecommunicationsAct of 1996 and 2001 and which promotes the establishment of a Universal ServiceAgency (now referred to as the Universal Service and Access Agency of SouthernAfrica (USAASA)), a Universal Service Fund, an Education Network (Edu-Net), and an‘e-rate’, all of which serve at least conceptually to support access to and use of ICTs ineducation institutions. The Education Network is to be an entity that would networkall public schools and education and training institutions. The e-rate allows discountedaccess to Internet services to education institutions in South Africa. Section 73 of theECA states that Internet services provided to all public schools and all public furthereducation and training institutions must be provided at a minimum discounted rateof 50 per cent of the total charge levied by the licensee. The discount includes, butis not limited to, any connectivity charges for access to the Internet, charges for anyequipment used for or in association with connectivity to the Internet, and charges forall calls made to an ISP.•••••••••05_Africa_Report09_South Africa.104 10405_Africa_Report09_South Africa.104 104 2/25/09 4:20:57 PM2/25/09 4:20:57 PM
  • 116. Country Report for South Africa105OUTSOURCINGTOAFRICAConstruction of the Eastern Africa Submarine Cable System (EASSy), a 9900 km-longoptical submarine cable between Durban and Port Sudan, is expected to reduce pricesfor international connectivity.Wider access to broadband, ADSL, and 3G accesses have boosted Internet connectivity;however, bandwidth remains relatively limited and expensive in South Africa, hamper-ing the rate of economic growth. The Dti, the single point facilitator for the outsourc-ing industry is attempting to get special rates for BPO Industry; however, the challengesthey are facing are the guidelines of the competition commission. In this case Botswanahas gone ahead by having special provisions for The Botswana Innovation Hub and theInternational financial Services centre.There are concrete government initiatives that are supporting ICT and relatedinfrastructure:Overall government plans for infrastructure spending totals some R416bn or(US$ 59,4 bn) over the next three years.Further allocations are envisaged going forward.Such investment levels have not been seen since 1994.50% To be spent by the three spheres of Government.5% To be spent through public private partnerships.3% To be spent by development finance institutions.40% To be spent by State-owned Enterprises.Thus, South Africa has a strong ICT Infrastructure necessary to support an attractive outsourc-ing destination. Efficient services levels and reasonable cost of these services have resultedin South Africa scoring so well in infrastructure, penetration, and cost. The caution is thatthe electricity situation is deteriorating and may pull South Africa down.Physical InfrastructureOffice market: The office market in Johannesburg has continued to improve, being fired bythe growth of the insurance and finance sectors. Vacancy levels have continued to fall andthe central Johannesburg office market has improved, being supported by a growing numberof new projects. Rental levels are substantially higher in the decentralised area of Sandtonthan in Johannesburg’s CBD. Institutional investment in the sector is increasing particularlyas a result of Johannesburg’s Urban Development Zone (UDZ) status.Retail market: The strength of the retail markets in Johannesburg, Cape Town, andDurban has seen vacancy rates continuing to fall and investment yields starting toharden. Retail developers have continued to seek additional opportunities in areas, forexample, along the Garden Route, where demand is projected to grow. Prospects forthe retail market look healthy, with consumer confidence reaching a record high in thefirst quarter of 2007, aided by a climate of low inflation and stable interest rates.••••••05_Africa_Report09_South Africa.105 10505_Africa_Report09_South Africa.105 105 2/25/09 4:20:57 PM2/25/09 4:20:57 PM
  • 117. 106Country Report for South AfricaOUTSOURCINGTOAFRICAIndustrial market: Industrial vacancies have continued to fall and, as a consequence,rents have been rising and opportunities for developers have arisen. The strength ofthe retail sector has driven demand for warehouse and distribution space, with occupi-ers requiring ever-larger facilities.Residential market: The Johannesburg and Cape Town markets have seen increasingdemand from both owner-occupiers and investors, and as a result prices have beenrising. This trend is expected to continue particularly in areas where zoned land isin short supply. Non-resident purchasers have presented a marketing opportunity fora growing number of developers who are seeking to tap into the global demand forsecond and third homes.JohannesburgPrime rents Prime yieldsOffices US$ 16 per sq m per month 7.5%Retail US$ 40 per sq m per month 8.5%Industrial US$ 5 per sq m per month 9.5%Residential US$ 4,500 per month* 5%*Four bed room executive house--prime locationCape TownPrime rents Prime yieldsOffices US$ 16 per sq m per month 8%Retail US$ 50 per sq m per month 8.5%Industrial US$ 6 per sq m per month 9.5%Residential US$ 4,200 per month* 5.25%On an overall basis these costs are reasonable—eighth in the fifteen countries studied.••••05_Africa_Report09_South Africa.106 10605_Africa_Report09_South Africa.106 106 2/25/09 4:20:58 PM2/25/09 4:20:58 PM
  • 118. Country Report for South Africa107OUTSOURCINGTOAFRICA8. ICT and BPO Industry EnvironmentA snapshot is shown here.ZIMBABWEBOTSWANANAMIBIASOUTH AFRICA-PROVINCESLIMPOPOMPUMALANGAKWAZULU NATALFREE STATEInteresting FactsSouth Africa is 6 hours closer to the USA thanis the Philippenes.South Africa has roughly 80,000 call centreseats.English is the language of business andeducation. There are ~9 million citizens thatspeak English as their first language.NORTH WESTNORTHERN CAPEATLANTICOCEANWESTERN CAPEEASTERN CAPEINDIAN OCEANLESOTHOUpingtonKimberleyBloemfonteinUmtataEast LondonPort ElizabethMossel BayCape TownDurbanPietermaritzburgKlerksdorpMatikengJohannesburgUpingtonPretoniaPolokwaneNelspruitThere is an impressive array of success stories.A solidfoundationThe ‘Triple Play’customer servicefunctionality makesMerchants one of themost advancedcontact centreoperations in SouthSouth Africa Has an Impressively Developing BPOSectorBrightview wasrated five stars incustomer serviceby “Which”Magazine in 2006Customersatisfactionresults are in linewith the UKcentres: VirginSources: BPeSA and regions, Network Times, May 2007 issue, Which Magazine, Virgin Mobile Case study, http://www.callcenters.net05_Africa_Report09_South Africa.107 10705_Africa_Report09_South Africa.107 107 2/25/09 4:20:58 PM2/25/09 4:20:58 PM
  • 119. 108Country Report for South AfricaOUTSOURCINGTOAFRICALeadership andCustomer Satisfaction ManagementStructuralDistinctivenessIT ManagementPerformanceSouth Africa Has a Comprehensive BPO-specificQuality Assurance FrameworkSouth Africa’s Contact Centre industry, under theauspices of the industry body (BPeSA), spentalmost a year designing new and comprehensivequality standards, holistically covering allmanagement areas in a business.The Standards are going through the offcialprocess to become national Standards, with theSouth African Bureau of Standard (SABS). TheStandards are currently referred to as ARP 099(Recommended Practices) and cover:Generally accepted ISO standards such as ISO 9001:2 are already widelyadopted in South Africa, together with well-known methodologies andapproaches such as the Capability Maturity Model (Carnegie Mellon) andSix SigmaSource: Standards South Africa (SABS) and SSP Quality Assurance TeamInbound contact centresOutbound contact centresBack-office operations•••HR ManagementOperationManagement100 %90 82CustomersatisfactionFirst call resolution Average speed toanswer (20 seconds)82 81 8174 7680706050403020100Global Benchmark South AfricaStructuralDistinctivenessSouth Africa competes at global quality service benchmark levels“We are attracted by thequality of the workforce,the infrastructure andprofessionalism of theservice providers that wework with on a day to daybasis.”Johann Kunz,Managing Director:Fusion OutsourcingSouth Africa.Source: Merchants Global Benchmark Report 2007South Africa Is Commited to Quality in the BPOSector05_Africa_Report09_South Africa.108 10805_Africa_Report09_South Africa.108 108 2/25/09 4:20:58 PM2/25/09 4:20:58 PM
  • 120. Country Report for South Africa109OUTSOURCINGTOAFRICAJohannesburg(Gauteng)Port Elizabeth (Eastern Cape)Cape Town(Western Cape)Total = 1312Limpopo, 2EasternCape, 37KwaZuluNatal, 90FreeState, 7Durban (Kwa-Zulu Natal)Gauteng,882A solidfoundationSource: Contact Industry Hub 2007....With over 1200 Contact Centres in Four KeyBPO LocationsSpecific areas of strength of the South African BOP sector is shown here.South Africa Has Distinct Strengths in Several Industry and Service LinesSophisticated bankingenvironmentWell-regulatedfinancial servicesenvironment e.g., FSA(UK) & FSB (SA) linksCompliance toInternationalregulations eg., BaselII, Data Privacy Act•••Large scalabletelecom infrastructureMany experiencedplayersFlexible operations(call-centre virtualmodel)Good technical know-how and capability••••Many large,experienced playerswith scalableinfrastructureProduct sophistication;similar life product tothe UKMature industry; firstworld insuranceoperations•••Banking Insurance TelecomsStrong customer serviceculture in SASouth Africans arePerceived abroad ashelpful and personallywarmAccent neutral, leadingto high conversionrates•••Customer contactUnderstanding of creditdue to strong creditcultureSuccessful track recordSuitable infrastructurewith appropriatetechnological platforms•••Payment servicesCapable of delivery toSLAs within a shortperiod of timeScalable infrastructure••High-end offshoringSource: Team analysisThe combination of SA’s strengths make itand ideal location to conduct a high-endfinancial services BPO operation•••••Mature industries ininsurance, banking, andtelecomsWidespread use of English,with similar accents andusage to UK and USCultural similarities to theUS and UKStrong product similaritiesin banking and insuranceCompliance withinternational regulationsIndustriesService lines05_Africa_Report09_South Africa.109 10905_Africa_Report09_South Africa.109 109 2/25/09 4:20:59 PM2/25/09 4:20:59 PM
  • 121. 110Country Report for South AfricaOUTSOURCINGTOAFRICAIn Summary... Offshoring to South Africa Will Boost a Buyer’sCustomer Service and Improve Its OperationsSA’s potential advantages for buyersHigher quality of call centre talentProduct and cultural affinity to UKAccent neutral speaking styles•••Time zone compatibility with UK/Western EuropeMuch easier to fly than to India/Philippines••Fairly balanced demand supply atagent levelDay shift operations at most callcentresLimited other avenues for jobs•••Higher quality of call centre talentNatural ability to interact in EnglishPleasant demeanourProduct and cultural affinity to US••••Source: Team analysisFasteracquisition ofcustomersBetter retentionof customersLower attrition oftalentClearer line ofsightSouth Africaoffers buyers amuch more highquality, long-term sustainablecall centreoffshoringopportunity forcomplex contactcentre servicesIT outsourcing is a growing business in South Africa, making up more than a third ofthe R30-billion IT services market, according to a study in 2008 by research and advisoryfirm IDC, taking up the largest share of all IT service categories.Gartner, the international research group, rates South Africa as one of its top thirtysoftware development outsourcing destinations, with 2007 research putting it on parwith Israel in the Europe, Middle East, and Africa region, and next to Australia andIndia globally.9. Human Resource Efficiency and CostSouth Africa can provide effective and efficient human resources required for an outsourc-ing destination. The next five diagrams show what is in place, including a collaborativetraining scheme. In spite of this in-house capability, specialist expatriate workers are notunwelcome. The government facilitates their induction once their need is established andsets up a favourable environment. Perhaps this stand has been taken as there is a significantmigration of skilled human resources out of South Africa.••05_Africa_Report09_South Africa.110 11005_Africa_Report09_South Africa.110 110 2/25/09 4:21:01 PM2/25/09 4:21:01 PM
  • 122. Country Report for South Africa111OUTSOURCINGTOAFRICA100% = 17 191 000Excludes discouraged work seekers who want to work and are available towork but have not taken active steps to look for work or to start some form ofself-employmentIncludes persons with grade 12 and those with a diploma/certificate with lessthan grade 12“We have managed to attract and develop key talents which are acritical resource in delivering world class service from South Africa to our local andinternational clients.... which has developed our Integrated Delivery Centre into acountry-leading service provider to the local and international business community.”12Employed12 800 000Unemployed4 391 00074% 26%2School LeaversThe Country Offers a Large Available LabourPool....A solidfoundationGraduates....with formal educationlarge available, labour pool170,0001,155,000Source: Statistics South Africa (Labour Force Survey 2006)Mark Harris, Country General Manager, IBMOther*Directly relevantto BPOAnnual graduates000The University of WitwatersrandThe University of Cape Town.... Supplied with Over 100,000 Graduates Each Year from a World ClassEducation System29%332937396664 65 6820012000 2002 200371%9399 102107Business andCommerceBusiness School ranked 45thin Financial TimesExecutive Education rankings87 Rhodes scholars4 Nobel Prize winners•••Exchange programmes with 16 leading US and UKuniversities18 scientists rated as ‘world leaders’ in their fields3 Nobel Prize winners•••Almost 40,000 students graduate each yearfrom courses directly relevant to BPO* Includes mathematical sciences, computer science and engineeringSource: Department of Education, Statistics South Africa, Team analysis05_Africa_Report09_South Africa.111 11105_Africa_Report09_South Africa.111 111 2/25/09 4:21:02 PM2/25/09 4:21:02 PM
  • 123. 112Country Report for South AfricaOUTSOURCINGTOAFRICAEmployerRecruiter TrainerLearnerTraining Programs Are Being Put in Place to Ensure School LeaversAre Suitably Qualified...Government and industry’s talent developmentprogramme, aimed at training 30 000 learners, is beingdevelopedTalent development programmeObjectiveTargetsIncrease the pool of entry-level employablepeople by using a targeted customisedskills training programme aimed at 30 000young, unemployed South African’sAccelerate the development of homegrownsupervisors and managersEnsure the ongoing capacity building of aglobally competitive talent pool with therequired skills at all levels of employment•••Train 1,000 entry level learners in 2007Train an additional 29,000 learners for theperiod 2007–2010.An innovative government funded,employer led, learner focused,recruiter and trainer supportedtraining programme hasbeen developed••Source: Team analysisMONYETLA (Work Readiness Programme) Success RateIn the first rollout (before the extra VAT money and miscellaneous re-allocations):963 learners started in the first rollout.85 are still completing the process.878 have completed.753 of 878 have been successful and have completed the programme competently(85.8%).679 of the 753 successful learners have been employed (90.2%).679 of the total of the 878 learners who began, were successful and are employed(77.3%).202 supervisors have been trained (against a required 146, so the target is exceededby 38%).•••••••05_Africa_Report09_South Africa.112 11205_Africa_Report09_South Africa.112 112 2/25/09 4:21:02 PM2/25/09 4:21:02 PM
  • 124. Country Report for South Africa113OUTSOURCINGTOAFRICATo summarise the Human Resource situation, see as under.... And Government Has Committed to Further Improve the Depth andQuality of South Africa’s Talent PoolInitiatives in place• The Skills Development Act provides a framework for thedevelopment of South Africa’s skills base, including the creation ofa National Skills Fund to provide for skills development initiatives.The Skills Support Programme offers incentives with a value of upto $840,000 for a 1,000-seat centre over 5 yrs. The programmeprovides:– Training grants for eligible training costs.– Learning development grants for developing customised trainingprogrammes.– Capital grants for installation of training capacity.A wage incentive programme for learnerships, available foremployers offering approved learnership programmes. Provides upto $430 000 over 5 yrs for a large centre.•••Source: Team analysisOverarching government objectivesDevelop and improve the skills of thebroader South African workforce.•Reduce unemployment in the countrythrough increased economic growth.•Empower previously disadvantaged SouthAfricans, both economically and socially.•Encourage greater investments in training.•Create opportunities for the introductionof new advanced skills.•Investors could take advantage of arange of support that is available toinvestors to enable job creation and skillsdevelopment10. Legal and Enforcement IssuesTrust in electronic transactions, that too in a distant location and different jurisdiction, isvital in attracting important and high value outsourcing. Thus ICT security and Cyber andIPR law enforcement is a critical factor. South Arica has topped the list in this score amongthe fifteen countries studied. This is due to the South African government recognising theseissues and taking the following legislative and enforcement steps:The Protection of Personal Information Bill covering Data Privacy is close to beingpromulgated and is very similar to the EU Data Protection Directive.The promulgation of information protection legislation in South Africa will necessarilyresult in amendments to other South African legislation, most notably the Promotion ofAccess to Information Act 2 of 2000, the Electronic Communications and TransactionsAct 25 of 2002, and the National Credit Bill [B18-2005]. All these acts contain interimprovisions regarding information protection in South Africa.The Intellectual Property Laws Amendment Act aligns South Africa with the Agreementon Trade Related Aspects of Intellectual Property Rights (‘TRIPS’).Patents Act 1978. South Africa is a subscriber to the Patent Co-operation Treaty (‘PCT’)which facilitates simultaneous protection in a large number of countries.Trade Marks Act 1993 contains legislation similar to the new legislation in the UnitedKingdom and other European community countries.•••••05_Africa_Report09_South Africa.113 11305_Africa_Report09_South Africa.113 113 2/25/09 4:21:03 PM2/25/09 4:21:03 PM
  • 125. 114Country Report for South AfricaOUTSOURCINGTOAFRICACopyright Act 1978 legislative amendments have extended the scope of copyright incomputer programmes. International protection follows from South Africa’s member-ship of the Berne Convention.Designs Act 1993 designs relating to integrated circuits can now be registered.Counterfeit Goods Act 1997 enables proprietors of certain intellectual property to actagainst counterfeiting of their products. The act provides streamlined and effectiveenforcement measures.Intellectual property law is also affected by other legislation including the following:Marketing ActCompanies ActTrade Practices ActThe Intellectual PropertyLaws Rationalisation•••••Merchandise Mark ActHarmful Business Practices ActCompetition ActBusiness Names ActStandards Act•••••Niche capability areas of the South Africa BOP sector are the financial services. A numberof legal instruments and their enforcement mechanisms regulate financial services providedin and out of South Africa. These are as follows:As general best practise, banks are compliant with BASEL II.Banks are regulated by the Banks Act, which is primarily based on similarlegislation in the United Kingdom, Australia and Canada. The BankingCouncil looks after consumer issues and there is an Ombudsman. TheNational Payment System Act of 1998 was introduced to bring the SouthAfrican financial settlement system in line with international practice onsettlement systems and systematic risk management procedures.••BANKSThe Financial Services Board (FSB) oversees the regulation of financialmarkets and institutions, including insurers, fund managers, and bro-king operations excluding banks, which fall under the South AfricanReserve Bank. The FSB is the equivalent of the FSA in the UK.•FSBThe Financial Intelligence Centres Act (FICA) counteracts moneylaundering.Compliance with the Financial Advisory and Intermediary Services(FAIS) Act is required for all providers of financial services. Agentsmust also be registered, trained and certified.••FICAFAISIt is because of these measures being in place that South Africa stands first in ICT Security,and Enforcement of Cyber Laws and IPR and third in legislative risk scores among thefifteen nations studied.••••05_Africa_Report09_South Africa.114 11405_Africa_Report09_South Africa.114 114 2/25/09 4:21:03 PM2/25/09 4:21:03 PM
  • 126. Country Report for South Africa115OUTSOURCINGTOAFRICA11. Labour & Expatriate Worker’s PermitsIt is felt and reported that South Africa expatriate workers are not unwelcome as in manyAfrican nations. South Africa promises attractive lifestyle and all facilities necessary.Attractive lifestyle features... And a Lifestyle Highly Attractive to Expatriate StaffSophisticated, cosmopolitan cities (e.g.,Johannesburg, Durban, and Cape Town)Excellent living standards and medicalservicesInternational schoolsDiverse and abundant natural splendourand year-round temperate climateEasy connectivity to the rest of the world•••••Source: Team analysisQuote from expatriate fromAmericas: “It is a great place to live... a comfortable life and distractionsfor my family. I am going to stayaround!”Quote form expatriate from the UK:“I came to South Africa for theenergy and diversity ... a lifestyleI’m used to, with a developing worldbuzz that’s alive with possibility”12. Revenue, Tax, and Repatriation IssuesForeign exchange controls exist but have not been reported to be discouraging; from theease and cost of financing and tax point of view, South Africa is second and a fifth amongthe fifteen countries studied.13. Investment Policy and IncentivesThe South African government has identified the Business Process Outsourcing and Off-shoring (BPO&O) sector as one of the top three priority sectors to stimulate growth withinits Accelerated Shared Growth Initiative (ASGI-SA). The sector is identified for its potentialto attract investment and create employment opportunities in the economy.Electricity tariff concessions: Industries requiring intensive use of electricity may nego-tiate special tariffs with the relevant local authority and/or the Electricity SupplyCommission (Eskom).•05_Africa_Report09_South Africa.115 11505_Africa_Report09_South Africa.115 115 2/25/09 4:21:03 PM2/25/09 4:21:03 PM
  • 127. 116Country Report for South AfricaOUTSOURCINGTOAFRICASpecific details of what is available are shown in the following tables:Nationalincentive Comments ValueInvestmentIncentive GrantThe incentives are offered to localand foreign investors establishingprojects that aim primarily to serveoffshore clients. The objective ofthe incentives is to attract BPOinvestment that creates employmentopportunitiesFrom $5300[R37,000]To $8500[R60,000]per seatDependent on thelevel of qualifyinginvestmentexpenditure andemployment creation.Minimum jobs = 200and 90% of revenuemust be derivedoffshoreTraining andSkills SupportGrantThe Grant supports company-specifictraining requirements including:In-house trainer/facilitator/assessor development/skillscosts for development of learn-ing materials/programmesCosts for trainer secondmentinto South AfricaCosts of purchasing and install-ing training equipment andfacilities••••Up to $1700[R12,000]per agentGrant per newemployee trained,calculated as 50% ofqualifying trainingexpenditureSpecific examples of situations and the incentives applicable are worked out as follows:A project employing between 200–499 agents with Qualifying Investment Expenditureof more than R74,000 per seat is eligible for a grant between R37,000 and R44,600per seat.A project employing 500 or more agents with Qualifying Investment Expenditure greaterthan R89,200/per seat is eligible for a grant between R44,601 and R60,000 per seat.Should a project have qualifying investment expenditure of less than R74,000 per seat,but 200 or more agents, it will be eligible for a grant between R37,000 and R52,500per seat. The approved grant may not exceed 50 per cent of the salary costs of agentsfor the first two years of the project.Employment createdQualifying investment costsper seat Grant per seat200–499 At least $10,500 [R74,000] $5300 [R37,000]–$6400 [R44,600]500 < Greater than $12,700 [R89,200] $6400 [R44,601]–$8500 [R60,000]200 < Less than $10,500 [ R74,000] Between $5300 [R37,000] and$7400 [R52,300]; or 50% ofagents’ salary costs for 2 yrs.(whichever is lesser)••••05_Africa_Report09_South Africa.116 11605_Africa_Report09_South Africa.116 116 2/25/09 4:21:04 PM2/25/09 4:21:04 PM
  • 128. Country Report for South Africa117OUTSOURCINGTOAFRICAThe approved grant will be disbursed in four stages, over three financial years of the com-pany, subject to performance criteria:Claims Period Percentage1 6 months 25%2 Year 1 25%3 Year 2 25%4 Year 3 25%In addition to the incentives specifically for the BPO industry other applicable incentivesbased on location and other factors are applicable and listed in the following table:Generalincentives Comments ValueTechnologyand HumanResourcefor IndustryProgramme(THRIP)The aim is to buildR & D capacity$1 for every$2 put inMatching grant to support costsincurred in R&D that enhances skillsUrban RenewalProgrammeThe aim is toencourage thedevelopment ofbusinesses in urbanrenewal areasAccelerated depreciation allowanceon the capital value of buildings andimprovements in Urban DevelopmentzonesNationalLearner-shipProgrammeThe aim is todevelop a pool ofnationally accreditedagents, supervisors,and managers$8500[R60,000]Tax deduction per unemployed personat the start of and on certification of aregistered learner-ship (split into twoamounts, before and after)$5700[R40,000]Tax deduction per employed personat the start of and on certification of aregistered learner-ship (split into twoamounts, before and after)Location inIndustrialDevelopmentZones (IDZ)There are threeIDZs in South AfricaVarious Grant to cover 50% of the costof developing innovative productsand processesExemption from Value Added Tax(VAT) on imported goods anda rebate on duty on importedgoods••RegionalProgrammesEach region offersindividual investorsoptions; typicallyreduced facility costsVarious In the Western Cape: 100% ratesrebate, free land and buildings,subject to availabilityGauteng: Highly reduced rentalspace••05_Africa_Report09_South Africa.117 11705_Africa_Report09_South Africa.117 117 2/25/09 4:21:04 PM2/25/09 4:21:04 PM
  • 129. 118Country Report for South AfricaOUTSOURCINGTOAFRICAHere’s a summary to the incentive situation:Working Hard to Make South Africa a More Attractive Offshoring DestinationConduciveEnvironmentAttractiveIncentivesSouth Africa has become an attractive value-based off-shoringdestination for captive and third party BPO operators alikeInvestorProtectionStrong political support from thePresidencyMacroeconomic and politicalstabilityAggressive infrastructuredevelopmentLiberalisation of telecomssectorAn official BPO programmewhich partners private andpublic sectors•••••Strong and functional legalframework (Rule of Law)Data Privacy ActRespect for property rightsProtection of intellectual propertyrightsWell regulated financial servicessectorCompliance with Basel II, MoneyLaundering Act, CorporateGovernance, etc.••••••Investment incentives up to +-R65,000 per seatTraining and skills incentives upto +-R12 000 per learnerVarious other non-fiscalincentives available at nationaland regional levelsOver R200m disbursed in the last4 months and numerousapplications being processed now••••14. Government Agencies Giving Support to OutsourcingThe department of trade and industry is the true single point contact and is willing tofacilitate...Fulfilment of regulatory requirementsInformation on all regulatory requirements.Progress tracking on different applications.Access to incentives programmesInformation on which incentives are available.Assistance in applications for incentive programmes.Progress tracking and feedback on incentive applications.Acquisition of work permitsInformation on work permit requirements.Assistance in applications for work permits.Progress tracking and feedback work permit on applications.•••••••••••05_Africa_Report09_South Africa.118 11805_Africa_Report09_South Africa.118 118 2/25/09 4:21:05 PM2/25/09 4:21:05 PM
  • 130. Country Report for South Africa119OUTSOURCINGTOAFRICARequired information relating toNational data, e.g., telecoms, connectivity, transport.SA BPO landscape.More detailed regional information, e.g., average salaries, rental costs, amenities, etc.Assistance for investors in setting up site visits withVendors.HR agencies.BPO centres.Assistance in identifying a location for a BPO centreIdentify available space.Consider required amenities.Support in planning further investments/ramp up of existing investment15. Overall Assessment and RecommendationsThe heavy incentives given to the outsourcing industry does raise a concern: Why? Is theindustry not strong enough to stand on its own feet or are the conditions so adverse? Theinherent strengths measured for South Africa certainly do not show weaknesses. Perhaps thissummit could elaborate on this.Will the new government that has come in after the April 2009 elections support outsourc-ing and ICT as the past governments have done?There are, however, some inhibitors that South Africa needs to watch carefully:Global competition specially from North Arica and close sub-Saharan neighbours andalso from Asian and East Europe.Perceived and actual public security; is enough been done to get to the root of theproblem? Does every-one really have to carry a gun like in the American Wild West ofthe late 1800s?Currency fluctuations–South Africa has scored the last in currency risk and pulled downcountries like Botswana whose currencies are in the same basket.South African industry and government need to ponder over these issues to remain in thepresent lead position.•••••••••••••••05_Africa_Report09_South Africa.119 11905_Africa_Report09_South Africa.119 119 2/25/09 4:21:07 PM2/25/09 4:21:07 PM
  • 131. 120Country Report for South AfricaOUTSOURCINGTOAFRICA16. Contact DetailsInvestment Promotion Agency (s)Pumela Salela, Director: BPO, Strategic Competitiveness Unit, the DtiTel: (+27) 12-394-1033; Mobile: (+27) 82-939-7293E-mail: Mfanu Mfayela, Chief Executive, BPeSATel: (+27) 861-722-2266; Mobile: (+27) 84-722-2266E-mail: These are true single window offices, and there is no need to contact individualdepartments.Useful Links wood, R. et a. Assessing Consumer Activity in The Telecoms and Internet Sectors in Africa.2006.IDRC.“Power, Poverty and the Global Water Crisis.” Human Development Report. 2006. UNDP.Education in South Africa, G. Understanding the South Africa Program Context. 2003.’s Top Ten Implementer Countries 2005 in CickAfrique.com World Fact Book.“ICT in South Africa.” 2005. Canadian High Commission.; Africa.120 12005_Africa_Report09_South Africa.120 120 2/25/09 4:21:07 PM2/25/09 4:21:07 PM
  • 132. Country Report for South Africa121OUTSOURCINGTOAFRICA Address by Dr Ivy Matsepe-Casaburri, Minister of Communications to the secondInformation Society and Development (ISAD) Inter-Governmental Relations Forum(IGRF), Free State of Communications: Policy Directions Issued by the Minister ofCommunications., L. 2006: “Let them Eat Dial-Up.” Brainstorm. November 2006. IT Web,Johannesburg, South Africa. Africa Draft ICT in Education Implementation Plan, 2006. National Department ofEducation.Harris, L. 2006: “Let them Eat Dial-Up.” Brainstorm. November 2006. IT Web,Johannesburg, South Africa.ICTs in Education: Transaction Advisor Terms of Reference, 2007. National Department ofEducation. Technologies and South African Higher Education: Mapping theLandscape, Council on Higher Education. 2006. Africa.121 12105_Africa_Report09_South Africa.121 121 2/25/09 4:21:10 PM2/25/09 4:21:10 PM
  • 133. 05_Africa_Report09_South Africa.122 12205_Africa_Report09_South Africa.122 122 2/25/09 4:21:10 PM2/25/09 4:21:10 PM
  • 134. 123OUTSOURCINGTOAFRICACountry Report for TunisiaDisclaimerThis short Country Report, a result of a larger Survey of ICT Outsourcing in Africa, provides a general over-view of the current activities and issues related to ICT Outsourcing in the country.The data presented hereshould be regarded as illustrative rather than exhaustive. ICT Outsourcing is at a particularly dynamic stagein Africa, with new developments and announcements happening on a daily basis somewhere or the otheron the continent.Therefore, these reports should be seen as ‘snapshots’ that were current at the time theywere taken; it is expected that certain facts and figures presented may become outdated very quickly.The findings, interpretations, and conclusions expressed herein are a faithful representation of the respond-ents of the interviews and secondary data collected from the countries and published literature. Strict analysishas been carried out with the minimal influence of the authors/team members. References to data sourceshave been made as far as possible. In the case of the detailed data parameters used for scores and ranking,the same data source and timeline has been used for all the fifteen countries compared. In the descriptivesection of the country reports all data received from the individual country has been used in order to giveas complete an assessment as possible. Thus those countries that have provided more information have abetter coverage than those who have not been able to provide data to the research team.Board of Executive Directors of the CBC or Cyber Media cannot guarantee the accuracy of the dataincluded in this work. The boundaries, colours, denominations, and other information shown on any mapin this work do not imply on the part of the CBC and Cyber Media any judgement of the legal status ofany territory or the endorsement or acceptance of such boundaries.It is expected that individual Country Reports from the Survey of ICT Outsourcing in Africa will be updatedin an iterative process over time, based on additional research and feedback received through the CBCand Cyber Media website.Mediterranean SeaLaGalitBizerteL’ArianaTUNISLa GouletteEl KefNabeulSousseSfaxKasserineGafsaTozeurMedenineTataouineZarzisALGERIA LIBYAGolfede GabesGabes0 50 100km0 50 100mi06_Africa_Report09_Tunisia.indd 12306_Africa_Report09_Tunisia.indd 123 2/25/09 4:21:50 PM2/25/09 4:21:50 PM
  • 135. 124Country Report for TunisiaOUTSOURCINGTOAFRICA1. OverviewTunisia, at the northernmost bulge of Africa, thrusts out toward Sicily to mark the divisionbetween the eastern and western Mediterranean Sea. Twice the size of South Carolina, itis bordered on the west by Algeria and by Libya on the south. Coastal plains on the eastrise to a north-south escarpment that slopes gently to the west. The Sahara Desert lies inthe southernmost part. Tunisia is more mountainous in the north, where the Atlas rangecontinues from Algeria. According to Tunisian government statistics, more than 60 percent of the population is middle class. Only 4 per cent falls below the poverty threshold.The national savings rate is 23 per cent, and 81 per cent of Tunisians own their ownhomes. Over 90 per cent of Tunisian homes are connected to the electrical grid and topotable water.Since independence, Tunisia has traditionally taken a balanced approach to developmentthat has emphasized family planning, education, and promotion of the status of women.Between 1987 and 1994, with International Monetary Fund (IMF) and World Bank support,Tunisia engaged in a series of important structural reforms. Unlike in most of the statesof the region, the Tunisian economy is highly diversified, with the increasingly unreliablehydrocarbon sector now accounting for no more than 12 per cent of local GDP.Tunisia enjoys preferred status for its exports to EU countries and has significantly loweredlocal tariff barriers to EU imports.2. Tunisia’s Position in Africa’s Fifteen CountriesMorocco *MoroccoTunisia *Geographical Coverage and RankTunisiaEgypt *EgyptSenegal *SenegalGhanaGhanaNigeriaNigeriaUgandaUgandaKenyaKenyaTanzaniaTanzaniaZambiaZambiaMozambique MozambiqueBotswanaBotswanaNamibiaNamibiaSouthAfricaSouth AfricaMauritiusAfrica*Non-Commonwealth CountriesMauritius06_Africa_Report09_Tunisia.indd 12406_Africa_Report09_Tunisia.indd 124 2/25/09 4:21:50 PM2/25/09 4:21:50 PM
  • 136. Country Report for Tunisia125OUTSOURCINGTOAFRICAContributing scores and ranks are as under.OverallBand Score (PS & BE) Rank in BandReady 6.77 FourthInfrastructureScore Rank Band7.8 1 ReadyTunisia is first in network readiness, overall cost of infrastructure, cost of travel and stay,telecommunication and data transfer costs, and road and rail. Tunisia comes second, third,and fourth in availability and penetration, cost of space and facilities, and internationalInternet bandwidth. At the other end, Tunisia comes tenth in electricity availability.People and Skills (PS)Score Rank3.447 4In the case of ‘People and Skills’, Tunisia is first in Quality and education, language anddomain skills, second in work satisfaction, and third in ICT exposure. At the other endTunisia is eleventh in the cost of human resources and thirteenth in cost of living.Business Environment (BE)Score Rank3.326 6In this lower level abstraction, Tunisia coming sixth is the best in geopolitical risk and legislativerisk; it enjoys the second position in ICT Security and enforcement of Cyber and IPR laws andcurrency risk. It has achieved third position in share of services in GDP. At the other end Tunisiais in the thirteenth position in the Share of ICT in exports and in the last position in tax.3. Country, Political, and Economic ProfileTunisia, at the northernmost bulge of Africa, thrusts out towards Sicily to mark the divisionbetween the eastern and western Mediterranean Sea. Twice the size of South Carolina, itis bordered on the west by Algeria and by Libya on the south. Coastal plains on the east06_Africa_Report09_Tunisia.indd 12506_Africa_Report09_Tunisia.indd 125 2/25/09 4:21:51 PM2/25/09 4:21:51 PM
  • 137. 126Country Report for TunisiaOUTSOURCINGTOAFRICArise to a north-south escarpment that slopes gently to the west. The Sahara Desert lies inthe southernmost part. Tunisia is more mountainous in the north, where the Atlas rangecontinues from Algeria.The salient features are as follows:Area: 163,610 sq km (63,378 sq mi).Cities: Tunis (capital); Greater Tunis Area, Sfax, Nabeul, Sousse.Terrain: Arable land in north and along central coast; south is mostly semiarid or desert.Climate: Hot, dry summers and mild, rainy winters.Population (2007): 10.10 million.Education (years compulsory): 9.Literacy (definition age 15 and over can read and write, 2006 estimates): 74.3 per cent.GDP (2006, 2000$ mil): $28.7 billion.Per capita GDP (2007, IMF): $2860.GDP Growth Rate: 6.3%.Government type: Parliamentary democracy.Independence: March 20, 1956.Branches: Executive (chief of state President Zine El Abidine BEN ALI [(since November 7,1987)] head of government.Prime Minister Mohamed Ghannouchi (since November 17, 1999) cabinet.Council of Ministers appointed by the president; president elected by popular vote for a five-yearterm; election last held 24 October 2004 (next to be held in October 2009).Prime minister appointed by the president. Election results:President Zine El Abidine Ben Ali re-elected for a fourth term.Candidates from opposition: Mohamed Bouchiha (PUP), Mohamed Ali Halouani (Et-Tajdid),and Mounir Beji (PSL).Percentage of vote: Zine El Abidine Ben Ali 94.49% (officially).Legislative: Bicameral. Chamber of Deputies or Majlis al-Nuwaab (189 seats; five-year terms;152 seats are elected by popular vote for party lists on a winner-take-all basis). An additional37 seats (20 per cent of the total) are distributed to opposition parties on a proportional basisas provided for in 1999 constitutional amendments. Elections last held 24 October 2004 (next tobe held in October 2009).Election results: Percentage of vote by party—RCD 92%; seats by party—RCD 152, MDS 14,PUP 11, UDU 7, Et-Tajdid 3, PSL 2.Note: The opposition increased number of seats from 34 to 37. A referendum in 2002 created a secondchamber, the Chamber of Advisors. Elections for the Chamber of Advisors were held in July 2005.Shura (consultative) CouncilJudicial: Nominally independent District Courts, Courts of Appeal, Highest Court(Cour de Cassation). Judges of the Highest Court are appointed by the president.••06_Africa_Report09_Tunisia.indd 12606_Africa_Report09_Tunisia.indd 126 2/25/09 4:21:51 PM2/25/09 4:21:51 PM
  • 138. Country Report for Tunisia127OUTSOURCINGTOAFRICAAdministrative subdivisions: 24 governorates—Ariana, Beja, Ben Arous, Bizerte,El Kef, Gabes, Gafsa, Jendouba, Kairouan, Kasserine, Kebili, Mahdia, Manouba,Medenine, Monastir, Nabeul, Sfax, Sidi Bou Zid, Siliana, Sousse, Tataouine, Tozeur,Tunis, Zaghouan.Principal political parties: Democratic Constitutional Rally (Rassemblement Consti-tutionnel Democratique—ruling party) or RCD, President Zine El Abidine Ben Ali;Et-Tajdid Movement (Mohamed Harmel); Democratic Forum for Labour and Liber-ties or FDTL (Mustapha Ben Jaafar); Liberal Social Party or PSL (Mondher Thabet);Movement of Democratic Socialists or MDS (Ismail Boulahia); Popular Unity Party orPUP (Mohamed Bouchiha); Unionist Democratic Union or UDU (Ahmed Inoubli);Progressive Democratic Party or PDP (Maya Jribi); Green Party for Progress or PVP(Mongi Khamassi).Suffrage: Universal at 18. (Active duty members of the military cannot vote.)EconomyThe government of Tunisia has been methodically reducing its role in the economy. By 1994,forty-six of the 189 public enterprises were completely or partially privatized either throughsale of shares or assets; most of these forty-six firms, however, were small-scale. Although theprivatization program is supported by the National Labor Federation (UGTT), the govern-ment is moving carefully to avoid mass firings in unprofitable public companies.The government is focusing on the stock market as the principal vehicle for the privatiza-tion program. Specific targets are companies operating in competitive sectors. Tunis Air andother major state-owned companies will be partially or wholly privatized by selling sharesthrough the stock market.The most dramatic re-orientation has occurred in the financial and banking sectors. TheCentral Bank is gradually shifting to a supervisory and regulatory role. Interest rates wereofficially deregulated and commercial banks allowed moving into the long-term credit mar-ket. The government made the Tunisian Dinar convertible for current account transactions,and currency trading was privatized.In the financial markets, the former state-controlled stock exchange, the Bourse, was priva-tized. The new structure is composed of brokerage houses. Similarly, a privately held centralstock clearing house company was established. The state will continue to exercise its super-visory and regulatory role through the Financial Market Council.In 1995, the government restructured its economic ministries. The former Ministry ofNational Economy was split into the Ministries of Industry and Commerce. The Ministry ofIndustry is responsible for improving the international competitiveness of Tunisian industry.It also retains control of the majority of state-owned industries. The Ministry of Commercemanages consumer subsidy and price control policies. Finally, the Ministry of EconomicDevelopment, formerly the Ministry of Planning, is responsible for long-term budget andpolicy development.•••06_Africa_Report09_Tunisia.indd 12706_Africa_Report09_Tunisia.indd 127 2/25/09 4:21:51 PM2/25/09 4:21:51 PM
  • 139. 128Country Report for TunisiaOUTSOURCINGTOAFRICAReformsTunisia, under the leadership of president Zine El Abidine Ben Ali, has implemented anInternational Monetary Fund-style economic stabilization program highlighted by rigorousbudget balancing, foreign trade liberalization, and private sector incentives. Consequently,economic growth rates have surged. Not surprisingly, so, too, has the rate of direct foreigninvestment, which according to official statistics was up 22 per cent during the first ninemonths of 1995 from the comparable period in 1994 to some US$ 300 million.Most of this capital came from European Union investors who were encouraged by Tunisia’sproximity to southern Mediterranean markets, relatively low cost labor force, and enhancedfiscal transparency.It has been in the vital area of local economic restructuring that Ben Ali’s accomplishmentshave been most impressive. Within the past year or so, Tunisia has emerged as the unquali-fied financial success story of Arab North Africa, with high GDP growth rates (7 per cent for1996), relatively low inflation rates (6.1 per cent in 1995), and a highly command rigorouslyrealistic exchange rate structure.In addition, Tunisia took in foreign capital in 1994 by issuing a samurai bond ( Japanese yendenominated government paper). In order to do so, it became the first Arab country to beassigned a country credit rating provided by the Japan Bond Research Institute.All signs now point towards considerably higher levels of both local and foreign investmentand sustainable overall economic growth.Commercial OutlookAs of 1995, 87 per cent of prices are free at the production level and 85 per cent at thedistribution level. Over 93 per cent of imports are unrestricted.At the end of the structural adjustment program in 1994, all basic economic indicators hadimproved. The average growth rate over 1987–1994 was 4.5 per cent with an average infla-tion rate of 5 per cent. The government budget deficit declined from 5.5 per cent of GrossDomestic Product (GDP) in 1986 to 2.6 per cent in 1994. Over the same period, the currentaccounts deficit went from 8 per cent of GDP to 4.6 per cent. Similarly, debt service as apercentage of exports declined from 27.9 per cent to 18.5 per cent.Constant GDP was US$ 12.8 billion in 1994 and US$ 13.3 billion in 1995, of which serv-ices accounted for about 33 per cent. The manufacturing and agriculture sectors eachcomprised about 15 per cent. Non-manufacturing industries, primarily phosphate miningand hydrocarbons, contributed 12 per cent to GDP. The remainder was made up of non-commercial activities.06_Africa_Report09_Tunisia.indd 12806_Africa_Report09_Tunisia.indd 128 2/25/09 4:21:52 PM2/25/09 4:21:52 PM
  • 140. Country Report for Tunisia129OUTSOURCINGTOAFRICAManufacturing consists primarily of textiles and food processing with textiles contributingover half the total revenue in the sector and most of the growth. Tourism plays the same rolein the services sector. The Ministry of Tourism hopes to draw five million tourists annuallyby the year 2000, which is 25 per cent above the current level.Industry: Petroleum, mining (particularly phosphate), textiles, footwear, food processing.Trade (2005): Exports—$11.7 billion; hydrocarbons, agricultural products, phosphates,chemicals, textiles, mechanical, electric components. By region—Africa 9.9%, Americas 3.1%,Asia 3.7%, Europe 83.3%. By country (U.S.$ million)—France $3807.07; Italy $2598.46; Germany$926.0; Spain $739.0; Libya $635.15; Belgium $282.61; U.K. $322.0; U.S. $145.6.Major markets: Imports ($15.2 billion)—industrial goods and equipment, hydrocarbons, food,consumer goods.Natural resources: Natural gas, crude oil, phosphates, salt, iron ore.Agriculture: Products—olives, dates, citrus, almonds, grains.An economy enjoying ongoing growth: Tunisia posts sustainable, steady growth.GDP GrowthIn %Ministry of Development and International Cooperation,Economic Budget 2008(E): estimated6. (E)2005200406_Africa_Report09_Tunisia.indd 12906_Africa_Report09_Tunisia.indd 129 2/25/09 4:21:52 PM2/25/09 4:21:52 PM
  • 141. 130Country Report for TunisiaOUTSOURCINGTOAFRICAA diversified economy: The services sector and manufacturing industries account for43.2 per cent and 19.2 per cent of GDP, respectively.GDP Structure–Factor Costs in 2007In %Ministry of Development and International Cooperation,Economic Budget 2008Agriculture & fishingNon-manufacturing industriesManufacturing industriesTourismTransportCommunicationsOther Services36.511.514. and diversified exports: Tunisian exports currently post sound performance anda diversified mix, accounting for 54.1 per cent of GDP, with a growth rate of 17 per centin 2007.Trends in Export of Goods and ServicesIn billion TNDMinistry of Development and International Cooperation,Economic Budget 2008(E): estimated16.4818.6820.6224.2826.3920042005200620072008 (E)••06_Africa_Report09_Tunisia.indd 13006_Africa_Report09_Tunisia.indd 130 2/25/09 4:21:52 PM2/25/09 4:21:52 PM
  • 142. Country Report for Tunisia131OUTSOURCINGTOAFRICAStructure of Export of Goods and Services in 2007In %Ministry of Development and International Cooperation,Economic Budget 2008Textile and leatherMechanical and electric industriesAgriculture and agro-foodTourismTransportChemical productsEnergyOther8.66.814.920.723. country open to the outer world: Exports are the backbone for growth in Tunisiaand thus are given high priority.Trends in Exports (% of GDP)Ministry of Development and International Cooperation,Economic Budget 2008(E): estimated20042005200620072008 (E)46.849.650.454.154.3•06_Africa_Report09_Tunisia.indd 13106_Africa_Report09_Tunisia.indd 131 2/25/09 4:21:53 PM2/25/09 4:21:53 PM
  • 143. 132Country Report for TunisiaOUTSOURCINGTOAFRICAFree access to the European Union market: The European Union is Tunisia’s primaryeconomic and commercial partner. Tunisia was the first country on the southern rimof the Mediterranean to sign a free-trade association agreement with the EuropeanUnion (1995).Trends of Tunisian Exports of Goods to the European UnionIn million TNDNational Institute of Statistics200320042005200620078,3439,99110,88611,78415,387Ongoing integration of the Maghreb and Arab markets: Tunisia is tied to Maghreb andArab countries by preferential agreements. Bilateral agreements have set up free-tradezones with Turkey, Egypt, Morocco, Jordan, Iraq, and Libya that govern trade withthese countries. A regional agreement was signed in 1998 to set up an Arab free-tradezone. The Agadir free-trade agreement was signed in 2004 by Jordan, Egypt, Morocco,and Tunisia.Trends in Tunisian Exports of Goods to Maghreb,Middle-East and Gulf CountriesIn million TNDNational Institute of Statistics2003796 8151,1451,3731,6442004200520062007••06_Africa_Report09_Tunisia.indd 13206_Africa_Report09_Tunisia.indd 132 2/25/09 4:21:53 PM2/25/09 4:21:53 PM
  • 144. Country Report for Tunisia133OUTSOURCINGTOAFRICALow inflation: Inflation has on average been kept on 3 per cent thanks to strengtheningof rules governing competitiveness and ongoing improvement in productivity.Trends in the Inflation RateIn %National Institute of Statistics, 2008200320042005200620072. risk: A low-risk economy Tunisia has been awarded an investment rating byfinancial institutions and rating agencies since 1994.Tunisia’s Rating in 2007US agencies Standing & Poor’s BBBMonday’s Baa2European agency IBCA BBBJapanese agency R & I A-All this data published by Tunisia generally agrees with our findings. It is worth looking intowhy the data on share of ICT in exports is so low whereas the profile presented by Tunisiain their investment guide should have given a much better figure. One possible explanationcould be that the total exports are so high that even a fairly large ICT export figure wouldgive a small percentage as the total export figure is large in absolute terms.Government and Political ConditionPolitical pressure groups and leaders.Authorized: Tunisian Human Rights League or LTDH (Mokhtar Trifi); Tunisian Asso-ciation of Democratic Women or ATFD (Khadija Cherif); Tunisian Bar Association(Adbessatar Ben Moussa); National Syndicate of Tunisian Journalists or SNJT (NejiBhouri).••••06_Africa_Report09_Tunisia.indd 13306_Africa_Report09_Tunisia.indd 133 2/25/09 4:21:54 PM2/25/09 4:21:54 PM
  • 145. 134Country Report for TunisiaOUTSOURCINGTOAFRICAUnauthorized: An-Nahdha (Renaissance) the Islamic fundamentalist party (Rached ElGhanouchi, in exile); National Council for Liberties in Tunisia or CNLT (Sihem BenSedrine); Movement of 18 October (Nejib Chebbi, Hamma Hammami, et. al) Con-gress for the Republic or CPR (Moncef Marzouki); Tunisian Communist Labor Partyor POCT (Hamma Hammami); Tunisian Green Party or PVT (Abdelkader Zitouni);International Association for the Support of Political Prisoners or AISPP (Co-ordina-tor—Mokhtar Yahyaoui); Tunisian Journalists’ Syndicate or SJT (Lotfi Hajji).Administrative divisions: 24 governorates—Ariana, Beja, Ben Arous, Bizerte, El Kef, Gabes,Gafsa, Jendouba, Kairouan, Kasserine, Kebili, Mahdia, Manouba, Medenine, Monastir,Nabeul, Sfax, Sidi Bou Zid, Siliana, Sousse, Tataouine, Tozeur, Tunis, Zaghouan.Tunisia is a republic with a presidential system President Zine El Abidine Ben Ali hasbeen in office since 1987, when he deposed Habib Bourguiba, president since Tunisia’sindependence from France in 1956. The ruling party, the Democratic ConstitutionalRally (RCD), used to be the sole legal party for twenty-five years but now it is oneamong several other political parties in the country. The president is elected to five-year terms and appoints a prime minister and cabinet, who play a strong role in theexecution of policy.Freedom of opinion and expression has been consolidated through a host of measures,including successive reforms in the Press Code (1988, 1993, 2001 and 2006), aimedat further reinforcing public freedoms. The latest amendments abolished the crime of“defamation of the public order” as well as the procedure of legal obligation to submitcopies of published material. The Tunisian media landscape is today open and plural-istic. Access to the Internet, satellite channels and foreign newspapers and magazinesis readily available to all Tunisian citizens all over the country.Democratic pluralism finds its illustration in the presence of nine legally recognizedpolitical parties, which freely express their views, hold public activities, participate inelections and publish their own newspapers. Political parties are represented in local,regional and national councils. They are also entitled to public funds to finance theiractivities and publish their own newspapers.Pluralism in elections is now a concrete reality in Tunisia. In 1994, the Electoral Codewas amended in such a way as to guarantee at least 20% of parliamentary seats toopposition parties. This minimum proportion will be brought up to 25% based on anew revision of the Electoral Code announced on March 21, 2008.The 2002 Constitutional Reforms reinforced the protection of personal privacy andconsecrated the inviolability and confidentiality of communications and personal data.Article 5 of the Constitution confirmed the importance Tunisia attaches to humanrights in their universality and comprehensiveness.Tunisia is a leader in the Arab world in promoting the legal and social status of women.A Personal Status Code was adopted shortly after independence in 1956, which, amongother things, gave women full legal status (allowing them to run and own businesses,have bank accounts, and seek passports under their own authority).It also, for the first time in the Arab world, outlawed polygamy.Tunisia’s judiciary is headed by the Court of Cassation, whose judges are appointedby the president. The country is divided administratively into 24 governorates. Thepresident appoints all governors.••••••••••06_Africa_Report09_Tunisia.indd 13406_Africa_Report09_Tunisia.indd 134 2/25/09 4:21:54 PM2/25/09 4:21:54 PM
  • 146. Country Report for Tunisia135OUTSOURCINGTOAFRICATunisia is considered safe from an Islamic fundamentalist take-over. The thirty-one yearrule of Tunisian president Habib Bourghiba (1956–87) left the country relatively free ofbureaucratic corruption and steered it clear of the same command economy structurethat decimated Algeria.President Zine El Abidine Ben Ali introduced several amendments mainly into article40 of the Constitution to ease the conditions of presidential candidacy, enable opposi-tion party leaders to participate in presidential elections, even if they cannot receivethe support of 30 members of parliament or heads of local councils as required bythe Constitution. In October 1999, then in October 2004, Tunisia witnessed pluralistpresidential elections where the incumbent President was challenged respectively bytwo then three contenders from the opposition for the highest executive office.Moderately concerned about the potentially destabilizing effects of home-grown Islamicfundamentalism, he has stood firm against the officially banned Islamic Ennadha(Renewal) Party. At the same time, he has also expanded on a flourishing social serv-ice net (Tunisian medical care and education are arguably the best in the Arab world)and kept the bureaucracy clean.4. Principal Government OfficialsPresident: Zine El Abidine Ben Ali.Prime Minister: Mohamed Ghannouchi.Minister of Foreign Affairs: Abdelwahab Abdallah.Minister of National Defense: Kamel Morjane.5. Foreign RelationsPresident Ben Ali has maintained Tunisia’s long-time policy of seeking good relationswith the West, including the United States, while playing an active role in Arab andAfrican regional bodies. President Bourguiba took a nonaligned stance but emphasizedclose relations with Europe and the United States.(The PLO Political Department remains in Tunis.) Tunisia consistently has played amoderating role in the negotiations for a comprehensive Middle East peace. In 1993,Tunisia was the first Arab country to host an official Israeli delegation as part of theMiddle East peace process. The Government of Tunisia operated an Interests Section inIsrael from April 1996 until the outbreak of the second Intifada in 2000. Israeli citizensmay travel to Tunisia on their Israeli passports.President Ben Ali has maintained Tunisia’s long-time policy of seeking good relationswith the West, including the United States, while playing an active role in Arab andAfrican regional bodies. President Bourguiba took a nonaligned stance but emphasizedclose relations with Europe and the United States.Tunisia’s relations with neighboring Libya appear to be stable. In fact, Libyan leaderMuammar Gaddafi began urging Tunisian businessmen to invest in his country inOctober 1996. His calls for investments included the agriculture, fisheries, petrochemi-cals, and iron and steel industries.•••••••06_Africa_Report09_Tunisia.indd 13506_Africa_Report09_Tunisia.indd 135 2/25/09 4:21:54 PM2/25/09 4:21:54 PM
  • 147. 136Country Report for TunisiaOUTSOURCINGTOAFRICABeing a member of the new ‘Club Med’ Alliance, Tunisia will have access to SouthernEuropean markets.In the case of preferential access to several markets, Tunisia is eligible for tariff reduc-tions under the Generalized Preference System, mainly for manufactured, agricul-tural and handicraft products with the United States, Canada, Japan, Switzerland andAustralia. It is also eligible for preferential access to markets in several African countriesin the framework of bilateral agreements.In the case of Trade Agreements, Tunisia prides itself on maintaining preferentialtrading-partner relations with African, Arab, and Mediterranean nations. Tunisia hasentered into trade agreements with forty-one developed and developing countries,which granted Tunisia most-favored-nation status. Tunisia has entered into bilateral andregional trade preference agreements with the European Union and the Arab MaghrebUnion as well as certain agreements under the framework of the Inter-Arab Coopera-tion, the Inter-African Cooperation and the Organization of the Islamic Conference.Furthermore, Tunisia is a member of the World Trade Organization (WTO) and is asignatory to the Global System on Trade Preferences.In 1995, the Tunisian government and the European Union negotiated a major eco-nomic agreement on free trade. The pact establishes the framework for free tradebetween Tunisia and the European Union. The agreement, which came into effect in1997, has a twelve-year phase-in period.6. Living, Security and Safety PerceptionsTunisia is a country that has done a good job of reconciling tradition and modernity.Tunisians are tolerant, hospitable, graced with boundless joy of living and blessed with astrong will to succeed. Tunisia is the number one tourist destination on the southern rimof the Mediterranean, thanks to its extensive hotel infrastructure and leisure facilities. Asidefrom its clement weather, Tunisia offers all the conveniences anyone could want—modernresidential neighborhoods, numerous shopping centers and hypermarkets, foreign schools,high level medical services, amusement parks, and recreational facilities. Contrary to ourfigures of the ‘Cost of Living’ from the World Development Indicators (WDI) data baseTunisia claims to be one of the least expensive cities. Tunisia is ranked among the leastexpensive countries in the world. It is thirteenth out of 144 in the list of the most expensivecities issued by Mercer Human Resource in 2007.In the present day situation it is necessary to take precautions and it is necessary to bealert even in a country as hospitable as Tunisia. Without being alarmed it is worthwhileto be ready for possible adverse incidents and take cognizance of the warnings issuedby responsible governments to their people visiting Tunisia.Criminals have targeted tourists and business travelers for theft, pickpocketing, and scams.Care should be taken with wallets and other valuables kept in handbags or backpacksthat can be easily opened from behind in crowded streets or marketplaces. Criminals mayviolently grab at items worn around the neck (purses, necklaces, backpacks) and then runaway, sometimes causing injury to their victims. Criminals have been known to rob pedes-trians by snatching purses and handbags from their victims while on a motorcycle.••••••06_Africa_Report09_Tunisia.indd 13606_Africa_Report09_Tunisia.indd 136 2/25/09 4:21:55 PM2/25/09 4:21:55 PM
  • 148. Country Report for Tunisia137OUTSOURCINGTOAFRICAHarassment of unaccompanied females occurs rarely in hotels, but it occurs morefrequently elsewhere. Dressing in a conservative manner can diminish potential harass-ment, especially for young women. It is always wise to travel in groups of two or morepeople. Women are advised against walking alone in isolated areas. Travelers are advisedto avoid buses and commuter rail when possible, and to never enter a taxi if anotherpassenger is present.Theft from vehicles is also common. Items high in value like luggage, cameras, laptopcomputers, or briefcases are often stolen from cars. Travelers are advised not to leavevaluables in parked cars, and to keep doors locked, windows rolled up, and valuablesout of sight. American residents in Tunisia are also advised to not leave items of valueunattended in the yards of their homes, as there have been reports of theft of itemssuch as tools and bicycles.In May and June 2008, there were also reports of disturbances in communities in thesouth of Tunisia near the Algerian border.Medical care in Tunisia is adequate, with a number of new, private ‘polyclinics’ availablethat function as simple hospitals and can provide a variety of procedures. Specializedcare or treatment may not be available. Facilities that can handle complex trauma casesare virtually non-existent. While most private clinics have a few physicians who are flu-ent in English, the medical establishment uses French, and all of the ancillary staff inevery clinic communicates in Arabic and/or French.Medical care could be expensive, and it is advisable to have a proper medical insur-ance cover.Driving practices are poor. Drivers fail to obey the rules of the road even in the pres-ence of the police.Emergency services are widely available in the larger towns. They can be less reliablein rural areas.Travelers’ checks and credit cards are accepted at some establishments in Tunisia,mainly in urban or tourist areas. Cash machines (ATMs) are available in urban andtourist areas. The Tunisian dinar is not a fully convertible currency. While the exportor import of Tunisian banknotes and coins is prohibited, the export of foreign currencydeclared when entering Tunisia is allowed.7. ICT Policy, Infrastructure, and ServiceICT Policy: Tunisia has committed to the institutionalisation of ICT in all aspects ofthe economy and has played a leading role on the global level by hosting the secondphase of the world summit on the information system. To introduce and sustain theintegration of ICT in education, Tunisia has implemented a multi-dimensional strategybased on modernizing its infrastructure. Education is an important sector affected bythis policy where a major restructuring took place, and reforms have taken into con-sideration the integration of ICT. Training and professional development of teachersand administrators were also considered as keys to successfully implementing ICT atall stages of the teaching-learning process. Distance education opens new horizons•••••••••06_Africa_Report09_Tunisia.indd 13706_Africa_Report09_Tunisia.indd 137 2/25/09 4:21:55 PM2/25/09 4:21:55 PM
  • 149. 138Country Report for TunisiaOUTSOURCINGTOAFRICAand constitutes a rich field of research, innovation, and creation that still needs to bereinforced and further developed.Communications infrastructure: The telecommunication sector in Tunisia is one of themost dynamic ones with an outstanding growth rate (more than 20 per cent between2002 and 2006). The investment has reached 5,302 million dinars between 2001 and2006, and it will reach 6,300 million dinars during the period 2007–2011. There areall kinds of networks in Tunisia, so foreign companies can set up communication linksto virtually everywhere in the world at low cost. High performance, multiplicity, andthe availability of systems and facilities for telecommunications transmission are basedon the following:Pair gain system.Pleysychrone, SDH systems.WLL.ISDN, ATM, Frame Relay, X25.LS, ADSL.VSAT.MOBIRIF (Rural network based in MGS technology).GFA, WIFI, GPS.Technology Infrastructure: Tunisia is home to seven technopoles and seven cyber parksin a number of regions, each devoted to a given area of specialization. The mid-termobjective is that each governorate is granted a science park.Industrial zones and economic activity parks: In 2007, Tunisia had 121 industrialzones distributed all over the territory covering a surface of 3,807 hectares and offer-ing several facilities. The eleventh economic development plan (2007–2011) providesfor the achievement of thirty-one industrial zones covering 650 ha to reach a totalarea of 4,500 ha in 2011. There are also two high-level operational economic activityparks—Bizerte and Zarzis–Jerba. The Bizerte park is located at the city’s port (just60 km from Tunis Airport), and the Zarzis park is located just half an hour fromJerba Airport.Energy infrastructure: Tunisia has eighteen electrical plants—thermal, combined cycle,gas turbine, and steam turbine providing coverage for the entire country. Installedcapacity stands at 3,110 M Watt. Gas mains in Tunisia are made up of 7,808 km for thetransportation, of which 1,810 km are for the dispatch and 5,998 km for the distribu-tion. In his report Tunisia is not scoring as well as described here. The figures usedin this study were from the WEF and US department of state data. Tunisia claims verycompetitive electricity and gas costs.Competitive production costs: There are particularly favorable conditions for settingup a business in Tunisia. Wage costs are very competitive, as are factor costs. Here’s adeviation from this report.•••••••••••••06_Africa_Report09_Tunisia.indd 13806_Africa_Report09_Tunisia.indd 138 2/25/09 4:21:55 PM2/25/09 4:21:55 PM
  • 150. Country Report for Tunisia139OUTSOURCINGTOAFRICAAverage Sales Price Index Exclusive of Tax on Gas and Electricity forIndustrial UsageTunisia = base 100CountryElectricity costs100 kW–160 MWh/yearNatural gas costs1,000 toe/yearTunisia 100 100France 149.1 310.6Spain 181.7 285.4Portugal 203.8 318.7Germany 215.2 478.0Italy 216.2 349.6Eurelectric, January 2007Physical InfrastructureOffice market: The four principal office districts of the capital Tunis are the city centre(Montplaisir), Les Berges du Lac, Centre Urbain Nord, and out-of-town. Of these areas,Les Berges du Lac has tended to attract most interest from new corporate tenants,particularly as it represents a recent extension to the existing city providing an oppor-tunity for developers and occupiers to create new low-rise developments. The locationprovides better communications than the current congested inner city areas.Retail market: There are a number of significant retail developments on the edge ofthe city, of which the most popular is on the road to Carthage and anchored by Car-refour. As an alternative, there is boutique shopping in Les Berges du Lac and highstreet retailers in the city centre. The general trend in retailing in Tunis is towardsoffering more to the sophisticated shopper.Industrial market: There are a number of major industrial areas located around Tunis,together with new areas which are being promoted by the inward investment agency,mainly located to the south of the city. Some of these locations provide new areas whicheffectively comprise plots of serviced land where the construction of new buildings isyet to start.Residential market: The residential market tends to be dominated by the locationsto the east of the city and north of the lake in Les Berges du Lac, including areassuch as La Marsa and Carthage. There are also plans for a massive new Sports Citydevelopment, which will include apartments and leisure uses and will further enhancethis area.Prime rents Prime yieldsOffices US$ 12 per sq m per month 11%Retail US$ 18 per sq m per month 8%Industrial US$ 4 per sq m per month 13%Residential US$ 4,000 per month* 9%*Four bedroom executive house—prime location••••06_Africa_Report09_Tunisia.indd 13906_Africa_Report09_Tunisia.indd 139 2/25/09 4:21:55 PM2/25/09 4:21:55 PM
  • 151. 140Country Report for TunisiaOUTSOURCINGTOAFRICA8. ICT and BPO Industry EnvironmentOutsourcing to Tunisia Many reports rate Tunisia as a leader in Africa and in the ArabWorld for its excellent performance worldwide. World Economic Forums Africa Com-petitiveness Report, 2007 identifies it as the first most competitive economy in Africaand twentieth in the world.A small north-African country, Tunisia has become a favoured destination for foreigndirect investment over a few years now. It is its modern infrastructure, stable govern-ment, strong economy, accessible location and most importantly, the availability of hightech professionals at low costs, which make it ideal market for the investors.Many European IT firms have set up operations here, as the cost of a Tunisian engineeris about 80 per cent lower than that in Europe. Tunisia’s thriving economy creates anattractive atmosphere for investors from the European Countries, Japan, and the US.Around 2,600 foreign firms have invested in the country, and few chose Tunisia for itsclose proximity and preferential trading relations with the European Community andthe Arab Maghreb Union, as well as for the Investment Code, which offers foreigninvestors considerable incentives and exemptions.Tunisia seeks to attract 2,000 new outsourcing jobs this year to minimize its double-digitjobless rate.A.T. Kearney’s recent study has ranked Tunisia amongst the world’s top-50 competitive‘offshore locations’ for outsourcing company services abroad. The Kearney index alsonoted that French-speaking countries like Tunisia, engage in the outsourcing of theircompany services by serving francophone markets with stronger business environmentscontending with lower costs.Many reports rate Tunisia as a leader in Africa and in the Arab World for its excellent per-formance worldwide. World Economic Forum’s Africa Competitiveness Report, 2007 iden-tifies it as the first most competitive economy in Africa and twenty-nineth in the world.World Economic Forum’s Global Information Technology Report, 2006–2007 ranks itfirst in Africa and in the Maghreb, and thirty-fifth in the world in the field of ‘globalinformation technology’, and A.T. Kearney’s Global Services Location Index, 2007, givesit 26th position in the world in terms of ‘labour cost advantages’.Tunisia, with a population of 10.3 million attracted foreign direct investment of $3.270million in 2008. Furthermore, despite the intensification of the world debt problem,Tunisia managed to reduce its total debt burden.Tunisia is a serious destination. Software Technology Parks with state-of-the-art IT infrastruc-ture and telecom facilities have helped Tunisia emerge as a prominent outsourcing hub.The ICT and BPO environment is favorable and established.9. Human Resource Efficiency and CostTunisia is a knowledge-based society and has what is needed for the outsourcing industry.In addition to its modern infrastructure, stable government, strong economy, accessiblelocation, and most importantly, the availability of high-tech professionals at low costs, which•••••••••06_Africa_Report09_Tunisia.indd 14006_Africa_Report09_Tunisia.indd 140 2/25/09 4:21:56 PM2/25/09 4:21:56 PM
  • 152. Country Report for Tunisia141OUTSOURCINGTOAFRICAmake it an ideal market for the investors. Many European IT firms have set up operationshere, as the cost of a Tunisian engineer is about 80 per cent lower than that in Europe.Tunisia seeks to attract 2,000 new outsourcing jobs this year to minimize its double-digitjobless rate. The government is committed:To quote from a recent speech by President Zine El Abidine Ben Ali“We are counting on our students, who are our most precious national resource and ourstrength for the future. We have opened the paths to knowledge for them and are doing allwe can to boost their employability, with any holder of a baccalaureate eligible to go on touniversity. This is the option we have chosen for building a knowledge-based society”.A Modern Educational SystemTunisia assigns a quarter of its budget and 7 per cent of GDP to education and is continuallyinvesting in the education system to meet the increasing needs of the economy.Quality of the Educational SystemTunisia ranks first among the fifteen in this study. An independent assessment by the WorldEconomic Forum shows the global position:Quality of the Educational SystemRank Country Score12 Tunisia 5.222 Germany 4.927 France 4.852 Spain 3.870 Turkey 3.577 Italy 3.490 Morocco 3.1119 Egypt 2.5(1 = does not meet the needs of a competitive economy)(7 = meets the needs of competitive economy)Global Competitiveness Report 2007–2008, Davos World Economic ForumMagnitude of the Human ResourceThere is a huge pool of skilled human resources. Over a period of just three decades, thenumber of students of higher education increased from 17,257 in 1975 to 335,649 in 2007.Female students accounted for 59.1 per cent of the student body in 2007.06_Africa_Report09_Tunisia.indd 14106_Africa_Report09_Tunisia.indd 141 2/25/09 4:21:56 PM2/25/09 4:21:56 PM
  • 153. 142Country Report for TunisiaOUTSOURCINGTOAFRICADistribution of the Number of Students by Cycle 2007–2008 (In %)Short cycle 45.97Master’s degree 34.11Engineering preparatory dycle 3.02Engineering 3.39Advanced graduate degree 2.09National degrees in medicine, pharmacy and dentistry 2.86Agregation* and advanced master 1.39Master and PhD 7.17*Competitive examination for recruitment of teachersMinistry of Higher Education, Scientific Research and TechnologyHuman Resources in Computer and CommunicationsMore and more young people are opting for computer and communication sciences,engineering and other technical branches—30.3 per cent in 2007. There were 58,598graduates in these fields in 2007. Young graduates of Tunisian engineering schools andtraining centers have not only to meet the growing need for skilled manpower in industrybut also to collaborate with companies to boost innovation and identify the products ofthe future.Availability of scientists and engineers is shown here.Rank Country Score7 France 5.79 Tunisia 5.618 Belgium 5.329 Egypt 5.036 Morocco 4.941 Turkey 4.745 Spain 4.749 Italy 4.6(1 = non-existent or rare 7 = widely available)Global Competitiveness Report 2007–2008, Davos World Economic Forum06_Africa_Report09_Tunisia.indd 14206_Africa_Report09_Tunisia.indd 142 2/25/09 4:21:56 PM2/25/09 4:21:56 PM
  • 154. Country Report for Tunisia143OUTSOURCINGTOAFRICAQuality of Math and Science EducationThe current study ranks Tunisia as the first.Rank Country Score2 Belgium 6.36 France 5.77 Tunisia 5.636 Germany 4.842 Morocco 4.659 Italy 4.360 Turkey 4.369 Spain 3.9106 Egypt 3.1(1 = lag far behind most other countries’ schools, 7 = are among the best in the world)Global Competitiveness Report 2007–2008, Davos World Economic ForumTargeted Vocational TrainingIn 2007, Tunisia’s vocational training system includes some 134 public centers throughoutthe country, providing training for 93,796 trainees in more than 336 specialties covering thefull range of economic sectors.Breakdown of trainees by level of training in 2007 is shown here.Breakdown of Trainees by Level of Training in 2007National Agency for Employment and Independent Work, 2008Certificate of vocational aptitude (CAP)Certificate of vocational technician (BTP)Certificate of higher technician (BTS)Certificate of skills and certificateof professional trainingConventional apprenticeship8,92622,47924,94532,784Total93,7964,662Skilled and Competitive Labor ForceA large number of young graduates are available on Tunisia’s job market. Their skills andqualifications in a wide range of technical fields are recognized worldwide, at very competi-tive costs. Illustrative costs are shown.06_Africa_Report09_Tunisia.indd 14306_Africa_Report09_Tunisia.indd 143 2/25/09 4:21:56 PM2/25/09 4:21:56 PM
  • 155. 144Country Report for TunisiaOUTSOURCINGTOAFRICASkills in Research and DevelopmentA number of foreign companies have already chosen Tunisia as a platform for their researchefforts, setting up R&D and engineering centres:ST Microelectronics.Sagem.Archimed Group.Alcatel.Siemens.Share of R&D Expenditure in GDPIn %The 11theconomic development plan (2007–2011),Ministry of Development and International Cooperation200120062011 Tunisia has the human resources for outsourcing including technological high level,research, and development.10. Legal and Enforcement IssuesIn the current study Tunisia has the least legislative risk out of the fifteen countries. Thefollowing factors reported in most literature goes to support this score.Intellectual Property RightsTunisian law provides for copyright and trademark protection but as elsewhere, enforcementis an ongoing problem. As part of its commitment to the WTO process, IPR legislation isbeing implemented which meets WTO TRIPS minimum standards. Protection of IPRs is theresponsibility of the Organisme Tunisien de Protection des Droit d’Auteur (OTPDA), whichalso represents foreign copyright organisations. Royalty payments must be approved by therelevant government ministries on a case-by-case basis.Tunisia is a signatory of the Paris Convention for the Protection of Industrial Propertyand the Paris Convention Regarding Trademarks, as revised in the Hague, London andStockholm. Tunisia is a member of the World Intellectual Property Organization and is a•••••06_Africa_Report09_Tunisia.indd 14406_Africa_Report09_Tunisia.indd 144 2/25/09 4:21:57 PM2/25/09 4:21:57 PM
  • 156. Country Report for Tunisia145OUTSOURCINGTOAFRICAsignatory of the UNCTAD agreement on the protection of patent and trademarks. Tunisiahas withdrawn from the Madrid Agreement regarding trademarks.Patent applications are examined by the Patent Office only with regard to form and, whilenovelty of an invention is examined, merit is not. A patent application, together with thegrant of a patent are published in the Official Gazette. Opposition to a patent applicationmust be filed within two months of the date when the application was filed. Applications forthe issue of letters patent should be made before the invention has been published, used,or otherwise has received sufficient publicity to allow it to be put into practice.The protection period of a patented invention is twenty years from the date on which thepatent application was filed. Working of a patent is an official requirement, and must bedone for two consecutive years, starting within three years of the date on which the patentapplication was filed or two years from the date on which the patent was granted. Nomi-nal working of a patent, by way of direct offer or solicitation, is sufficient to meet thestandards.Rights in a patent may be transferred or assigned to third parties, including, by the laws ofsuccession, to heirs.The Tunisian Copyright Law of 1994 determined the copyright as the right of the ownerof the work to have the exclusive right to copy the work in a material form, whatever itstype, and to present his work to the public. The protected work may be literary, scientific,or artistic, whatever its value or the purpose for which it is prepared.According to Article 18 of the Law, the copyright is valid during the author’s lifetime andcontinues for fifty calendar years after the author’s death. The copyright with respect tophotographic works is valid, according to Article 19, for twenty-five calendar years as fromthe date of work completion. The copyrights are assignable by sale, wholly or partially,according to Article 22.The law establishes the Tunisian Institution for the Protection of Copyright. The Institutionhas several functions, including the protection of copyright.Any party which does not respect copyright as defined by the law, shall be obligated to paydamages to the owner of this right. The law also establishes monetary sanctions for viola-tions or infringements. A person who violates the law may be obliged to pay fines rangingfrom TD 500 to 5,000.Legal ReviewTunisia is a Civil Law Republic, founded upon a constitution that embodies the principlesof sovereignty of the people and separation of powers between the branches of government.The republic is divided into twenty-three regions, each of which has its own local govern-ment and is competent to conduct and manage local affairs.06_Africa_Report09_Tunisia.indd 14506_Africa_Report09_Tunisia.indd 145 2/25/09 4:21:57 PM2/25/09 4:21:57 PM
  • 157. 146Country Report for TunisiaOUTSOURCINGTOAFRICAJudiciaryPowers are vested in the Court of Justice (Cour de Cassation). The judicial branch of gov-ernment has criminal, administrative, and civil systems.Civil Court System: The civil court system is divided into four levels; the District Courts,Courts of First Instance, Appeal Courts, and the Supreme Court.District Courts have jurisdiction to hear matters the value of which does not exceed TD7,000 as well as matters relating to nationality and labor issues. A single judge hearscases in the District Courts. Appeal of a judgement from a District Court is made tothe Courts of First Instance.A Court of First Instance is located in each of Tunisia’s twenty-three regions. The Courtsof First Instance are vested with the power to hear all civil and commercial matterswithout regard to the monetary value of the claim, including divorces and applicationsfor immediate relief in urgent matters. The Courts of First Instance also hear appealsof decisions from the District Courts. Each Court of First Instance is composed of apanel of three judges.Cases which began in the Courts of First Instance may be appealed to the AppealCourts. Appeals of District Court judgements decided by Courts of First Instance maynot be appealed to the Appeal Courts, but, rather, relief may be sought from theSupreme Court.The Appeals Courts have jurisdiction to hear appeals of decisions rendered by theCourts of First Instance except where the decision was an appeal from a decision ofa District Court. The Appeal Courts cover several regions, and, therefore, cases fromseveral Courts of First Instance are heard by the same Appeals Court.Supreme Court: The Tunisian Supreme Court examines decisions appealed from eitherthe Appeals Court or from the Courts of First Instance sitting in its appellate capacityto determine whether the law was correctly applied by the lower court. The SupremeCourt does not examine the substantive aspects of the case on appeal, and only pointsof law may be appealed to it. Submitting a matter to the review of the Supreme Courtdoes not automatically stay execution of the original judgement. A stay of executionmay be granted by the First President of the Supreme Court; the applicant making themotion for such a stay must deposit a bond with the court to secure the judgement.In the event that the Supreme Court voids a lower court judgement, the matter is resub-mitted to another judge or panel of judges of the court which rendered the originaljudgement. For example, a judgement from the Appeals Court covering several regionswould be resubmitted to an Appeals Court covering a different area. In the event thatthe court, on re hearing the matter, fails to comply with the ruling of the SupremeCourt regarding the application of law, the matter is heard by the full panel of theSupreme Court whose decision on the case is binding.The criminal court system is very similar in structure to the civil court system. Misde-meanor offenses are handled by the District Courts, while all other criminal offenses,except felonies, are submitted to the Courts of First Instance for determination. Felonycrimes are submitted to the criminal courts division of the Appeal Courts after an••06_Africa_Report09_Tunisia.indd 14606_Africa_Report09_Tunisia.indd 146 2/25/09 4:21:57 PM2/25/09 4:21:57 PM
  • 158. Country Report for Tunisia147OUTSOURCINGTOAFRICAindictment is issued by a judge based on the findings of the grand jury (ChambredMises en Accusation).The administrative court system is responsible for resolving disputes between individu-als and the government and any governmental subdivision or agency.11. Labour and Expatriate Workers PermitsEmployment relations in Tunisia are governed by the Labor Code of 1956. Labor contractsmay be for a definite or an indefinite period of time. A definite period contract may specifythat it is valid for either a limited period of time or for a specific task. If the parties con-tinue such a contract after the agreed expiration date, then it becomes a contract for anindefinite period.A labor contract may be terminated by agreement of the contracting parties or as a resultof resignation or dismissal of the employee. In the latter case, the employee is entitledto severance pay. The Labor Code sets standards regarding other employment conditions,such as the maximum number of work hours per week, the minimum wage level, overtimework rate, and annual leave. Regional labor inspectors are responsible for the enforcementof such regulations. Worker health and safety standards are regulated and enforced by theSocial Affairs Ministry.Foreign LaborThe law providing incentives to foreign investors has granted wide employment facilitiesfor expatriate personnel. For instance, foreign managers acting in their capacity as employ-ers are not required to hold a work contract, and their company or enterprise may, with asimple declaration to the appropriate authorities, hire up to four expatriate technicians whomay choose either a foreign social security system or the Tunisian system to which they mustcontribute a fixed amount set at 20 per cent of their gross income.Social security payments in respect of Tunisian employees are paid by the employer whocontributes 20 per cent of the employee’s wage to the system and deducts 6.25 per cent fromthe employee’s wages for this purpose to be paid on the employee’s behalf.12. Revenue, Tax and Repatriation IssuesTaxation: The maximum business tax rate is fixed at 35 per cent; however, to encourageTunisian firms to list on the stock exchange, the government has instituted tax incentiveswhich reduce corporate tax to 20 per cent for companies with at least 30 per cent oftheir shares listed. Maximum tariff rates on imports can be as high as 230 per cent forsome goods, and there are also a wide range of non-tariff barriers on imports, especiallyfor non-capital items. Consumer items are also liable for a consumption tax that canbe as high as 700 per cent, and all imported goods are subject to a customs formality•06_Africa_Report09_Tunisia.indd 14706_Africa_Report09_Tunisia.indd 147 2/25/09 4:21:58 PM2/25/09 4:21:58 PM
  • 159. 148Country Report for TunisiaOUTSOURCINGTOAFRICAfee of 3 per cent of the total duties paid. There is a three-tier VAT rate of 29 per cent,18 per cent, and 6 per cent, with most goods being covered by the 18 per cent rate.Tax relief to encourage investment includes relief on re-invested revenues and profits,a reduction of VAT to 10 per cent on many imported capital goods, and improveddepreciation schedules for production equipment. Companies producing over 80 percent for export receive 100 per cent tax exemption for the first 10 years and a 50 percent reduction thereafter, as well as duty-free import of capital goods and tax/dutyexemption for raw materials and semi-finished goods used in the business.Tunisia simplified its tax system and reduced tax rates, with a fixed maximum rateof 35 per cent. Banking and financial sectors were partly liberalized and restruc-tured. Some public companies were privatized and foreign trade and domestic pricesde-controlled.Financing and funds transfer: The financial markets, which have shown significantrecent growth, comprise a semi-privatised stock exchange and a variety of bond andmixed bond/stock funds. The exchange lists about fifty companies, but the lack ofsecondary markets has limited the potential of the exchange to become an importantvehicle for obtaining capital. While credit is usually available, and the banking systemis sound, interest rates can be relatively high and a generally conservative bank sectoris often reluctant to deal with newer firms. The opening of the financial sector to com-petition in 2001 is expected to substantially improve the situation. Although interestrates have been officially deregulated they are not yet market-determined in practice.Trading operates around a rate established by the central bank based on a basket ofcurrencies. However, commercial banks are permitted to participate in the foreignexchange market, and the currency is fully convertible for current account transactions.Foreign investors may transfer returns on investments without authorization. Tunisia isa member of the International Centre for the Settlement of Investment Disputes.Foreign Currency Control: Foreign exchange controls in Tunisia are regulated by theForeign Trade and Foreign Exchange Code of 1976. The government has undertakena review of the code and is in the process of instituting liberalization changes. TheTunisian Dinar is not fully convertible to foreign currencies; however, in recent yearsTunisia has relaxed foreign exchange control provisions regarding current accounttransactions. A currency account transaction law was enacted in 1993 which incorpo-rates liberalizing provisions in this regard. Today the Tunisian Dinar is commerciallyconvertible for all bona fide trade and investment operations. Foreign investors inTunisian companies are entitled to repatriation capital and may receive dividends inforeign currency.In the area of import of goods, all import documents which involve payments mustbe handled through authorized banks. Foreign currency may be purchased from theCentral Bank of Tunisia (CBT) or from banks which have been designated by the CBTfor the payment of imports, subject to licensing restrictions and provided that thelicense has been obtained prior to importation.Payments for exports received in foreign currency ordinarily must be repatriatedwithin ten days of payment. Capital transfers are subject to the approval of the CBT.••06_Africa_Report09_Tunisia.indd 14806_Africa_Report09_Tunisia.indd 148 2/25/09 4:21:58 PM2/25/09 4:21:58 PM
  • 160. Country Report for Tunisia149OUTSOURCINGTOAFRICANon-residents are allowed to repatriate invested capital and net proceeds of such invest-ment in foreign currency.Banking: The CBT monitors the commercial, development, and investment banks oper-ating in Tunisia. The commercial banks provide short and mid-term credit. Develop-ment banks grant only long-term credit for the financing of large scale projects intourism, agriculture, and industry. Investment banks, which were recently created, areresponsible for promoting investment projects and managing capital risks.New legislation enacted in 1994 is aimed at broadening the range of banking servicesand products available, easing restrictions regarding loan approvals, and increasingcompetition in the banking industry. These new laws also created a new type of bank-ing category which specializes in providing financial management banking services forbusiness enterprises.13. Investment Policy and IncentivesFree investment: Investment is free for Tunisian citizens and foreigners in most sectors. Ingeneral, a foreign investor can hold up to 100 per cent of capital in a given initiative withouthaving to obtain authorization.Major Investment IncentivesThe Investment Incentives Law offers many advantages. Additional incentives can beawarded for investments that are of particular interest for the economy or for areas alongthe border.Tax breaks Export income and agriculture projects enjoy a full exemptionof income tax for ten years, and the projects established inregional development zones benefit from five or ten years ofexemption according to the zone’s priority.Subsidies In regional development zones, capped subsidies can reach 8,15, or 25 per cent of the project cost according to the zone’spriority and 7 per cent for agricultural projects.Assumption of employer’s cost Total or partial, for several years, for recruitment of newgraduates, jobs created in regional development zones, oremployment of more than one team.Assumption of certaininfrastructure costsFor certain agricultural activities and projects in regionaldevelopment zones.Investment IncentivesTunisia has enacted several laws to encourage foreign investment in the industrial, agricul-tural and tourism sectors. Legislation promoting foreign investment in the service sector hasbeen drafted and may be adopted by the government.•06_Africa_Report09_Tunisia.indd 14906_Africa_Report09_Tunisia.indd 149 2/25/09 4:21:58 PM2/25/09 4:21:58 PM
  • 161. 150Country Report for TunisiaOUTSOURCINGTOAFRICAForeign investors wishing to invest in these sectors under the enabling legislation may do sothrough the form of a partnership (Association of Person) or as either a public or privatecompany (Association of Capital).In order to promote economic growth, narrow existing trade imbalances, and increaseexports, Tunisia offers extensive investment incentives. These incentives have been availablesince the 1970s. The Investment Incentives Code, which became effective in January 1994,promotes these goals. The Investment Incentives Code offers two types of incentives. Thefirst kind of investment incentives is applied to all investment projects, except projects relat-ing to mining, energy, and finance. The second kind of investment incentives is reserved forprojects engaged in specified fields or projects of a special nature.All investment projects, except projects relating to mining, energy, and finance are entitledto the following investment incentives:A deduction from taxable income, of up to 35 per cent of net income or profits, forincome or profits reinvested in share capital or invested in capital increase.A suspension of VAT and sales tax on locally produced equipment.A reduction of 10 per cent from customs duties and the suspension of VAT and sales taxeson imported equipment for which there is no Tunisian manufactured substitute.An option to apply an installment method of depreciation for production plantsand equipment, excluding office equipment, having a life expectancy of more thanseven years.The second kind of investment incentives is available to investment projects in the fieldof exporting (whether in whole or in part), regional development projects, or projectsengaged in agriculture, environmental protection, research and development, and newsmall enterprises. The investment incentives are substantial and vary depending on thefield in which the enterprise engages and the industry concerned. A brief overview ofsome of the incentives available follows:A full deduction of income or profits from taxable income or corporate taxable incomefor a period of ten years, and a reduction of up to 50 per cent beginning in the elev-enth year.A full tax allowance in respect of profits reinvested in share capital or in the increaseof the company’s registered share capital.A full tax allowance in respect of profits reinvested in the company.Financial support for amounts paid for social security levies.Investment bonuses equal to 8 per cent of the cost of the investment made.The option to elect a flat-tax rate of 20 per cent of gross earnings.In addition to the incentives available under the Investment Incentives Code, non-residentsenjoy the tax-free transfer of capital invested in the investment project and the profits arisingas a result thereof. Also, non-residents may freely repatriate their profits and capital uponthe sale of their holdings in such investment projects.••••••••••06_Africa_Report09_Tunisia.indd 15006_Africa_Report09_Tunisia.indd 150 2/25/09 4:21:58 PM2/25/09 4:21:58 PM
  • 162. Country Report for Tunisia151OUTSOURCINGTOAFRICAThe High Commission for Investments is authorized to grant further incentives to investmentprojects deemed to be of special or significant importance. Such benefits may take the form ofexemptions from income tax or corporate tax for a period up to five years, state-funded contri-butions to the costs of infrastructure development, an investment bonus of up to 5 per cent ofthe total investment in the project, or the suspension of tariffs and taxes levied on equipment.Free Trade ZonesOver 130 companies have submitted requests to invest in Tunisia’s two free trade zones. Sixtycompanies, of which fifty are foreign, made requests to operate in the Bizerte Harbor FreeTrade Zone located sixty kilometers north of Tunis. Most of these companies are French,but requests have also come from American, German, British, Danish, Belgian, Japanese,Indonesian, and Egyptian companies. These foreign companies are seeking to invest in theelectronics, metals, pharmaceuticals, and food industries.The second free trade zone, in Zarzis Harbor, is 450 kilometres south of Tunis, near theLibyan border. Over seventy foreign companies have already submitted requests to invest inthis zone, most of them French. The Zarzis zone spans over 380,000 square metres. Twentymillion dollars have been invested to establish this zone, part of which will be utilized toexpand the harbor facilities at Zarzis. The harbor is currently used to import oil from Libya,among other activities.CustomsSince March 1994 and the enactment of Law No. 94-41, which embodies the policy of the freetrade principle adopted in other liberalization measures, Tunisia has allowed the free importa-tion and exportation of goods, with the exception of restrictions relating to national security,public order, health and hygiene, and the protection of flora, fauna, and natural heritage.Tunisia’s basic tariff rate ranges from 10 per cent to 43 per cent. In addition, several yearsago Tunisia imposed a temporary supplemental duty on certain imports that compete withlocally produced goods. This duty was originally scheduled to be phased out at the end of1994 but remains in effect.14. Overall Assessment and RecommendationsTunisia is topping in infrastructure and doing very well in people and skills. It has very goodlinks with Europe. A bit of introspection on taxes and a greater focus on outsourcing invest-ment among all other investments will make Tunisia go much further.15. Government Agencies Giving Support to OutsourcingForeign Investment Promotion Agency FIPA-Tunisia as per contact details are shown here.06_Africa_Report09_Tunisia.indd 15106_Africa_Report09_Tunisia.indd 151 2/25/09 4:21:59 PM2/25/09 4:21:59 PM
  • 163. 152Country Report for TunisiaOUTSOURCINGTOAFRICA16. Contact DetailsForeign Investment Promotion Agency FIPA-TunisiaTunisiaRue Salaheddine EI Ammami1004 TunisTel: (+216-71) 752540; Fax: (+216-71) 231400E-mail: http://www.investintunisia.tnBrussels31/33, rue Montoyer, Bte 41000 BruxellesTel: (+32-2) 5129327; Fax: (+32-2) 5111757E-mail: fipa1.tunisie@scarlet.beCologneHohenstaufenring 44-4650674 KolnTel: (+49-221) 2403346/2403347; Fax: (+49-221) 2403446E-mail: fipacologne@t-online.deLondon63-66 Hatton GardenLondon EC1N 8LETel: (+44-0207) 4301315; Fax: (+44-0207) 4301400E-mail: Alfonso XIII, N 6828016 MadridTel: (+34-91)4473512/4473518; Fax: (+34-91) 5938416E-mail: ambtnmad@terra.esMilanVia M. Gonzaga, 5(Piazza Missori)20123 MilanoTel: (+39-02) 8092/809298; Fax: (+39-02) 809353E-mail: fipatunisiamilano@tin.it06_Africa_Report09_Tunisia.indd 15206_Africa_Report09_Tunisia.indd 152 2/25/09 4:21:59 PM2/25/09 4:21:59 PM
  • 164. Country Report for Tunisia153OUTSOURCINGTOAFRICA Paris8, rue de la Bienfaisance75008 ParisTel: (+33-01) 45226857; Fax: (+33-01)45226853E-mail: apie.tunisie@wanadoo.frEmbassy of Tunisia in China, France, Germany, India, UK, USATunisian Embassy in Beijing, China1 Sanlitun Dong LuCity: BeijingTel: (+86) 10-65322435/(+86) 10-65322436; Fax: (+86) 10-65325818Consulate General of Tunisia in Nanterre, France101, Avenue Jean Lolive-93502 PantinCity: NanterreTel:; Fax: Embassy in Paris, France25, rue Barbet de Jouy-75007City: ParisTel:; Fax: Embassy in Grenoble, France4, rue Alexandre 1er de Yougoslavie-38000City: GrenobleTel:; Fax: ct.grenoble@wanadoo.frConsulate General of Tunisian in Lyon, France14, avenue du Marechal Foch-69453 Cedex 06City: LyonTel:; Fax: cgt.lyon@imaginet.frTunisian Consulate in Marseille, France8, boulevard d’Athènes-13001City: MarseilleTel:; Fax: 15306_Africa_Report09_Tunisia.indd 153 2/25/09 4:21:59 PM2/25/09 4:21:59 PM
  • 165. 154Country Report for TunisiaOUTSOURCINGTOAFRICA Consulate General of Tunisia in Nice, France18, avenue des Fleurs-06000City: NiceTel:; Fax: General of Tunisia in Paris, France19, rue de Lubeck-75016City: ParisTel:; Fax: General of Tunisia in Toulouse, France19, allée Jean-Jaurès-31000City: ToulouseTel:; Fax: Consulate in Strasbourg, France6, rue SchillerCity: StrasbourgTel: (+33) 3-88365275; Fax: (+33)3-88371871Email: ct.strasbourg@wanadoo.frEmbassy of Tunisia in GermanyLindenallee 16City: BerlinTel: (+49) 30-36-41-07-0; Fax: (+49) 30-308-20-683Consulate of Tunisia in GermanyGodesberger Allee 103City: BonnTel: (+49) 228-8-48-96-00; Fax: (+49) 228-8-48-97-00Overbeckstraýe 19City: HamburgTel: (+49) 40-226-926-3; Fax: (+49) 40-2-27-97-86Embassy of Tunisia in HungaryPusztaszei út 24/ACity: BudapestTel: (+36) 1-3361616/(+36) 1-3361617; Fax: (+36) 1-3257291Email: 15406_Africa_Report09_Tunisia.indd 154 2/25/09 4:21:59 PM2/25/09 4:21:59 PM
  • 166. Country Report for Tunisia155OUTSOURCINGTOAFRICA 29 Princes GateLondon SW7 1QGCity: LondonTel: 004420-(7)5848117; Fax: 004420-(7)225 2884Email: Embassy in Washington, United StatesEmbassy of Tunisia in USA1515 Massachusetts Avenue, NW, 20005City: WashingtonTel: (+202) 862-1850; Fax: (+202) 862-1858Useful LinksThe World Factbook 2007. OF ICT AND EDUCATION IN AFRICA: Tunisia Country ReportTunisia–11.http://www.infodev.orgOfficial Portal of the Ministry of Education and Training.http://www.edunet.tnEducation Act.2002. Edunet. and Communication technologies in Tunisia-Main Achivements. Ministry ofCommunication Technologies. ICT Priority Issues. National Institute of Bureautics and Computing.http://www.inbmi.edunet.tnWorld Education News & Reviews. Khawarizmi Calculus Center.http://www.cck.rnu.tnThe Virtual University of Tunis. 15506_Africa_Report09_Tunisia.indd 155 2/25/09 4:21:59 PM2/25/09 4:21:59 PM
  • 167. 156Country Report for TunisiaOUTSOURCINGTOAFRICA The Tunisian Virtual School.http://www.evt.edunet.tnThe Virtual University of Tunis.http://www.uvt.rnu.tnGlobal Challenges of eDevelopment. 15606_Africa_Report09_Tunisia.indd 156 2/25/09 4:22:00 PM2/25/09 4:22:00 PM
  • 168. 157OUTSOURCINGTOAFRICACountry Report for MoroccoDisclaimerThis short Country Report, a result of a larger Survey of ICT Outsourcing in Africa, provides a generaloverview of current activities and issues related to ICT Outsourcing in the country.The data presented hereshould be regarded as illustrative rather than exhaustive. ICT Outsourcing is at a particularly dynamic stagein Africa; with new developments and announcements happening on a daily basis somewhere or the otheron the continent.Therefore, these reports should be seen as snapshots that were current at the time theywere taken; it is expected that certain facts and figures presented may become outdated very quickly.The findings, interpretations and conclusions expressed herein are a faithful representation of the respondentsof the interviews and secondary data collected from the countries and published literature. Strict analysishas been carried out with the minimal influence of the authors/team members. References to data sourceshave been made as far as possible. In the case of the detailed data parameters used for scores, and ranking,the same data source and timeline has been used for all the fifteen countries compared. In the descriptivesection of the country reports all data received from the individual country has been used in order to giveas complete an assessment as possible. Thus these countries that have provided more information have abetter coverage than those who have not been able to provide data to the research team.Board of Executive Directors of the CBC or Cyber Media cannot guarantee the accuracy of the dataincluded in this work. The boundaries, colours, denominations, and other information shown on any mapin this work do not imply on the part of the CBC and Cyber Media any judgement of the legal status ofany territory or the endorsement or acceptance of such boundaries.It is expected that individual Country Reports from the Survey of ICT Outsourcing in Africa will be updatedin an iterative process over time based on additional research and feedback received through the CBCand Cyber Media website.0 100 200km0 100 200mi2828323636123212 88 4TangierCasablancaMohammediaEl JadidaSafiMarrakechOuarzazateAgadirSebkha TahJbelToubkalMediterraneanSeaStrait of GibraltarNORTHATLANTICOCEANMeknèsFèsOujdaBouArfaTarfayaMAUR.Western SaharaSPAINPORT.KenitraMelilla (SP.)Ceuta (SP.)TétouanRABATALGERIA07_Africa_Report09_Morocco.indd 15707_Africa_Report09_Morocco.indd 157 2/25/09 4:22:34 PM2/25/09 4:22:34 PM
  • 169. 158Country Report for MoroccoOUTSOURCINGTOAFRICA1. OverviewMorocco is in many ways a country apart, separated from the rest of the continent by thetowering Atlas Mountains and by the Sahara itself. Its climate, geography, and history areall more closely related to the Mediterranean than to the rest of Africa, and for this reasonvisitors are often struck by the odd sensation of having not quite reached Africa when inMorocco. In the north, its fine beaches, lush highland valleys, and evocative old cities rein-force this impression. Yet, as one moves south and east, into and over the starkly beautifulranges of the Atlases, Morocco’s Mediterranean character melts away like a mirage. TheSahara stretches out to the horizon and forbidding kasbahs stare.Moroccans are predominantly Sunni Muslims of Arab, Berber, or mixed Arab-Berber ancestry.The Arabs brought Islam, along with Arabic language and culture to the region, from the ArabianPeninsula during the Muslim conquests of the seventh century. Today, there remains a Jewish com-munity of approximately 5,000, and a largely expatriate Christian population of 5,000, who enjoyreligious freedom and full civil rights. Morocco is also home to a 300–500-person Baha’i com-munity which, in recent years, has been able to worship free from government interference.Morocco, a constitutional monarchy, is the only African country that is not currently amember of the African Union. However, it is a member of the Arab League, Arab MaghrebUnion, Organization of the Islamic Conference, Mediterranean Dialogue group, and Groupof 77, and it is a major non-NATO ally.2. Morocco’s Position in Africa’s Fifteen CountriesMorocco is the fifth in the ready band of countries from the outsourcing attractiveness pointof view. The map and table below show where Morocco is positioned.Morocco *MoroccoTunisia *Geographical Coverage and RankTunisiaEgypt *EgyptSenegal *SenegalGhanaGhanaNigeriaNigeriaUgandaUgandaKenyaKenyaTanzaniaTanzaniaZambiaZambiaMozambique MozambiqueBotswanaBotswanaNamibiaNamibiaSouthAfricaSouth AfricaMauritiusAfrica*Non-Commonwealth CountriesMauritius07_Africa_Report09_Morocco.indd 15807_Africa_Report09_Morocco.indd 158 2/25/09 4:22:35 PM2/25/09 4:22:35 PM
  • 170. Country Report for Morocco159OUTSOURCINGTOAFRICAContributing scores and ranks are as under.OverallBand Score (PS & BE) Rank in bandReady 6.43 FifthInfrastructureScore Rank Band6.7 Fourth ReadyWhile achieving the fourth position, Morocco has scored the first five ranks for six out ofnine parameters that go towards this lower level abstraction. Morocco is the best in avail-ability and International Internet bandwidth; in electricity availability the country is third,fourth in road and rail transport, and fifth in network readiness. At the other end, spaceand facilities are expensive in Morocco with a rank of twelve out of fifteen.People and Skills (PS)Score Rank3.173 7In the case of ‘People and Skills’, Morocco comes seventh with fourth position in the quan-tity and quality of human resources, and fifth in Education, language, and domain skills. Atthe other end the cost of living is in the fifteenth place and the cost of human resourcesat the thirteenth position.Business Environment (BE)Score Rank3.261 7In this lower level abstraction, Morocco is seventh. In achieving this position it is third inthe share of services in exports, geopolitical risk and currency risk; fourth in share of ICTin exports, share of ICT in services, and foreign exchange reserves. At the other end taxrates, and ease and cost of finance are at the thirteenth and fourteenth position.07_Africa_Report09_Morocco.indd 15907_Africa_Report09_Morocco.indd 159 2/25/09 4:22:35 PM2/25/09 4:22:35 PM
  • 171. 160Country Report for MoroccoOUTSOURCINGTOAFRICA3. Country, Political and Economic ProfileThe Kingdom of Morocco is situated in North Africa, with a long coast on the Atlantic Oceanthat reaches past the Strait of Gibraltar into the Mediterranean Sea. Its climate, geography,and history are all more closely related to the Mediterranean than to the rest of Africa.Salient features are as follows:Area: 446,550 sq km (172,413 sq mi).Cities: Rabat (capital), Casablanca, Marrakech, Fes, Meknes, Tangier.Terrain: Coastal plains, mountains, desert.Climate: Mediterranean to more extreme in the interior and south.Population: (2007) 33,757,175. (The population of the disputed territory of Western Sahara is350,000.)Education: Years compulsory—9. Literacy (age 15 and over can read and write)—totalpopulation 51.7%; female 39.4% (2003 est.).Government Type: Parliamentary democracy.Independence: 2 March 1956.Branches: Executive—King (head of state), Prime Minister (head of government).Legislative: Bicameral Parliament.Morocco is divided into sixteen administrative regions (further broken into provincesand prefectures); the regions are administered by Walis (governors) appointed bythe king.The Moroccan constitution provides for a monarchy with a parliament and an inde-pendent judiciary. Ultimate authority rests with the king.The king presides over the Council of Ministers; appoints the prime minister followinglegislative elections; appoints all members of the government taking into account theprime minister’s recommendations; and may, at his discretion, terminate the tenure ofany minister, dissolve the parliament, call for new elections, or rule by decree.The king is the commander-in-chief of the military and holds the title of Amir al-Mou’minin, the country’s religious leader.Since the constitutional reform of 1996, the bicameral legislature consists of a lowerchamber called the Chamber of Representatives, which is directly elected, and an upperchamber, the Chamber of Counsellors, whose members are indirectly elected throughvarious regional, local, and professional councils.In order to create employment opportunities, the government is promoting investmentin the tourism, industrial, fishing, and service industries, and is ameliorating, restructur-ing, and modernizing the education system.Parliamentary elections were held in September 2007. Abbas El Fassi was designatedto form a new government.•••••••07_Africa_Report09_Morocco.indd 16007_Africa_Report09_Morocco.indd 160 2/25/09 4:22:36 PM2/25/09 4:22:36 PM
  • 172. Country Report for Morocco161OUTSOURCINGTOAFRICAEconomyMacroeconomic stability, coupled with low inflation and relatively slow economic growth, hascharacterized the Moroccan economy over the past several years. The government continuesto pursue reform, liberalization, and modernization aimed at stimulating growth and creat-ing jobs. Employment, however, remains overly dependent on the agriculture sector, whichis extremely vulnerable to inconsistent rainfall. Morocco’s primary economic challenge is toaccelerate growth in order to reduce high levels of unemployment and underemployment.While overall unemployment stands at 7.7 per cent, this figure masks significantly higherurban unemployment which is as high as 33 per cent.The current government is continuing a series of structural reforms begun in recent years.The most promising reforms have been in the labour market and financial sectors, andprivatization has accelerated the sale of Global System for Mobile Communications (GSM)licenses in recent years. Morocco also has liberalized rules for oil and gas exploration andhas granted concessions for many public services in major cities. The tender process inMorocco is becoming increasingly transparent. Many believe, however, that the process ofeconomic reform must be accelerated in order to reduce urban unemployment.GDP (2006): $56.72 billion.Per capita GDP (PPP) (2006): $4,400.Industry: Phosphate mining, manufacturing and handicrafts, construction and public works,energy.Sector Information as percentage of GDP (2006): Agriculture 13.3%, industry 31.2%,services 55.5%.Monetary unit: Moroccan dirham.Trade: Exports—$11.72 billion (2006).Major markets: EU 71.5%, India 4.1%, US 2.6%, and Brazil 2.4%.Imports: $21.22 billion (2006).Major partners: EU 52.1%, Saudi Arabia 4.8%, Russia 6.7%, China 5.2%, U.S. 3.4%.Natural resources: Phosphates, fish, manganese, lead, silver, and copper.Agriculture products: Barley, citrus fruits, vegetables, olives, livestock, and fishing.Economy: Macroeconomic stability, coupled with low inflation and relatively slow economicgrowth, has characterized the Moroccan economy over the past several years.Foreign exchange: Foreign exchange reserves are strong, with over $16 billion in reserves, theequivalent of eleven months of imports at the end of 2005. The combination of strong foreignexchange reserves and active external debt management gives Morocco ample capacity to serviceits debt. Current external debt stands at about $17.9 billion.Government and Political ConditionMorocco is an Islamic, democratic, and social constitutional monarchy with a king, executivebranch, bicameral legislature, and judiciary branch.07_Africa_Report09_Morocco.indd 16107_Africa_Report09_Morocco.indd 161 2/25/09 4:22:36 PM2/25/09 4:22:36 PM
  • 173. 162Country Report for MoroccoOUTSOURCINGTOAFRICAThe king is considered the Supreme Representative of the Nation, the symbol of its unityand Defender of the Faith. He is entrusted with protecting the rights and liberties of allcitizens, social groups, and organizations. His powers include appointing the prime ministerand cabinet members, presiding over cabinet meetings, promulgating laws, dissolving parlia-ment, addressing the nation and parliament, issuing royal decrees, commanding the RoyalArmed Forces, and being in charge of foreign policy, presiding over the Supreme MagistrateCouncil, appointing judges, and granting pardons. The crown is passed down to the eldestson unless the king names a different successor during his lifetime. The closest male relativeis chosen if the past king did not have sons and did not appoint another successor.The Regent CouncilThe Regent Council performs the constitutional roles of the king until he reaches the ageof sixteen and serves as an advisory board until he turns twenty.LegislativeThe legislature consists of the House of Representatives and the House of Counsellors. Houseof Representatives members are elected to six-year terms. For the House of Counsellors, two-fifths of members are elected by the people and three-fifths are chosen by regional electoralcolleges for nine-year terms. The legislature’s powers include voting on laws, determiningcrimes and penalties, determining the statute of magistrates and pubic offices, determiningthe electoral system of local assemblies and councils, establishing new public agencies, andnationalizing enterprises.ExecutiveThe prime minister is selected by the king and ensures the execution of laws. His powersinclude introducing bills, the co-ordination of ministerial activities, and other administrativetasks.JudiciaryThe king appoints magistrates based on recommendations of the Supreme Magistrate Council.They are independent of the legislative and executive branches and cannot be removed.The High Court of Justice, which consists of an equal number of legislators from both theHouse of Representatives and House of Counsellors, conducts trials for government mem-bers accused of crimes.Principal political parties: Socialist Union of Popular Forces (USFP), Istiqlal (Independ-ence) Party (PI), Party of Justice and Development (PJD), National Rally of Independents(RNI), Popular Movement (MP), National Popular Movement (MNP), Constitutional•07_Africa_Report09_Morocco.indd 16207_Africa_Report09_Morocco.indd 162 2/25/09 4:22:36 PM2/25/09 4:22:36 PM
  • 174. Country Report for Morocco163OUTSOURCINGTOAFRICAUnion Party (UC), Democratic Forces Front (FFD), National Democratic Party (PND),Party of Progress and Socialism (PPS), Democratic Union (UD), Democratic and SocialMovement (MDS), Social Democratic Party (PSD), The Pact (AHD), Liberty Alliance(ADL), United Socialist Leftists (GSU), Moroccan Liberal Party (PML), Party of Reformand Development (PRD), Citizen Forces (FC), National Itihadi (Unity) Congress (CNI),Party of Action (PA), Social Center Party (PCS), Party of Environment and Develop-ment (PED), Citizens Initiative for Development (ICD), Party of Renewal and Equity(PRE), Consultation and Independence Party (PCI), Advancing Democratic and SocialParty (PAGDS).Suffrage: Universal starting at eighteen years of age.4. Principal Government OfficialsPresident: King Mohammed VI.Prime Minister: Driss Jettou.5. Foreign RelationsMorocco is a moderate Arab state which maintains close relations with Europe andthe United States. It is a member of the UN and belongs to the Arab League, ArabMaghreb Union (UMA), Organization of the Islamic Conference (OIC), and the Non-Aligned Movement.Organization of African Unity (OAU), Morocco remains involved in African diplomacy.It contributes consistently to UN peacekeeping efforts on the continent.Morocco is active in Maghreb, Arab, and African affairs. It supports the search for peaceand moderation in the Middle East.Morocco was the first Arab state to condemn Iraq’s invasion of Kuwait in 1990, andsent troops to help defend Saudi Arabia.Morocco was among the first Arab and Islamic states to denounce the 11 September,2001 terrorist attacks in the United States and declare solidarity with the Americanpeople in the war against terror.6. Living, Security, and Safety PerceptionsLiving in Morocco is fairly comfortable; however, it is necessary to take precautions againstthe following problems.Demonstrations occur in Morocco and usually centre on local domestic issues. Duringperiods of heightened regional tension, large demonstrations may take place in themajor cities.Travellers should be cognizant of the current levels of tension in Morocco and stayinformed of regional issues that could resonate in Morocco and create an anti-Americanresponse.••••••••07_Africa_Report09_Morocco.indd 16307_Africa_Report09_Morocco.indd 163 2/25/09 4:22:36 PM2/25/09 4:22:36 PM
  • 175. 164Country Report for MoroccoOUTSOURCINGTOAFRICACrime in Morocco is a concern, particularly in the major cities and tourist areas.Residential break-ins also occur and have, on occasion, turned violent, but most crimi-nals look for opportunities based on stealth rather than confrontation.Women walking alone in certain areas of cities and rural areas are particularly vulner-able to harassment from men.Fraud in Morocco may involve a wide range of situations from financial fraud to rela-tionship fraud for the purpose of obtaining a visa.Adequate medical care is available in Morocco’s largest cities, particularly in Rabat andCasablanca, although not all facilities meet high quality standards. Specialized care or treat-ment may not be available. Medical facilities are adequate for non-emergency matters, par-ticularly in the urban areas, but most medical staff will have limited or no English skills.Most ordinary prescription and over-the-counter medicines are widely available. However,specialized prescriptions may be difficult to fill, and availability of all medicines in ruralareas is unreliable. Medical facilities would be expensive and valid, and adequate medicalinsurance cover is necessary.7. ICT Policy, Infrastructure, and ServiceMorocco has a very well-developed telecommunications and ICT network. It has high capac-ity digital fibre links with France and is a landing station for the West African undersea fibrebroadband links. Internal links to remote corners of the country are available.Maroc Telecom has activated more than 83,000 lines over this first half year. This representsan increase +141 per cent compared to June 2005.These results translate into a broadband penetration rate of 28 per cent (number of broad-band connections in relation to the number of fixed lines excluding public telephones), thehighest on the African continent. In May this year, Maroc Telecom launched IPTV, a firstamong Morocco, Africa, and the Arab world.Maroc Telecom has continued to stimulate the broadband market during this first half yearwith promotions, and a new ADSL offers price cut from May 1, ranging between 17 per centand 33 per cent depending on the broadband. For existing customers, broadband upgradeswere granted without tariff change.A recent report on North Africa Internet Country Market Profiles published earlier this yearalready noted, “Morocco has over 300,000 DSL broadband subscribers, making it the largestbroadband market on the continent. Not surprisingly, Morocco currently has the cheapestDSL connection on the continent, starting at US$ 17 per month for a 128/64k uncappedbroadband connection.”For the first half part of this year fixed-line and Internet gross revenues amounted to MAD6,145 million, up 6.2 per cent. Maroc Telecom’s mobile activity has achieved gross revenuesof MAD 6,957 million, up 16.4 per cent. This performance is mainly due to the growth of••••07_Africa_Report09_Morocco.indd 16407_Africa_Report09_Morocco.indd 164 2/25/09 4:22:37 PM2/25/09 4:22:37 PM
  • 176. Country Report for Morocco165OUTSOURCINGTOAFRICAthe customer base, that stands at 8.924 million, corresponding to an increase of 24.2 per centcompared to June 2005 and a net add of 687,000 customers over the first half year.Specifically for the Outsourcing ParksDedicated zones in three main cities (Casablanca, Rabat, and soon, Fez), have infrastructureup to the best standards of quality and cost—at around 90 Dh per sq m, way cheaper thanthe current market price for such facilities—as well as tailor-made services.This ‘ready for output’ office space will come with air-conditioning, eco-friendly design,pre-cabling and Internet connections, as well as world class telecom offers leveraging thecompetition between the local and international operators.In December 2005, His Majesty King Mohammed VI launched the construction of the firstzone Casa near Shore Park, the first business area dedicated to offshore services and out-sourcing, which is developed and managed by the CDG group. The offshoring zone, tocost over Dh2.7bn ($300 M), is being built on a fifty-three hectare site at the outskirts ofCasablanca, and the Mohammed-V airport. The first phase, which will consist of 34,000 sq mof office floor and 6,000 sq m of services available, is expected to be operational by early2008. The remaining 210,000 sq m will be delivered in two phases over the next threeyears. 30,000 BPO/ITO jobs are expected, and about as many indirect jobs.The next step will be the launch of Techno polis also under construction. Financing andmanagement are through the CDG as well. This park will target in priority ITO but also KPO,due to the presence in the capital of a large number of prestigious engineering schools.The objective is to create up to 12,000–15,000 jobs at the opening. Techno polis will holdseparately engineering, high tech colleges and R&D spaces. Next in line is FesShore whereat this stage land acquisition and master plans are being finalized. Marrakech Shore is ona ‘blue print’ road map for the time being.Physical InfrastructurePrime rents Prime yieldsOffices US$ 10 per sq m per month 12%Retail US$ 37 per sq m per month 14%Industrial US$ 3 per sq m per month 15%Residential US$ 3,500 per month* 9%*Four bed room executive house—prime locationThus Morocco has the entire infrastructure that is needed to be an attractive outsourcingdestination.07_Africa_Report09_Morocco.indd 16507_Africa_Report09_Morocco.indd 165 2/25/09 4:22:37 PM2/25/09 4:22:37 PM
  • 177. 166Country Report for MoroccoOUTSOURCINGTOAFRICA8. ICT and BPO Industry EnvironmentMorocco’s fate changed with the construction of the Casa Near Shore Park—the first busi-ness area dedicated to offshore services and outsourcing in December ’05. Another park,Techno polis, constitutes engineering colleges, and R&D spaces to target service providers.World leaders of IT and communication established in Morocco include Cisco, Capgemini,Compaq, and more.According to McKinsey’s own study, when compared with competitors such as Mauritius,Senegal, and Tunisia, Morocco is geographically closer to France and boasts a better telecom-munications infrastructure. Rabat is the commercial and industrial capital, Casablanca, themajor economic capital, and Marrakech, the commercial and cultural destination.Reliable telephone infrastructure and reduced operating costs are attracting multinationalcorporations to invest in Morocco. With state-of-the-art high-speed transportation lines, portsand harbours, railways, principal highways and airports with paved runways, Morocco’s suc-cess story till date is widely seen as a foundation to develop more offshore services theregenerating value.With businesses bent on reducing their cost base, Morocco’s aim is to become a leadingprovider of offshore services and the preferred destination for the francophone and Spanishmarkets, betting on offshore services to spur growth and job creation.The kingdom has devised a strategy dubbed the ‘Moroccan offer’, which aims at sharpeningits competitive edge in this sector, providing world class infrastructure and training as wellas offering a set of unique incentives.The CAISSE DE DEPOT ET DE GESTION (CDG) group which has been entrusted with themission to accompany this strategy and develop infrastructure and specialist know-how foroffshore services, spearheaded a first fully integrated park in Casablanca, ‘Casanearshore’,growing the trend of relocating entire business functions to either self-owned or third-partyservice providers, typically in low-cost locations.The development of BPO/ITO was initiated in the early 1990s by US and UK-based busi-nesses, which were soon followed by Northern Europe. The French, Spanish, Belgian, andSwiss markets started bridging the gap only in the late 1990s, with BPO expenses estimatedat slightly over $10 bn in 2005, according to prevailing analysis and research.Thanks to its cost-effective multilingual labour supply and modern, liberalized telecomsector, Morocco has attracted roughly half of the French-speaking call centres that havegone offshore so far, and a number of the Spanish ones, including leaders such as Attento,which caters to the French and Spanish markets from Morocco. The country currentlyhas about 200 call centres, including thirty of significant size, that employ a total of over18,000 people.07_Africa_Report09_Morocco.indd 16607_Africa_Report09_Morocco.indd 166 2/25/09 4:22:37 PM2/25/09 4:22:37 PM
  • 178. Country Report for Morocco167OUTSOURCINGTOAFRICAAs an example, the global PC and laptop leader Dell established helpdesks in Morocco toserve its French and Spanish customers, creating some 1,500 jobs and with discussions toextend to another 3,500 positions. The success story of the Moroccan call centre industry iswidely seen as a foundation to develop other offshore services generating added value.9. Human Resource Efficiency and CostEducation in Morocco is free and compulsory through primary school (age fifteen). Never-theless, many children—particularly girls in rural areas—do not attend school. The country’sliteracy rate reveals sharp gaps in education, both in terms of gender and location; whilecountry-wide literacy rates are estimated at 39 per cent among women and 64 per centamong men, the female literacy rate in rural areas is only 10 per cent.Morocco is home to fourteen public universities. Mohammed V University in Rabat is one ofthe country’s most famous schools, with faculties of law, sciences, liberal arts, and medicine.Karaouine University, in Fes, is a longstanding centre for Islamic studies and is the oldestuniversity in the Maghreb. Morocco has one private, English language university, Al-Akhawayn,in Ifrane, founded in 1993 by King Hassan II and King Fahd of Saudi Arabia. The curricu-lum is based on an American model. This lays a sustainable foundation of a regular supplyof human resources.Morocco boasts of a large pool of HR as well—producing up to 50,000 university graduatesannually. To ensure that the talent is well-suited to the BPO, ITO and KPO industries, pro-motion of technology and professional training for 25,000 recruits are being provided—fromlow-level administrative functions to technicians, engineers, and managers. All measures arebeing taken to boost skilled talent to 100,000 by 2015, in order to maintain an abundantsupply of labour and prevent wage inflation.Such is the level of development that Morocco’s employment ministry indicates a fall inthe overall unemployment rate—from 13.9 per cent in 1999 to 9.8 per cent in 2007 and9.6 per cent over the first quarter of 2008, which is again expected to drop to 9.2 per centin the second quarter of this year.When compared with competitors such as Mauritius, Senegal, and Tunisia, Morocco is geo-graphically closer to France, and has a larger and more qualified talent pool when measuredagainst eastern European countries, Morocco presents reduced labour costs and a largerpool of French speakers.10. Legal and Enforcement IssuesA strong intellectual property rights legislation, economic reforms, privatization program,and willingness to build long-term trade and investment ties put Morocco in a strong posi-tion in this area.07_Africa_Report09_Morocco.indd 16707_Africa_Report09_Morocco.indd 167 2/25/09 4:22:37 PM2/25/09 4:22:37 PM
  • 179. 168Country Report for MoroccoOUTSOURCINGTOAFRICAIntellectual PropertyMorocco has a relatively comprehensive regulatory and legislative system for the protectionof intellectual property. Intellectual property rights, however, must be registered in bothCasablanca and Tangier in order to be protected in Morocco. Morocco is a member of theWorld Intellectual Property Organization (WIPO) and party to a number of other inter-national agreements and conventions dedicated to the protection of intellectual property,including the Bern Copyright, Paris Industrial Property and Universal Copyright conven-tions, the Brussels Satellite Convention, and the Madrid, Nice and the Hague Agreementsfor the Protection of Intellectual Property. Moroccan law provides copyright protection forthe literary or artistic expression of an idea, and there are no registration requirements toinvoke such protection.A copyright confers upon the author two principal rights: a property right and an ethicalright. The property right gives the author the exclusive right to exploit the copyrighted workfor pecuniary gain. This right extends throughout the author’s lifetime, and, thereafter, itis transferred to the benefit of the author’s heirs for a period of fifty years.The ethical right protects an author’s non-pecuniary interest in the literary or artistic work,which includes the protection of authorship and integrity. This right is perpetual, inal-ienable, and remains with the author until death, and thereafter, with the author’s heirs.Authors may sell all or part of their property rights, or the right to perform or reproducethe work, without forfeiting their ethical rights.11. Labour and Expatriate Workers PermitsLabour LawThe employment contract binding the employer to each of his employees is governed by theRoyal Decree dated 13 August 1913, which lays down a code of obligations and contracts.Such contract may be written or oral. A decree of 23 October 1948 sets out a specimencontract applicable to all industrial and commercial establishments. It defines the reciprocalrights and duties of employer and employees. An employer, however, can make more favour-able arrangements in his establishment, subject to agreement with the Minister of Labour.Workers have the right to join together in unions for the protection of their rights and tostrike in defence for their collective interests.The work week is limited to forty-eight hours, with no more than ten hours worked per day.Every employee is entitled to a weekly day of rest and a number of statutory paid holidays.Salaries and WagesThere are no legislated wage controls in Morocco other than the minimum wage. Therefore,wages and salaries can be freely contracted between employees and employers. Apart fromagreed pay increases, an indexing system enables the government to raise by decree all wages07_Africa_Report09_Morocco.indd 16807_Africa_Report09_Morocco.indd 168 2/25/09 4:22:37 PM2/25/09 4:22:37 PM
  • 180. Country Report for Morocco169OUTSOURCINGTOAFRICAand salaries effectively paid when the Central Commission for Prices and Wages records anincrease of at least five per cent in the cost of living.Health and SafetyThe provision of medical services is compulsory in every firm employing more than fiftypersons. Employers must provide the services of a doctor; alternatively, they may set upa joint service with other firms, supervised by a chairman. The operation of such healthservice is subject to inspection.Termination of EmploymentDismissal of personnel may take place for a number of reasons, such as reduction of jobs inthe particular branch, incapacity owing to age or insufficient aptitude, or as a disciplinarymeasure owing to a serious offense. Except in the case of a serious offense, the worker isentitled to notice, which varies according to his seniority in the firm and the nature of hiswork. Such a dismissed worker is also entitled, after a year’s service, to compensation pro-portionate to the length of his service with the firm.Social BenefitsAll employers and employees are covered by the social security system. Foreign workerscoming to take up employment in Morocco participate on the same basis as Moroccannationals.Moroccan Business VisaBusiness visas are also issued for duration of three months although they can be grantedas either a single entry or multiple entry permits. In Morocco, business visas are designedfor those who wish to visit the country in order to engage in business activities other thanworking in Morocco.All applications for either Moroccan visa service outlined above must satisfy the followingrequirements:Applications must include a fully signed and completed application form with passportphotos and the appropriate fee.Each candidate must be in possession of a current and valid passport with at least oneblank page.Where candidates are visiting Morocco as tourists, evidence of the purpose of the visitmust be provided through holiday-booking documentation.•••07_Africa_Report09_Morocco.indd 16907_Africa_Report09_Morocco.indd 169 2/25/09 4:22:38 PM2/25/09 4:22:38 PM
  • 181. 170Country Report for MoroccoOUTSOURCINGTOAFRICAWhere visitors are entering under a business permit, a letter of introduction from theircompany will be necessary as well as a letter of invitation from a Moroccan firm.Living and Working in MoroccoIn Morocco, immigration requires candidates who wish to stay in the country for longerthan the three-month period discussed to apply for a visa extension within the fifteen daysimmediately following their arrival.For applicants who wish to apply for a Moroccan residence permit, the procedure is toenter the country on a short-term entry visa, then apply for permanent residency once inMorocco.Candidates for Moroccan immigration who wish to apply for a residence permit must doso within two weeks of their initial arrival in Morocco. In Morocco, work permit applica-tions are employer led and work permits may only be granted to candidates who have beenoffered a specific position with a particular Moroccan company. The company in questionmust apply on behalf of the candidate and will be required to demonstrate that the positionbeing offered could not have been filled by a Moroccan citizen or permanent resident.Processing Times and Fees: In Morocco, visa applications can often be processed within fiveworking days. However, immigration visa services are frequently subject to change and maybe affected by the type of entry clearance being pursued and the nationality of the applicant.In some circumstances, applications may take up to two months to process.12. Revenue, Tax and Repatriation IssuesThe Moroccan government has made the Moroccan Dirham (MDh) convertible for anincreasing number of transactions over the last few years. As of February 1993, the MDhwas made convertible for all current transactions and for some capital transactions, notably,capital repatriation by foreign investors. Foreign exchange is routinely available throughcommercial banks for such transactions upon presentation of documents. The Central Banksets the exchange rate for the MDh against a basket of currencies of its principal tradingpartners. The rate against the basket has been steady since a 9 per cent devaluationin May 1990, with changes in the rate of individual currencies reflecting changes in crossrates. In a further move, the Ministry of Finance recently decided that private enterprisesare allowed to access international financial markets directly.International financial transactions are subject to the control of the Moroccan ExchangeOffice, which retains the authority to act in a balance of payments or liquidity crisis.The liberalization of the exchange control has removed all barriers for international tradetransactions, foreign investments, income transfer, foreign technical assistance, and tourism.Remittances of capital and related income to non-residence are guaranteed. No limitations•07_Africa_Report09_Morocco.indd 17007_Africa_Report09_Morocco.indd 170 2/25/09 4:22:38 PM2/25/09 4:22:38 PM
  • 182. Country Report for Morocco171OUTSOURCINGTOAFRICAare imposed on the time or amount of profit remitted. Loans, however, must be authorizedby the Office of Exchange. Another important decision gives the banks the power to freelyconduct investment operations in international capital market sites and, also, to engage inhard currency accounts or in any other amount of capital deposited by foreign entities.TaxationThe Moroccan taxation system consists of direct and indirect taxes. Indirect taxes providea greater source of tax revenue than the direct taxes. The system is statutory-based and hasbeen recently updated in part with effect from 1 January 1996 by the Investment Charter(Law No. 18/95). There is virtually no case law on taxation, and tax issues hardly comebefore the courts. In general, the tax authorities do not issue advance rulings on taxationmatters.Taxation of Companies: Moroccan corporations are subject to a unitary tax system. Thecorporate tax (impôt sur les sociétés or IS) rate has been reduced to 35 per cent in 1996.Corporations are taxed under a special tax regime, which covers limited liability companies,limited partnerships by shares, general and limited partnerships in which at least one part-ner is a corporate entity, civil companies, branches of foreign corporations, public sectorcompanies having profit-oriented activity and joint ventures having business-oriented activity.General partnerships and limited partnerships in which all partners are individuals may electto be taxed under the corporate tax regime. The same applies to joint ventures in whichall parties are individuals.Foreign corporations are subject to taxation on income arising in Morocco if they have orare deemed to have a permanent establishment in Morocco. Taxation of corporations is thesame irrespective of ownership, and foreign-owned corporations are essentially regarded asMoroccan corporations insofar as they are incorporated in Morocco.The corporate tax regime is based upon territoriality. Net profits earned by foreign subsidi-aries and establishments of Moroccan companies are not taxable until profits are actuallyrepatriated and distributed to shareholders.Taxable income is based on receipts and accruals from products delivered, services rendered,and work carried out and accepted by customers. Interest, royalties, income, and servicefees are subject to corporate income tax at the rate of 36 per cent. Dividends received bycorporate shareholders from taxable entities incorporated in Morocco are not taxable. Thisexemption does not apply, however, to foreign investment income, which is taxed afterdeducting foreign-withholding taxes.Morocco exempts certain types of income from corporate taxation. The first is income derivedfrom agriculture which is exempt until the year 2020. The second concerns income of compa-nies set up in Western Sahara. There are also specific tax incentives exempting some compa-nies from corporate tax for specified periods. In addition, Moroccan corporations can distrib-ute tax-free dividends of common-stock pro rata to all common-stock shareholders.07_Africa_Report09_Morocco.indd 17107_Africa_Report09_Morocco.indd 171 2/25/09 4:22:38 PM2/25/09 4:22:38 PM
  • 183. 172Country Report for MoroccoOUTSOURCINGTOAFRICAAll expenses incurred for the purpose of the business are normally deductible, includingsalaries and wages, depreciation, rent, and representation expenses. Only 75 per cent of theamount paid for purchases of raw materials and products, start-up expenses, donations, andother general expenses equal to or exceeding MDh 10,000 are deductible, unless the pay-ment is made by a non-assignable crossed check, bank transfer, or bill of exchange. Exceptfor the corporate tax (IS), taxes are deductible.Expenses incurred outside Morocco by a foreign company having permanent activity inMorocco require adequate justification and documentation before they may be deducted.Losses may be carried forward and deducted from taxable profit for a period of four years.A minimum amount of corporate tax is payable by companies other than foreign compa-nies (cotisation minimale or CM), irrespective of the company’s profits or losses. The CMis based on turnover, income from interest, subsidies, bonuses, or donations received. TheCM is levied at a rate of 0.5 per cent of income and is not payable by companies duringtheir first thirty-six months of operation.Registration FeesMorocco imposes a registration fee at a fixed rate of 0.50 per cent on the forming or increas-ing of company capital. This rate is reduced to 0.25 per cent for deeds of partnership orcapital increase of investment banks and companies the main purpose of which is eitherstocks and shares management or application for other companies on joint account.Subsidiaries of Foreign CompaniesSubsidiaries set up in Morocco by foreign companies are treated as local companies, inde-pendent of their foreign parent company for legal and taxation purposes. Inter-companytransactions must be on an arm’s length basis. Expenses must be incurred in the furtheringof the subsidiary’s objectives and not those of its parent company.Dividends paid to non-resident shareholders are subject to a 15 per cent withholding tax.Interest, royalties and service or management fees paid to non residents are subject to a10 per cent withholding tax. These rates may be reduced or waived under prevention ofdouble taxation treaties.National Solidarity LevyCompanies subject to corporate tax must pay a levy called National Solidarity Levy (PSN).The base used to asses this levy is equal to the base chosen for the assessment of corporatetax, and it is calculated by applying a 10 per cent rate to the amount of the corporate tax.If a company is fully exempt from corporate tax, PSN has to be paid in an amount of25 per cent to a theoretical corporate tax. The PSN cannot be less than MDh 1,500 for a07_Africa_Report09_Morocco.indd 17207_Africa_Report09_Morocco.indd 172 2/25/09 4:22:38 PM2/25/09 4:22:38 PM
  • 184. Country Report for Morocco173OUTSOURCINGTOAFRICAyearly turnover of less than MDh 1,000,000 and not less than MDh 3,000 for a turnover ofmore than MDh 1,000,000.Capital Gains TaxMorocco instituted a tax on the proceeds from stocks and company’s shares and comparableincome (TPT), distributed by companies based in Morocco and paying taxes on corpora-tions. The tax of 15 per cent is collected at the source and applies to the following:Dividends.Capital interest.Profit percentages.Special allowances or the payment of fees and other compensations allotted to mem-bers of the board of directors (except for the fraction of these compensations consid-ered as salary and subject to personal income tax-IGR).Sums levied on profits to repay capital produced to stockholders or to buy overstocks.Beneficiary/founder’s shares.Surpluses from winding up augmented by reserves built up over at least ten years.Profits made in Morocco by establishments whose home office is located abroad, asthese profits are made available to such companies abroad.Taxation of IndividualsIndividuals, regardless of nationality or activity, who have their habitual residence in Morocco,are subject to a personal income tax (impôt général sur le revenue or IGR) on their world-wide income on a progressive scale between 13 and 44 per cent. Individuals not having theirhabitual residence in Morocco are subject to tax only on Moroccan-source income. Habitualresidence status is established by reference to one of the following:Place of permanent abode.Centre of economic interest.Duration of stay in the country exceeding 183 days within any period of 365 days. Theissue of double taxation is partially addressed by tax treaties or unilateral relief in theform of tax credit.Generally speaking, there are no concessions for foreign nationals working in Morocco, butthe cost of home travel is exempt from tax every two years, and a substantial reduction in taxon pensions received from other countries is granted. In addition to employment income,tax is levied on professional and business activities, investments, and rent.All compensation paid to employees is taxable, including salaries and wages, allowances, pen-sions, annuities, reimbursement of taxes, and all benefits derived from employment. Taxable•••••••••••07_Africa_Report09_Morocco.indd 17307_Africa_Report09_Morocco.indd 173 2/25/09 4:22:38 PM2/25/09 4:22:38 PM
  • 185. 174Country Report for MoroccoOUTSOURCINGTOAFRICAbenefits include the furnishing of an automobile for the employee’s private use, housingbenefits, and profit sharing or retirement plans paid by foreign companies.An individual taxpayer can deduct from taxable income any necessary travelling and enter-tainment expenses, provided they are incurred in the performance of that individual’s dutiesand are justified by the nature of the profession.The Value Added Tax (VAT) is a non-cumulative tax levied at each stage of the productionand distribution cycle. Thus, suppliers of goods and services must add VAT to their netprices. Where the purchaser is also liable for VAT, input VAT may be offset against outputVAT. The standard VAT rate is 19 per cent and applies to all suppliers of goods and services,except those taxed at other rates or those who are exempt. A reduced rate of 7 per centapplies to specific items such as banking and credit services, leasing, gas, water and electric-ity. A reduced rate of 14 per cent applies to building and construction activities and to thetransport and hotel industries.Two types of exemptions from VAT are provided. The first is an exemption with credit, equiv-alent to the zero-tax concepts, which applies to exports, agricultural material and equipment,and fishing equipment. The second is an exemption without credit, i.e., the seller receivesno credit for input VAT paid. This exemption applies to basic foodstuffs, newspapers, andinternational transport services.A business tax, or patente, is levied on individuals and enterprises that habitually carryout business in Morocco. The tax consists of a tax on the rental value of business premises(rented or owned) and a fixed amount depending on the size and nature of the business.The tax rates range from 5 per cent to 30 per cent and pro rata reimbursements are grantedfor businesses which commence or cease activities during the tax year.The Patent Tax is to be paid by individuals involved in commercial activities who are notexempted by special decree (dahir). The tax includes a proportional tax which averages10 per cent of the rental value of industrial establishments and a variable tax which dependson the number and kind of pieces of equipment owned by the business entity.Stamp Duty/Notarial TaxCorporate stocks, founder’s shares, and bonds issued by companies are free from both stampduty and formalities. A notarial tax is imposed based on the capital stock, in the amount of1 per cent for stock up to MDh 5.000, 0.5 per cent from MDh 5,000 to 10,000 and 0.2 per centfor over MDh 10,000.Urban Property Tax and Municipal TaxOwners of real estate are subject to urban property tax on the rental value of the property. Thesame applies to owners of machines and appliances that are integral parts of the establishmentproducing goods or services. The general urban property tax rate is 13.5 per cent of the07_Africa_Report09_Morocco.indd 17407_Africa_Report09_Morocco.indd 174 2/25/09 4:22:39 PM2/25/09 4:22:39 PM
  • 186. Country Report for Morocco175OUTSOURCINGTOAFRICArental value. It is 3 per cent for lots and 4 per cent for structures and fittings as well as formachines and appliances.The tenants of rented property are subject to a municipal tax on the value of the property.The rate is 10 per cent of the normal rental value of the buildings located within the urbanareas and 6 per cent of the normal value on peripheral zones of urban communes.Tax on InterestTax is imposed on individual or corporate residents in respect of interest earned on bondsand other loan securities, fixed and current account deposits, loans and advances, and vari-ous loans conducted through banks or financial institutions.Customs DutiesAll goods and services may be imported; goods deemed to have a negative impact on nationalproduction, however, may require an import license. Most products imported are subjectto import duties, the rates of which vary between 2.5 per cent and 10 per cent for equip-ment, materials, spare parts and accessories. Some materials and products, however, areexempted, especially those imported under the investment charter, imported under customseconomic systems and those using renewable energies. Value-added tax is also payable ongoods imported into Morocco.The Import Tax Levy (PFI) is imposed on imported commodities at a fixed rate of 15 per cent.It is reduced or eliminated, however, as follows:A rate of 12.5 per cent for pharmaceuticals or raw materials used in the manufacturingof pharmaceuticals.Exemption for the import of material subject to customs duties.Exemption for enterprises which engage in research activities involving mineralsubstances.Exemption for materials using renewable energies.Exemption for fertilizer products.Exemption for certain antibiotic medical products.There is also a para fiscal tax of 0.25 per cent which applies to imported commodities.Treaties for the Prevention of Double TaxationSince a Moroccan resident is taxed on worldwide income, the Moroccan tax system providesrelief from foreign taxes paid on such worldwide income by means of a foreign tax credit.This foreign tax credit cannot exceed the Moroccan tax otherwise payable in respect of theforeign-source income.••••••07_Africa_Report09_Morocco.indd 17507_Africa_Report09_Morocco.indd 175 2/25/09 4:22:39 PM2/25/09 4:22:39 PM
  • 187. 176Country Report for MoroccoOUTSOURCINGTOAFRICAThe Moroccan government is eager to encourage foreign investment. This is reflected bythe territoriality principle for taxation applicable to corporations mentioned above. Inaddition, Morocco has concluded about seventeen treaties for the prevention of double taxa-tion, mainly with developed countries. Morocco’s list of treaty-partners include Belgium,Canada, France, Germany, Italy, Luxembourg, the Netherlands, Norway, Romania, Spain,Sweden, Tunisia, the United Kingdom, and the United States.Most of the tax treaties are based on the OECD model and do not contain specific anti-abuseprovisions. Reduced withholding tax rates vary from one treaty to another and in the caseof the treaty with Sweden, the rate is zero. Of special interest is the treaty with France whichoffers advantages involving self-employed foreigners and payments for technical assistanceand contracts (e.g., imported supplies).In short, taxes are heavy in Morocco and thus Morocco has the second lowest score in taxes.13. Investment Policy and IncentivesThe strategy for attracting off-shoring is in place.Being the central plank of the ‘Emergence’ program, Morocco’s ‘Off shoring’ strategy aimsat strengthening the country attractiveness by establishing an environment conducive to thisactivity, with a view to boosting investment and job creation. It enjoys long-term politicalstability and a business-friendly government, a good telecoms and ICT environment, plentyof well-trained multi-lingual graduates pool, and both geographical and cultural proximity toEurope, Morocco is well-positioned to secure a large share of the European BPO/ITO market.Our approach has therefore devised an aggressive action plan based on three pillars:State-of-the-art infrastructure and services.Skilled and widely available human resources.An attractive fiscal and incentive scheme.A specific scheme for companies established within dedicated zones. This encompasses an effec-tive overall 20 per cent income tax rate, in addition to the corporate tax relieves already includedin the investment charter for FDI (0 Corporate tax during first five years and 50 per cent breakafterwards, VAT exemption for exports, ~2.5 per cent customs, etc.) and a subsidy for training pur-poses to the tune of Dh65,000 ($7,000) per Moroccan recruit over the first three years of hire.In addition, the Investment Charter would apply to the following:Investments PolicyResident or non-resident foreign nationals are entitled to invest freely in Morocco; no invest-ment operation in Morocco requires any prior authorization from the Control ExchangeOffice. Prior to 1996, Morocco offered foreign investors a package of investment incentives•••07_Africa_Report09_Morocco.indd 17607_Africa_Report09_Morocco.indd 176 2/25/09 4:22:39 PM2/25/09 4:22:39 PM
  • 188. Country Report for Morocco177OUTSOURCINGTOAFRICAcontained in various investment codes in different areas of business such as exports, tourism,industrial, mining, maritime, handicraft, and real estate investments. Those codes have beenreplaced by a new Investment Charter, promulgated by Decree No.1-95-213 of November 8,1995. Effective as of January 1996, the new charter set up as a framework the main objectivesregarding the promotion and development of investments in Morocco within the nextten years. It also codified several existing regulations some of which have been implementedthrough their inclusion in the Corporate Tax Law in 1996. Further, the charter establishesthat benefits for investors under previously existing laws will be maintained until expirationof their term and of the conditions for which they had been granted.Investment IncentivesThe charter gives the same preference to all sectors except for agriculture. The top fivesectors Morocco is trying to develop are as follows:BankingIndustryHoldingsReal estateTradeSpecial incentives have been made available to attract these industries; these incentives dif-ferentiate between the installation phase and the operational phase of a company.Incentives offered for the Installation Phase are as follows:Exemption from formalities for land acquisition.Application of a registration fee of 2.5 per cent for acquisition formalities for land.Application of 0.5 per cent registration fee for inputs in capital formation of companiesor increases in capital.Reduced import dues (between 2.5 per cent and 10 per cent maximum ad valorem).Exemption from import tax levy (PFI).Patent tax is suppression of the variable tax and exemption due first five years ofoperation.Exemption of urban tax for first five years after the completion or installation of newbuildings.Exemption of reimbursement of VAT for equipment, material, and tools acquiredlocally or imported.Incentives for the Operational Phase are as follows:Profits and income liable to corporate tax are not subject to the National SolidarityContribution (PSN).••••••••••••••07_Africa_Report09_Morocco.indd 17707_Africa_Report09_Morocco.indd 177 2/25/09 4:22:39 PM2/25/09 4:22:39 PM
  • 189. 178Country Report for MoroccoOUTSOURCINGTOAFRICAProfits and income completely exonerated from corporate tax pay a contribution at arate of 25 per cent of the normal corporate tax.Exemption from corporate tax for exporting enterprises for five years.50 per cent reduction in corporate tax or income tax during the first five yearsthereafter.Enterprises are allowed to create an annual investment reserve free of tax.Application of sliding scale amortization for equipment.Exemption from real estate profits tax when premises are first ceded for use asaccommodation.In addition, special incentives are available to encourage companies to comply with environ-ment protection laws or to install environment protection equipment.14. Government Agencies Giving Support to OutsourcingIt appears that the best way to contact the government agencies is through the embassies inUK, USA, Germany, France, India or China, or alternatively, the director of the investmentdirectorate.15. Overall Assessment and RecommendationsOutlookWith less than 10 per cent of the French-speaking offshoring business having moved off-shore, there is little doubt that the offshoring sector still has a lot of growth potential for callcenters, BPO, and ITO. Indeed, Morocco could also develop knowledge process outsourcing(KPO) activities, which generate far more added value. This was evidenced in early 2006when European banking leader BNP Paribas announced it was stepping up its presence inMorocco by investing some Dh75m ($8.3 m) over the 2005–2009 period to develop ‘MedihaInformatique’ and ‘BDSI’, two local subsidiaries in charge of software development for thegroup. This move will create some 500 jobs. Other offshore software development opera-tions established in Morocco include Logica, Cap Gemini, Atos-Origin, and SQLI to namea few.16. Contact DetailsInvestment Directorate: Bernoussi, Director: Sbiti, Deputy Director:••••••07_Africa_Report09_Morocco.indd 17807_Africa_Report09_Morocco.indd 178 2/25/09 4:22:39 PM2/25/09 4:22:39 PM
  • 190. Country Report for Morocco179OUTSOURCINGTOAFRICA Embassies in UK, USA, Germany, France, India and ChinaEmbassy of Morocco: WashingtonAmbassador: M. Aziz MekouarChancellerie: 1601 - 21st Street N.W. Washington DC 20009Tel: (+1) 202-462-79-79; Fax: (+1) 202-462-76-43/62-35-77/62-13-27/62-65-01E-mail: embassy@moroccous.comWebsite: http://www.themoroccanembassy.comConsulate General of Morocco: New YorkConsul General: M. Mohamed KarmouneChancellerie: 10 East 40th Street 24 FloorNew York NY 10016Tel: (+1) 212-213-96-44; Fax: (+1) 212-725-41-98E-mail: info@moroccanconsulate.comWebsite: http://www.moroccanconsulate.comEmbassy of Morocco: LondresAmbassador: Mme. Chrifa Lalla Joumala AlaouiChancellerie: 49, Queen’s Gate GardensLondon SW7 5NE UKTel: (+44) 207-581-50-01 à 04; Fax: (+44) 207-225-38-62E-mail: General of Morocco: LondresConsul General: M.Chancellerie: Diamond House 97/99 Praed StreetPaddington-london W2-1NTTel: (+44) 207-724-07-19/06-24; Fax: (+44) 207-706-74-07E-mail: of Morocco: New DelhiAmbassador: M. Larbi MoukhariqChancellerie: 33, Archbishop Makarios MargNew Delhi-110003Tel: (+91) 11-24-63-69-24; Fax: (+91) 11-24-63-69-25E-mail: embassyofmorocco@rediffmail.comWebsite: http://www.moroccoembindia.comEmbassy of Morocco: BerlinAmbassador: M. Mohammed Rachad BouhlalChancellerie: Niederwallstr 39, 10117-BerlinTel: (+49) 30-20-61-240; Fax: (+49) 30-20-61-24-20E-mail: marokko-botschaft@t-online.deWebsite: 17907_Africa_Report09_Morocco.indd 179 2/25/09 4:22:40 PM2/25/09 4:22:40 PM
  • 191. 180Country Report for MoroccoOUTSOURCINGTOAFRICA Consulate General of Morocco: DusseldorfConsul General: M. Ahmed MesgguidChancellerie: Oststrasse 86-40210 DusseldorfAllemagneTel: 00-49 (+211) 65-04-510; Fax: 00-49 (+211) 65-04-51-51E-mail: consumadues@t-online.deConsulate General of Morocco: FrancfortConsul General: M. Fath-allah BencherifChancellerie: 49-Mittelweg-60318 Frankfurt/Am MainTel: (+49) 69-95-50-12-57/42; Fax: (+49) 69-95-50-12-55E-mail: info@consulatmarocfrankfort.deWebsite: http://www.consulatmarocfrankfurt.deEmbassy of Morocco: ParisAmbassador: M. El Mostapha SahelChancellerie: .5, Rue Le Tasse 75016 ParisTel: (+33) 1-45-20-69-35; Fax: (+33) 1-45-20-22-58E-mail: info@amb-maroc.frConsulate General of Morocco: ParisAmbassador: M. L’amb. Abderrazak JaidiChancellerie: 12, Rue De La Saida 75015 ParisTel: (+33) 1-56-56-72-00; Fax: (+33) 1-56-56-72-14E-mail: consulat-general-du-maroc2@wanadoo.frConsulate General of Morocco: BordeauxConsul General: M. Samir AddahreChancellerie: 12 Rue Mexico 33200 BordeauxCauderanTel: (+33) 5-56-02-42-21; Fax: (+33) 5-56-42-02-75E-mail: consumab2@wanadoo.frWebsite: www.cgmb-maroc.comConsulate General of Morocco: LyonConsul General: M. Mohamed BentajaChancellerie: 2-4 Rue Carry 69003 LyonTel: (+33) 4-72-36-96-17/30-07; Fax: (+33) 4-72-36-89-46E-mail: consulat-maroc-lyon@wanadoo.frWebsite: http://www.cgml.net07_Africa_Report09_Morocco.indd 18007_Africa_Report09_Morocco.indd 180 2/25/09 4:22:40 PM2/25/09 4:22:40 PM
  • 192. Country Report for Morocco181OUTSOURCINGTOAFRICA Consulate General of Morocco: MarseilleConsul General: M. Abdelmalek ChihebChancellerie: 22, Allee Leon Gambetta 13001MarseilleTel: (+33) 4-91-70-02-13/91-50-93-50; Fax: (+33) 4-91-50-86-09E-mail: cons.mars@wanadoo.frWebsite: http://www.consulat-maroc-marseille.frConsulate General of Morocco: StrasbourgConsul General: M. Mohammed Alaoui BelrhitiChancellerie: 7, Rue Erckmann-Chatrian 67000StrasbourgTel: (+33) 3-88-35-23-09; Fax: (+33) 3-88-35-68-51E-mail: consumastras@noos.frConsulate General of Morocco: ToulouseConsul General: M. Abdelkrim SmailiChancellerie: 57, Avenue Jean Rieux31500 ToulouseTel: (+33) 562-47-10-47; Fax: (+33) 562-47-04-00E-mail: cogematoulouse@wanadoo.frWebsite: http://www.consulatmaroc-toulouse.orgConsulate General of Morocco: BastiaConsul General: M. Driss BenamaraChancellerie: Route Nationale 193Casatorra-20620 Biguglia-BastiaPhone: (+33) 495-30-10-70; Fax: (+33) 495-30-71-86E-mail: consbast@fr.oleane.comConsulate General of Morocco: DijonConsul General: M. Salah RamiChancellerie: 26 Rue Louis de Broglie 21000 DijonTel: (+33) 3-80-56-64-23; Fax: (+33) 3-80-55-26-21E-mail: consulat-general-du-maroc@wanadoo.frWebsite: http://www.consulatmarocdijon.netConsulate General of Morocco: LilleConsul General: M. Mohammed Ali LazreqChancellerie: 20, Rue De Bourgogne 59000 LilleTel: (+33) 3-20-54-90-28; Fax: (+33) 3-20-15-12-31E-mail: consumalille@wanadoo.fr07_Africa_Report09_Morocco.indd 18107_Africa_Report09_Morocco.indd 181 2/25/09 4:22:40 PM2/25/09 4:22:40 PM
  • 193. 182Country Report for MoroccoOUTSOURCINGTOAFRICA Consulate General of Morocco: MontpellierConsul General: M. Sidi Abdelfattah El KadiriChancellerie: 16, Rue Remy Belleau B.P.55-103-34-072 Montpellier Cedex 3Tel: (+33) 4-67-06-88-30; Fax: (+33) 467-06-88-33E-mail: consumamontp@wanadoo.frConsulate General of Morocco: ColombesConsul General: M. Yahia BennaniChancellerie: 89 Rue des Gros Grès 92700Colombes-FranceTel: (+33) 1-56-83-80-20; Fax: (+33) 1-56-83-85-54E-mail: http://www.cgm-colombes.comConsulate General of Morocco: PontoiseConsul General: M. Said LahmiriChancellerie: 7, Rue Thiers, 95300 PontoiseTel: (+33) 1-30-30-32-26; Fax: (+33) 1-30-30-11-47E-mail: consulat-du-maroc@wanadoo.frWebsite: http://www.consulatmaroc-pontoise.frConsulate General of Morocco: RennesConsul General: M. Majid HalimChancellerie: 19, Bd De Sevigne 35 700 RennesTel: (+33) 2-99-27-54-00; Fax: (+33) 2-99-36-99-31E-mail: consumarenne@wanadoo.frWebsite: General of Morocco: VillemombleConsul General: M. Farhat BouazzaChancellerie: 40, Av. Du Raincy 93 250 VillemombleTel: (+33) 1-48-94-99-31; Fax: (+33) 1-48-94-99-21E-mail: contact@consulat-general-royaume-maroc.comConsulate General of Morocco: OrleansConsul General: Mme Faouz El AchchabiChancellerie: 6, Avenue ClaudeGuillemin 45100 OrleansTel: (+33) 2-38-24-92-31; Fax: (+33) 2-38-25-95-17E-mail: consulat.maroc.orleans@orange.frWebsite: 18207_Africa_Report09_Morocco.indd 182 2/25/09 4:22:40 PM2/25/09 4:22:40 PM
  • 194. Country Report for Morocco183OUTSOURCINGTOAFRICA Embassy of Morocco: PekinAmbassador: M. Jaafar Alj HakimChancellerie: 16 San Li Tun Lu–Beijing 100600, R.P. ChineTel: (+86) 10-65-32-14-89; Fax: (+86) 10-65-32-14-53E-mail: LinksThe World Fact book 2007. du Ministre Missions Textes Juridiques An2000 Plan Quinquennal ProjetsManifestations Contacts Liens Forum home- Plan Quinquennal 1999-2003. United NationsEconomic Commission for Africa (UNECA). Internet Usage and Marketing Report. Internet World Stats. News. USAID. 2005. for Education for All: Possibilities and Prospects in the Arab World. Hamid Behaj.; Education and Resource Network.http://www.mearn.orgCountry profile: Morocco. UNECA. Voices Collaborative Solutions (CIVICS). (Moroccan Government) Agencies:Foreign Exchange Office. Department.www.statistic-hcp.maTelecommunications Regulatory Agency (ANRT). Service. 18307_Africa_Report09_Morocco.indd 183 2/25/09 4:22:40 PM2/25/09 4:22:40 PM
  • 195. 184Country Report for MoroccoOUTSOURCINGTOAFRICA Ministry of Finance. Potable Water Authority (ONEP). Corporation (ONCF).http://www.oncf.maIntellectual Property Service (OMPIC). Authority (ONDA). Authority (ODEP). Control and Product Analysis Institute (EACCE). Energy Agency (CDER). Corporation (ONE). and Mining Agency (ONHYM).http://www.onhym.comNational Employment Promotion Agency (ANAPEC).http://www.anapec.orgEmployment Promotion and Professional Training Office (OFPPT). and Medium Sized Entreprises Agency (ANPME).http://www.anpme.maGOM Ministries.Prime Minister’s Department. of Foreign Affairs & Cooperation. 18407_Africa_Report09_Morocco.indd 184 2/25/09 4:22:41 PM2/25/09 4:22:41 PM
  • 196. Country Report for Morocco185OUTSOURCINGTOAFRICA Ministry of Communication. of Finance and Privatization. of Tourism, Ministry of Commerce, Industry and Economic Upgrading. of Justice. of Health.;Ministry of Agriculture, Rural Development, and Fisheries. of Education, Higher Education, and Scientific Research. Technology and Postal Services Department. of Energy and Mining. of Foreign Trade. of Housing & Urbanism. of Town and Country Planning, Water, and Environment. Investment Centers (RICs)The mission of the regional investment centres is the simplification of administrative proce-dures, the enhancement of communication with investors, and the promotion of investmentin respective regions.There are sixteen centers in Morocco, which are as follows (with names of directors) 18507_Africa_Report09_Morocco.indd 185 2/25/09 4:22:41 PM2/25/09 4:22:41 PM
  • 197. 186Country Report for MoroccoOUTSOURCINGTOAFRICA Agadir (Karim Lahlou)Tel: (+212) 48-82-69-77; Fax: (+212) 48-82-69-80E-mail: contact@cri_agadir.maWebsite: (temporarily down?)Chamber of Commerce and Industry and Services in Agadir.Website: Hoceim (Othman Badich)Tel: (+212) 39-39-98-39; Fax: (+212) 39-98-39-88E-mail: Othman.badich@caramail.comWebsite: (Abdelhamid Benelafdil)Tel: (+212) 22-48-18-88/22-48-21-15/22-48-18-54; Fax: (+212) 48-21-15E-mail: hbenelafdil@casainvest.maWebsite: (Mamay Bahiya)Tel: (+212) 48-89-85-35; Fax: (+212) 48-89-79-12Website: (Fouad Ouzzine)Tel: (+212) 55-65-20-57; Fax: (+212) 55-65-16-46E-mail: ouzzine@crifes.maWebsite: (Bari Bourqqia)Tel: (+212) 48-77-17-77; Fax: (+212) 48-77-14-44E-mail: bourqqia@netcourrier.comWebsite: (temp. down)Kenitra (Jamal Attari)Tel: (+212) 37-37-46-27; Fax: (+212) 37-37-45-36E-mail: info@kenitrainvesti.maWebsite: http://www.kenitrainvesti.maLaayoune (Ech Charki Ritab)Tel: (+212) 48-99-12-01; Fax: (+212) 48-89-11-79E-mail: echarkiritab@hotmail.comWebsite: 18607_Africa_Report09_Morocco.indd 186 2/25/09 4:22:41 PM2/25/09 4:22:41 PM
  • 198. Country Report for Morocco187OUTSOURCINGTOAFRICA Marrakesh (Abderrazaq Moumni)Tel: (+212) 44-42-04-93/44-42-04-92; Fax: (+212) 44-31-01-34E-mail: moumni@crimarrakech.maWebsite: (Hassan Bahi)Tel: (+212) 55-51-18-46/55-51-19-63; Fax: (+212) 55-51-39-22E-mail: (Farid Chourak???? *)Tel: (+212) 56-68-28-27/56-68-57-45**; Fax: (+212) 56-69-06-81Chourak.farid@caramail.comE-mail: crioujda@orientalinvest.maWebsite:, (Nabil Kharoubi)Tel: (+212) 37-73-13-07; Fax: (+212) 37-70-25-94E-mail: info@rabatinvest.maWebsite: www.rabatinvest.maSafi/Doukalla/Abda (Mohamed Lemrabet)Tel: (+212) 44-61-01-54/44-61-21-40/44-61-21-39; Fax: (+212) 44-61-01-58E-mail:, lemrabet@safi-invest.comWebsite: (Jelloul Samsseme)Tel: (+212) 23-72-37-61; Fax: (+212) 23-72-36-81E-mail: jsamsseme@hotmail.comWebsite: (temp. down?)Tadla/Azilal (Ahmed El Haouti)Tel: (+212) 23-48-20-72; Fax: (+212) 23-48-23-13E-mail: criatizad@yahoo.frWebsite: (Mohamed Yacoubi)Tel: (+212) 39-94-68-24; Fax: (+212) 39-94-33-14Website: www.tangiers-tetouaninvest.ma07_Africa_Report09_Morocco.indd 18707_Africa_Report09_Morocco.indd 187 2/25/09 4:22:41 PM2/25/09 4:22:41 PM
  • 199. 188Country Report for MoroccoOUTSOURCINGTOAFRICA Professional AssociationsInvestment Division, Moroccan Economic and General Affairs Ministry. Centrale de Garantie.http://www.ccg.maBouskoura Industrial Estate. Free Zone.http://www.tangiersfreezone.comTangiers Mediterranean Special Agency.http://www.tmsa.maCGEM (Moroccan Employers Federation).http://www.cgem.maONA Group. Clothing and Textile Association. Exporters Association.http://www.asmex.orgMoroccan Export Promotion Center. Foreign Trade Council. Export Site. Chambers of Commerce, Industry and ServicesCasablanca98, Boulevard Mohamed V, CasablancaTel: (+212) 22-26-43-27; Fax: (+212) 22-26-84-36 18807_Africa_Report09_Morocco.indd 188 2/25/09 4:22:41 PM2/25/09 4:22:41 PM
  • 200. Country Report for Morocco189OUTSOURCINGTOAFRICA Rabat1, rue Ghandi, RabatTel: (+212) 37-70-64-42; Fax: (+212) 37-70-64-66, rue Hariri et Ibn Tagmia BP 411, TangerTel: (+212) 39-94-63-80; Fax: (+212) 39-94-63-88MarrakeshJnan El Harti, Gueliz BP 529, MarrakechTel: (+212) 44-43-61-91; Fax: (+212) 44-43-52-56E-mail: ccismar@menara.maAgadirAvenue Hassan II, BP 420, AgadirTel: (+212) 48-84-71-24; Fax: (+212) 48-84-54-55http://www.ccis-agadir.comFezBoulevard Abdellah Chefchaouni, BP 2032, FèsTel: (+212) 55-62-28-32; Fax: (+212) 55-62-68-84Information Technology (IT) ContactsAssociation of IT Professionals. website. purchasing service provider. Technopark. (under construction as of 5-Jun-07)IT News in Morocco. to the computer industry in Morocco. Telecommunications Regulatory Agency. 18907_Africa_Report09_Morocco.indd 189 2/25/09 4:22:41 PM2/25/09 4:22:41 PM
  • 201. 190Country Report for MoroccoOUTSOURCINGTOAFRICA Government department responsible for postal services, telecommunications and IT. ContactsMoroccan Call Center Trade Show. on call centers in Morocco. news in Morocco. of IT Professionals. and Mining ContactsNational Hydrocarbon and Mines Agency (ONHYM). Electricity Corporation. Ministry of Energy and Mining. Phosphate Corporation. Acid Shipping Company. Phosphates Research Center. Industry Federation. Hydrocarbon and Mines Agency. Renewable Energy Center (CDER). 19007_Africa_Report09_Morocco.indd 190 2/25/09 4:22:42 PM2/25/09 4:22:42 PM
  • 202. Country Report for Morocco191OUTSOURCINGTOAFRICA Banking and Finance ContactsMoroccan Ministry of Finance and Privatization. Stock Exchange. de Dépôt et de Gestion (CDG) group. Federation of Micro credit Associations. Exchange Office. Al Maghreb (Moroccan Postal Service). finance gateway. Ministry of Commerce and Industry. Ministry of Communication. Profiles News Planet 19107_Africa_Report09_Morocco.indd 191 2/25/09 4:22:42 PM2/25/09 4:22:42 PM
  • 203. 192Country Report for MoroccoOUTSOURCINGTOAFRICA Morocco Site Brief for Morocco/Future Plans 19207_Africa_Report09_Morocco.indd 192 2/25/09 4:22:42 PM2/25/09 4:22:42 PM
  • 204. 193OUTSOURCINGTOAFRICACountry Report for BotswanaDisclaimerThis short Country Report, a result of a larger Survey of ICT Outsourcing in Africa, provides a general over-view of the current activities and issues related to ICT Outsourcing in the country.The data presented hereshould be regarded as illustrative rather than exhaustive. ICT Outsourcing is at a particularly dynamic stagein Africa with new developments and announcements happening on a daily basis somewhere or the otheron the continent.Therefore, these reports should be seen as ‘snapshots’ that were current at the time theywere taken; it is expected that certain facts and figures presented may become outdated very quickly.The findings, interpretations, and conclusions expressed herein are a faithful representation of the respond-ents of the interviews and secondary data collected. Strict analysis has been carried out with the minimalinfluence of the authors/team members. References to data sources have been made as far as possible. Inthe case of the detailed data parameters used for scores and ranking, the same data source and timelinehas been used for all the fifteen countries compared. In the descriptive section of the country reportsall data received from the individual country has been used in order to give as complete an assessmentas possible. Thus these countries that have provided more information have a better coverage than thosewho have not been able to provide data to the research team.Board of Executive Directors of the CBC or Cyber Media cannot guarantee the accuracy of the dataincluded in this work. The boundaries, colours, denominations, and other information shown on any mapin this work do not imply on the part of the CBC and Cyber Media any judgment of the legal status ofany territory or the endorsement or acceptance of such boundaries.It is expected that individual Country Report from the Survey of ICT Outsourcing in Africa will be updatedin an iterative process over time, based on additional research and feedback received through the CBCand Cyber Media website.ANGOLA ZAMBIA LakeKaribaKasaneZIMBABWENAMIBIAS O U T H A F R I C AGABORONEMaunFrancistownBobonongSeroweMahalapyeKalahari DesertTshabongGhanziMamuno0 50 100 km0 50 100 mi08_Africa_Report09_Botswana.indd193 19308_Africa_Report09_Botswana.indd193 193 2/25/09 4:24:31 PM2/25/09 4:24:31 PM
  • 205. 194Country Report for BotswanaOUTSOURCINGTOAFRICA1. Overview (ICT, Policies, and Outsourcing)Botswana is a small, dynamic country with visionary leadership particularly in the sector ofICTs in all facets of life. Not only does it boast a liberal telecom policy, its education andnational ICT policies are linked to a broader economic vision for the country. Moreover,in practice, Botswana arguably boasts the highest PC penetration in education institutionsin Africa. The government has committed financial resources to improve connectivity andpromote the educational use of ICTs. This gives Botswana a strong potential for a sustainableoutsource destination. Whether all related labour, telecommunications, and other policieslook at outsourcing as a priority is not clear. Outsourcing is just another task among manyin the field of ICT.2. Botswana’s Position in Africa’s Fifteen CountriesBotswana is the first in the upcoming band of countries from the outsourcing attractivenesspoint of view. The following map and table show where Botswana is positioned.Morocco *MoroccoTunisia *Geographical Coverage and RankTunisiaEgypt *EgyptSenegal *SenegalGhanaGhanaNigeriaNigeriaUgandaUgandaKenyaKenyaTanzaniaTanzaniaZambiaZambiaMozambique MozambiqueBotswanaBotswanaNamibiaNamibiaSouthAfricaSouth AfricaMauritiusAfrica*Non-Commonwealth CountriesMauritius08_Africa_Report09_Botswana.indd194 19408_Africa_Report09_Botswana.indd194 194 2/25/09 4:24:32 PM2/25/09 4:24:32 PM
  • 206. Country Report for Botswana195OUTSOURCINGTOAFRICAThe contributing scores and ranks are as under.OverallBand Score (PS & BE) Rank in BandUpcoming 6.57 FirstInfrastructureScore Rank Band6.1 8 UpcomingWhile achieving this score for ‘Infrastructure’, Botswana has been third and fourth, respec-tively, in the scores for road and rail network and cost of space and has fallen to eleventhand twelfth in electricity availability, telecommunications and data tariffs. In all others Bot-swana is average.People and Skills (PS)Score Rank3.215 6In the case of ‘People and Skills’, Botswana has done well in human resource cost and worksatisfaction (fourth and fifth among fifteen countries), whereas for quantity it has fallen totwelfth position. In all other scores Botswana is average.Business Environment (BE)Score Rank3.357 5Botswana is in the second place in tax rates, geo political and legislative risk, third placein ease and cost of finance, fourth place in share of services in GDP, and fifth in foreignexchange reserves. On the other hand it has fallen to twelfth position in ICT Security, CyberLaws, and IPR. In the case of currency risk, the score is as low as thirteen.08_Africa_Report09_Botswana.indd195 19508_Africa_Report09_Botswana.indd195 195 2/25/09 4:24:37 PM2/25/09 4:24:37 PM
  • 207. 196Country Report for BotswanaOUTSOURCINGTOAFRICA3. Country, Political, and Economic ProfileSalient features are as followsArea: 582,000 sq km.Population: 1.8 million.Cities: Gaborone (pop. 186,007).Other towns: Francistown, Selebi-Phikwe, Molepolole, Kanye, Serowe, Mahalapye, Lobatse,Maun, Mochudi.Terrain: Desert and savannah; Mostly subtropical.Education: Adult literacy (81%).GDP (2007 est.): $26 billion. Growth 4.8%.Per capita GDP (2007 est.): $5846.Industry types: Mining, diamonds, copper, nickel, coal, tourism, textiles, construction, beefprocessing, chemical products production, food and beverage production.Trade (2007) (Exports—$7.2 billion): Diamonds, nickel, copper, meat products, textiles, hides,skins, and soda ash.Partners: EU, South Africa.Major markets: South Africa.Imports ($4.2 billion): Machinery, transport equipment, manufactured goods, food,chemicals, fuels.Major suppliers: South Africa, EU, and US.Natural resources: Diamonds, copper, nickel, coal, soda ash, salt, gold, potash.Agriculture products (1.7% of real GDP, 2006/2007): livestock, sorghum, white maize, millet,cowpeas, beans.Government type: Republic.Independence: 30 September 1966.Constitution: March 1965.Branches (Executive): President (Chief of state and head of Government).Legislative: Popularly elected National Assembly; advisory House of Chiefs.Judicial: High Court, Court of Appeal, local and customary courts, industrial labour court.Administrative subdivisions: Five town councils and nine district councils.Major political parties: Botswana Democratic Party (BDP)—48 seats, Botswana NationalFront (BNF)—12 seats, Botswana Congress Party (BCP)—1 seat, Botswana Alliance Movement(BAM)—0 seats.Ruling political party: Botswana Democratic Party (BDP)—48 seatsPrincipal opposition parties: Botswana National Front (BNF)—12 seats, Botswana CongressParty (BCP)—1 seat, Botswana Alliance Movement (BAM)—0 seats.Suffrage: Universal at 18.08_Africa_Report09_Botswana.indd196 19608_Africa_Report09_Botswana.indd196 196 2/25/09 4:24:37 PM2/25/09 4:24:37 PM
  • 208. Country Report for Botswana197OUTSOURCINGTOAFRICA4. Principal Government OfficialsFrom the present till the end of 2009, when the next election takes place, the politicalleadership is as follows:President: Lt. Gen. (retired) Seretse Khama Ian Khama.Vice-President: Lt. Gen. (retired) Mompati S Merafhe.Foreign Affairs and International Cooperation: Phandu TC Skelemani.Trade and Industry: Daniel Neo Moroka.Ministry of Communications Science Technology: Pelonomi Venson-Moitoi.5. Foreign RelationsBotswana puts a premium on economic and political integration in southern Africa. It seeksto make SADC a working vehicle for economic development and promotes efforts to makethe region self-policing in terms of preventative diplomacy, conflict resolution, and goodgovernance.Botswana joins the African consensus on most major international matters and is a memberof international organizations such as the United Nations and the African Union (AU). In2008, Botswana has taken a leadership role within SADC. Botswana has most favoured Nationpartnerships with many countries.6. Security and Safety PerceptionsLiving conditions in Botswana are comfortable, as most of the areas are safe. However,wherever one stays some moderate caution is necessary. There are a few suburbs that couldbe avoided. The following pointers give an indication of the situation and hints on how toremain safe:Petty crime and ‘smash and grab’ robberies from vehicles are a significant concern inBotswana.Visitors must be vigilant and take common sense security precautions and avoid displayof wealth.Adequately equipped emergency rooms and trained physicians are available in thecapital, but services are rudimentary elsewhere.Medical attention and evacuation to South Africa in emergencies is expensive andadequate. Valid medical insurance cover is essential.Civil unrest and disorder are rare. However, people should avoid crowds, political ral-lies, and street demonstrations and maintain security awareness at all times.Crime is a significant concern in Botswana. Visitors must be vigilant and take commonsense security precautions. The criminal threat is very similar to that of any large urbanarea. Petty street crime and crimes of opportunity, primarily the theft of money and••••••08_Africa_Report09_Botswana.indd197 19708_Africa_Report09_Botswana.indd197 197 2/25/09 4:24:37 PM2/25/09 4:24:37 PM
  • 209. 198Country Report for BotswanaOUTSOURCINGTOAFRICApersonal property, are not uncommon. Home invasions ‘smash and grab’ from vehicles,and cell phone thefts, often at knife point, are routinely reported to the police.Since February 2008, rolling electric power outages have left many areas withoutpower for several hours each week. This situation is likely to continue. Visitors areurged to carry flashlights. All must be aware of how power outages might affect homesecurity systems, garage doors and gates, and the adverse elements do take advantageof such situations.There has been a positive improvement in the situation over the last six months whenspecial steps have been taken to improve the policing and security services.7. ICT Policy, Infrastructure, and ServiceA National ICT Policy was approved by parliament in 2007 with the following programmesamong others to support the outsourcing environment:Economic Development & Growth of the ICT SectorInfrastructure and SecurityLegislation and PolicyBasic ICTBotswana has a large ICT base of about two hundred million US dollars (2005 estimates).There are adequate capabilities in the local industry to support computers, networks,large servers and all allied hardware, software, and systems. This is due to the majorcomputerisation in the government and private sector players big and small. Most ofthe ICT services in the government and private sector are run by outsourced serviceproviders; thus outsourcing is well known and understood by the industry.The ICT sector is supported by a ministry, a regulator, ICT departments, and a fullygovernment-owned telecommunications corporation. Civil society associations to supportthe interests of the ICT community are virtually absent. The established Botswana Infor-mation Technology Society (BITS) is almost inactive and the association for citizen-ownedbusiness in IT is just a lobby for citizen-owned businesses to gain a larger reserved shareof the government ICT market. The government is going in for aggressive localisationat the cost of basic needs of reliable service delivery.Local and Overseas Data Communication LinksAs of 2006 major liberalisation policies have been approved; however, the implementa-tion is yet to take place fully. Most of the major links that a medium size or large out-source centre would need as of now would have to be routed through the national serv-ice provider, the Botswana Telecommunication Corporation (BTC), which at presenthas capability and capacity constraints to provide a basic service level.••••••••08_Africa_Report09_Botswana.indd198 19808_Africa_Report09_Botswana.indd198 198 2/25/09 4:24:37 PM2/25/09 4:24:37 PM
  • 210. Country Report for Botswana199OUTSOURCINGTOAFRICAAccurate estimates of the cost of such links could not be obtained as the BotswanaTelecommunications Authority refrained from giving an estimate. The estimatesobtained from possible suppliers and reported in reviews carried out for policy andstrategy exercises indicate that the cost of a one-megabyte link through satellite is ashigh as USD 3250 per month and for a terrestrial link USD 6000 per month. The BTChas recently quoted USD 3714 per month.Thus until the overseas links like the Seacom, EASSy, and Infraco project are complete, noimprovement will be possible. In addition, till the service levels of BTC in providing thenational linkages or some big operator taking these over and running them well comesup, it is expected that this may take till 2010 when the overseas links will come up.Physical InfrastructureCost: There is no shortage of space with all facilities necessary to support the outsourc-ing activity. The costs are competitive with any in Africa.Office market: Extensive development in Gaborone in the early 2000s coincided withslowing economic growth and a resultant decrease in demand. In 2005, approximately35 per cent of new office space was vacant. Rents fell by up to 20 per cent between2004 and 2006. A recent upswing in the economy has created increased demand, help-ing rents to stabilise and grow for high quality accommodation. There is currently noquality large space available. Development of smaller buildings is resuming based onhigher rental returns.Retail market: Oversupply and cooling market conditions caused rents to fall by up to25 per cent between 2003 and 2006. Most major retailers are South African; they havebeen concentrating on their booming domestic market and have not seen Botswanaconsumer demand as affording an opportunity for growth. However, the recent upturnin the economy has led to the stabilisation of rents and the take-up of vacant space.Very little prime space is currently available in Gaborone.Industrial market: The cooling market saw rents fall by up to 15 per cent between 2004and 2006. Economic uplift and the influx of foreign direct investment, especially inthe diamond-producing sector, have caused an increase in demand and a stabilisationof rents, especially for hi-tech properties. Current low rents mean that it is currentlyuneconomic to construct new accommodation. Rents will rise on the back of increas-ing demand.Residential market: The economic slowdown of 2003/4 led to disinvestment and anexodus of companies and personnel, causing house values to stagnate, with some areasseeing a 30 per cent fall in both values and rental levels, together with significantincreases in void periods. Since the end of 2006, there has been an uplift in the econ-omy and with it an increase in demand, to the extent that there is now a shortage ofquality stock. However, high building costs will continue to make it unviable to buildto rent, until rental levels increase.Diamond and Innovation Hub: With the Diamond Hub and the Innovation Hub com-ing up the value of property may rise, but there are unlikely to be shortages or abnor-mally high prices.••••••••08_Africa_Report09_Botswana.indd199 19908_Africa_Report09_Botswana.indd199 199 2/25/09 4:24:38 PM2/25/09 4:24:38 PM
  • 211. 200Country Report for BotswanaOUTSOURCINGTOAFRICARents and Yields:Prime rents Prime yieldsOffices US$ 13 per sq m per month 12%Retail US$ 23 per sq m per month 11.5%Industrial US$ 3 per sq m per month 14%Residential US$ 2,500 per month* 15%*Four bed room executive house—prime locationElectricity shortages: From February 2008 for about three years there is a serious short-age of electric power and any outsourcing facility will need 100 per cent power backupin terms of diesel generators.8. ICT and BPO Industry EnvironmentMost of the ICT services in the government and private sector are run by outsourcedservice providers.Botswana has practiced outsourcing in its government and corporate ICT operationsover a decade. It has, however, not offered outsourcing in an organised manner to theoutside world.Software development and support services have been delivered by companies inBotswana to other African countries. Sporadic ICT projects have been done by Botswanacompanies (not necessarily citizen owned) for other African countries and even forsome UK clients. However, it is unorganised and not measurable.Limited call centre industry has come up, supporting local industry like HIV and AIDScounselling, BTC, and other services. Two of the call centre operators have stated thatthey are getting contracts from multinational companies to set up large—by Botswanaperceptions—500-seat call centres.The International Financial Services Centre (IFSC) has been in operation since 2001but has attracted thirty-seven investors out of which only nineteen are operational.Figures for employment generation or export earnings are not available.In short the international outsourcing efforts of the Botswana industry is small.Best environment where government honours all its commitments allowing free flowof foreign exchange and excellent tax conditions.9. Human Resource Efficiency and CostBotswana has one of the smallest populations in the set of fifteen countries assessed inthe study. Thus, it will be very difficult for Botswana to provide all the human resourcesnecessary to run large outsource operations.••••••••••08_Africa_Report09_Botswana.indd200 20008_Africa_Report09_Botswana.indd200 200 2/25/09 4:24:38 PM2/25/09 4:24:38 PM
  • 212. Country Report for Botswana201OUTSOURCINGTOAFRICAYoung workers are of a very high quality, sincerity, honesty, and capability and aretrained in the best schools in Botswana or abroad. Yet they are small in numbers, andthere are many opportunities for them in government and local industry because ofthe reservations and localisation policies.The inward-looking immigration policies make recruitment of the necessary expatriatehuman resources very difficult as no analysis of human resource needs is done. Forexample, modern, developed, and heavily populated nations carry out internal surveysto determine what skills are available and what are not.The Botswana IFSC has taken the initiative with the Botswana Accountancy College torun special courses to generate suitable human resources for the BPO industry.Botswana ranks sixth in the combined ‘Human Resource’ score that covers quantityand working satisfaction, quality, ICT exposure, education, language, and domain skills,personnel, and cost of living.10. Legal and Enforcement IssuesCyber Laws and Their EnforcementThe National ICT Policy recommended the enactment of a comprehensive set of lawsand acts (of which Cyber crime and computer related crimes act had been enacted)to make transactions in cyberspace safe. It also recommended the establishment of amechanism to enforce such laws.Other related acts like the acts necessary for digital signatures, electronic transactions,etc., are yet to be enacted.For outsourcing to flourish, especially in the financial services sector that Botswana isproud of, these acts and related enforcement mechanisms need to be put in place assoon as possible.The Intellectual Property LegislationIt is administered by the Office of Registrar of Companies, Copyright, and IndustrialProperty in the Ministry of Trade and Industry.IP is covered under the Industrial Property Act and the Copyright and NeighbouringRights Act.11. Labour and Expatriate Worker’s PermitsThere is one application form for work and residence permits with the following factorsconsidered in assessing the application: availability of suitable candidates in the labourmarket and whether the applicant meets the requirements for the job.Turnaround time for processing applications is approximately six weeks.•••••••••••08_Africa_Report09_Botswana.indd201 20108_Africa_Report09_Botswana.indd201 201 2/25/09 4:24:38 PM2/25/09 4:24:38 PM
  • 213. 202Country Report for BotswanaOUTSOURCINGTOAFRICA12. Revenue, Tax, and Repatriation IssuesIn Botswana, manufacturing industry qualifies for a company tax rate of 15 per centinstead of the usual 25 per cent. Further concessions in the tax rate up to as low as nilfor a period of five to ten years is possible under the ‘Development Approval Order’.In this case a specific concession is given to an industry that will give the industry azero tax rate for five to ten years. This is applicable if the order is obtained/negotiatedbefore starting the operations. Industries that contribute to employment and trainingof citizens, make provision for eventual replacement of non-citizens, provide for par-ticipation of Botswana citizens in management—area where the business is located andthe business contributes to the reduction of price of consumer goods.Capital can be moved without restriction in Botswana, and there are no foreign exchangecontrols and profits; dividends and capital can be readily repatriated.13. Investment Policy and IncentivesTo encourage companies to train their employees, companies are allowed a deductionof 200 per cent of their training expenditure in determining their taxable income.14. Agencies Giving Support to OutsourcingThe Government of Botswana encourages any investment in the establishment of anindustry by assistance in setting up the infrastructure, licensing procedures, immigra-tion, and customs formalities through the Botswana Investment and Export Develop-ment and Investment Authority (BEDIA) ( is an autonomous private sector-led organisation mandated by an act ofparliament (1997) to encourage, promote, and facilitate the establishment of export-oriented enterprises and selected services which will result in economic diversifica-tion, rapid economic growth, and creation of sustained employment opportunities; it isentrusted with the task of identifying market outlets for locally manufactured productsand constructs factory buildings for setting up of manufacturing enterprises. BEDIAalso works closely with the Government of Botswana to ensure that the country has apositive investment climate.BEDIA investment guide recognises service as an industry but does not clearly indicateif delivering service is manufacturing. For example, development of software is as noblean industry as any manufacturing industry but would be deemed to be service.The Government of Botswana recognises International Financial Services and has setIFSC (, an agency whose role is to establish and developBotswana as a world-class hub to facilitate the delivery of a wide range of cross-borderfinancial services to clients in other countries.The Botswana Innovation Hub (BIH) ( is a recent initiative thatwill encourage high-end outsourcing activities for innovative output in Information andCommunications Technologies (ICT), mining technologies, energy, and Biotechnology.••••••••08_Africa_Report09_Botswana.indd202 20208_Africa_Report09_Botswana.indd202 202 2/25/09 4:24:38 PM2/25/09 4:24:38 PM
  • 214. Country Report for Botswana203OUTSOURCINGTOAFRICAIt promises linkages with the local university and intellectual organisations. BIH plansto be a true singe point facilitation centre for high-level technology investments.15. Overall Assessment and RecommendationsThe country should address the shortage of electricity and reduce its power depend-ence on other countries. It is understood that some projects are in hand, but, perhaps,greater attention is necessary.The standard of ICT services and service quality available to individuals of small andmedium industries is questionable. In practice it is very difficult for such small-scaleoperators to deliver services due to the absence of reliable support. It is expected thatthe facilities in the BIH will address this problem when the BIH is operational.At present it will be worthwhile for very large multinationals of status who can negotiatewith the government attractive terms for all the needs like infrastructure, people andskills, and business environment facilities and carry out a large operation. The govern-ment is used to such deals and honours all the commitments made.From the Botswana angle, investment promotion agencies could best look for suchpartners and try to attract them to set up operations in Botswana.16. Contact DetailsInvestment Promotion Agency (ies)Botswana Innovation Hub, Ministry of Communications, Science and TechnologyP/Bag 00414Gaborone, BotswanaTel: (+267) 39133281/3907466; Fax: (+267) 3913289Botswana International Financial Services Centre, Fairgrounds Office ParkOff Machel DriveP/Bag 160Gaborone, BotswanaTel: (+267) 3605000; Fax: (+267) 3913075Botswana Export Development and Investment AuthorityP.O. Box 3122 GaboronePlot 28, Matsitama RoadTel: (+267) 3181931; Fax: (+267) 3181941Website:••••08_Africa_Report09_Botswana.indd203 20308_Africa_Report09_Botswana.indd203 203 2/25/09 4:24:39 PM2/25/09 4:24:39 PM
  • 215. 204Country Report for BotswanaOUTSOURCINGTOAFRICA ICT Industry Promotion Agency/MinistryMinistry of Communications, Science and TechnologyP/Bag 00414Gaborone, BotswanaTel: (+267) 3907230; Fax: (+267) 3907230/3907207Revenue AgencyBotswana Unified Revenue ServicesP/Bag 0013, Plot 53976Kudumatse RoadGaborone, BotswanaTel: (+267) 36395101; Fax: (+267) 3951918Company Affairs AgencyRegistrar of CompaniesP.O. Box 102Gaborone, BotswanaTel: (+267) 3188754; Fax: (+267) 3188310Labour and Residence Permits Agency/Ministry/DepartmentCommissioner of Labour and Social SecurityDepartment of Labour and Social SecurityMinistry of Labour and Home AffairsP/Bag 0072Gaborone, BotswanaTel: (+267) 3611500; Fax: (+267) 3952427Department of Immigration and CitizenshipP.O. Box 942Gaborone, BotswanaTel: (+267) 36113900; Fax: (+267) 3914289U.S., UK, Germany, France, China, and Indian MissionEmbassy of Botswana in Washington1531-1533 New Hampshire Avenue, NW Washington D.C. 20036United StatesWashington DCTel: (+1) 202-244-4990; Fax: (+1) 202-244-4164Website: http://www.botswanaembassy.org08_Africa_Report09_Botswana.indd204 20408_Africa_Report09_Botswana.indd204 204 2/25/09 4:24:39 PM2/25/09 4:24:39 PM
  • 216. Country Report for Botswana205OUTSOURCINGTOAFRICA Botswana Consulate in New York, United States, Botswana Permanent Mission to the UNNew York, 154 East 46th StreetNew York, NY, 10016Tel: (+212) 8892277; Fax: (+212) 7255061Botswana Consulate in Atlanta, United StatesConsulate General of Botswana in Atlanta, United States5580 Queens Borough Drive, NEAtlanta, Georgia 30338United StatesAtlantaTel: (+1) 770-394-3303Botswana Consulate in Houston, United StatesConsulate of Botswana in Houston, United States10000 Memorial Drive, Suite, 400Houston, Texas 77024United StatesHoustonTel: (+1) 713-680-1155; Fax: (+1) 713-680-8055Botswana Consulate in Los Angeles, United StatesConsulate of Botswana in Los Angeles, United States355 S. Grand Avenue, Suite 4000Los Angeles, California 90071United StatesLos AngelesTel: (+1) 213-626-8484Botswana Consulate in San Francisco, United StatesConsulate of Botswana in San Francisco, United2333 Octavia StreetSan Fancisco, California 94109United StatesSan FranciscoTel: (+1) 415-885-2733High CommissionerHigh Commission of the Republic of BotswanaF-8/3, Vasant Vihar, New Delhi-110057IndiaTel: (+91) 11-46537000; Fax: (+91) 11-4603619108_Africa_Report09_Botswana.indd205 20508_Africa_Report09_Botswana.indd205 205 2/25/09 4:24:39 PM2/25/09 4:24:39 PM
  • 217. 206Country Report for BotswanaOUTSOURCINGTOAFRICA Embassy of Botswana in ChinaChancery: Unit 811, IBM Tower Pacific Century Place # 2A Gong Ti BeiluBeijing P.R. ChinaTel: (+86) 10-65391616; Fax: (+86) 10-65391199E-mail: Info@botswanaembassy.combotchin@gov.bwUseful LinksThe World Fact book 2007. Ibid.WITFOR. 2005., A. and S. Oestmann. Universal Access and Service for Botswana Program forInternet and ICT Workshop. August 2006. Grand Palm, Gaborone. World Fact book 2007. of Botswana ICT Landscape., P. et al. “Improving the Quality of Literacy Learning in the Content Areas:Situational Analysis of Secondary Level Education in Botswana.” 2005. UNESCO. Challenge Project Data. 20608_Africa_Report09_Botswana.indd206 206 2/25/09 4:24:39 PM2/25/09 4:24:39 PM
  • 218. Country Report for Botswana207OUTSOURCINGTOAFRICA Kajevu, Z. “BOCODOL to Improve Learner Support Services.” Mmegi, Tuesday19 October, 2004.’s Investors Service 2007 credit rating report on Botswana. Business 2009 report by World Bank. profile by Foreign and Commonwealth Office. Country Overview by Capital Resources (Pty) Ltd. 20708_Africa_Report09_Botswana.indd207 207 2/25/09 4:24:39 PM2/25/09 4:24:39 PM
  • 219. 08_Africa_Report09_Botswana.indd208 20808_Africa_Report09_Botswana.indd208 208 2/25/09 4:24:39 PM2/25/09 4:24:39 PM
  • 220. 209OUTSOURCINGTOAFRICACountry Report for GhanaDisclaimerThis short Country Report, a result of a larger Survey of ICT Outsourcing in Africa, provides a generaloverview of current activities and issues related to ICT Outsourcing in the country.The data presented hereshould be regarded as illustrative rather than exhaustive. ICT Outsourcing is at a particularly dynamic stagein Africa with new developments and announcements happening on a daily basis somewhere or the otheron the continent.Therefore, these reports should be seen as ‘snapshots’ that were current at the time theywere taken; it is expected that certain facts and figures presented may become outdated very quickly.The findings, interpretations, and conclusions expressed herein are a faithful representation of the respondentsof the interviews and secondary data collected from the countries and published literature. Strict analysishas been carried out with the minimal influence of the authors/team members. References to data sourceshave been made as far as possible. In the case of the detailed data parameters used for scores and ranking,the same data source and timeline has been used for all the fifteen countries compared. In the descriptivesection of the country reports all data received from the individual country has been used in order to giveas complete an assessment as possible. Thus those countries that have provided more information have abetter coverage than those who have not been able to provide data to the research team.Board of Executive Directors of the CBC or Cyber Media cannot guarantee the accuracy of the dataincluded in this work. The boundaries, colours, denominations, and other information shown on any mapin this work do not imply on the part of the CBC and Cyber Media any judgement of the legal status ofany territory or the endorsement or acceptance of such boundaries.It is expected that individual Country Report from the Survey of ICT Outsourcing in Africa will be updatedin an iterative process over time, based on additional research and feedback received through the CBCand Cyber Media website.B U R K I N A F A S OBolgatangaTamaleKumasiHoAsamankeseNsawamTarkwa TemaCape CoastTakoradiBight ofBeninLakeVoltaCOTED’IVOIREBENINACCRATOGOGulf of Guinea0 50 100 km0 50 100 mi09_Africa_Report09_Ghana.indd 20909_Africa_Report09_Ghana.indd 209 2/25/09 4:25:27 PM2/25/09 4:25:27 PM
  • 221. 210Country Report for GhanaOUTSOURCINGTOAFRICA1. OverviewThe Republic of Ghana is a country in West Africa. It borders Côte d’Ivoire (Ivory Coast) tothe west, Burkina Faso to the north, Togo to the east, and the Gulf of Guinea to the south.The word Ghana means ‘Warrior King’,[4] and was the source of the name ‘Guinea’ that isused to refer to the West African coast (as in Gulf of Guinea).Ghana was inhabited in pre-colonial times by a number of ancient kingdoms, including theGa-Da_mes on the eastern coast, inland Empire of Ashanti, and various Fante states alongthe coast and inland. Trade with European states flourished after contact with the Portu-guese in the fifteenth century, and the British established a crown colony, Gold Coast, in1874.[5]Upon being the first sub-Saharan African nation to achieve independence from the UnitedKingdom in 1957[6], the name Ghana was chosen for the new nation to reflect the ancientEmpire of Ghana that once extended throughout much of western Africa.Ghana is a country located on the Gulf of Guinea, only a few degrees north of the Equator,therefore, giving it a warm climate. The Greenwich Meridian also passes through Ghana,specifically through the industrial city of Ghana-Tema; so it is said that Ghana is geographi-cally closer to the ‘centre’ of the world than any other country. The coastline is mostly alow, sandy shore backed by plains and scrubl and intersected by several rivers and streams.Formerly, a tropical rainforest belt, broken by heavily forested hills and many streams andrivers, extended northward from the coast, but most of the rainforest was felled in the twen-tieth century, leaving scattered remnants, principally in the southwest, some of which areunder protection. North of this belt, the land is covered by low bush, park-like savannah,and grassy plains.The climate is tropical. The eastern coastal belt is warm and comparatively dry (see DahomeyGap); the southwest corner, hot and humid; and the north, hot and dry. Lake Volta, theworld’s largest artificial lake, extends through large portions of eastern Ghana.09_Africa_Report09_Ghana.indd 21009_Africa_Report09_Ghana.indd 210 2/25/09 4:25:30 PM2/25/09 4:25:30 PM
  • 222. Country Report for Ghana211OUTSOURCINGTOAFRICA2. Ghana’s Position in Africa’s Fifteen CountriesGhana is in the second position and is in the upcoming band of countries from the out-sourcing attractiveness point of view. The following map and table show where Ghana ispositioned among the fifteen studied countries.Morocco *MoroccoTunisia *Geographical Coverage and RankTunisiaEgypt *EgyptSenegal *SenegalGhanaGhanaNigeriaNigeriaUgandaUgandaKenyaKenyaTanzaniaTanzaniaZambiaZambiaMozambique MozambiqueBotswanaBotswanaNamibiaNamibiaSouthAfricaSouth AfricaMauritiusAfrica*Non-Commonwealth CountriesMauritiusContributing scores and ranks are as under.OverallBand Score (PS & BE) RankUpcoming 6.32 SecondInfrastructureScore Rank Band6.2 6 UpcomingWhile achieving the sixth position in score for ‘Infrastructure’, Ghana is sixth in electric-ity availability, seventh in telecommunications and data transfer costs, seventh in networkreadiness, fourth in infrastructure cost, tenth in availability and penetration, and ninth inthe road and rail network.09_Africa_Report09_Ghana.indd 21109_Africa_Report09_Ghana.indd 211 2/25/09 4:25:30 PM2/25/09 4:25:30 PM
  • 223. 212Country Report for GhanaOUTSOURCINGTOAFRICAPeople and Skills (PS)Score Rank3.543 2Ghana is the second in the case of ‘People and Skills’, being seventh in quantity, ninth forquality, and eighth in working satisfaction, and last in ICT exposure. It has ranked first inhuman resource costs and tenth in education, language, and domain skills.Business Environment (BE)Score Rank2.781 12Ghana has ranked twelfth in this lower-level abstraction. In achieving this position it hascome seventh in ICT security, Cyber, and IPR laws, and eleventh in share of services in GDP.Ghana has the eleventh highest foreign exchange reserves and is the fourth in ease and costof finances, fourteenth for exports and share of ICT, and eighth in legislative risk. In thetax rate Ghana is eighth, and in share of services in exports it has come twelfth. Ghana hascome twelfth in both geopolitical risk and currency risk.3. Country, Political, and Economic ProfileArea: 238,538 sq km (92,100 sq mi); about the size of Illinois and Indiana combined.Cities: Capital—Accra (metropolitan area pop. 3 million estimate).Other cities: Kumasi (1 million est.), Tema (500,000 estimate), Sekondi-Takoradi(370,000 estimate).Terrain: Plains and scrubland, rainforest, savannah.Climate: Tropical.Population (2007 estimate): 22.50 million.Education: Years compulsory—9.Literacy: 53.7 per cent.GDP: (2007): $10.7 billion.Per capita GDP (2007): $485.Growth: 2 per cent.Industry: Mining, lumber, light manufacturing, fishing, aluminium, tourism.Trade (2006): Exports—$3.9 billion; cocoa ($1.26 billion), gold, timber, diamonds, andmanganese.Major markets: Nigeria, China, the United States, UK, Germany, Togo, France, Netherlands,and Spain.Imports: $6.8 billion; petroleum ($1.3 billion), food, industrial raw materials, machinery,and equipment.09_Africa_Report09_Ghana.indd 21209_Africa_Report09_Ghana.indd 212 2/25/09 4:25:30 PM2/25/09 4:25:30 PM
  • 224. Country Report for Ghana213OUTSOURCINGTOAFRICA Major trade partners: Nigeria, China, the United States, UK, Germany, Togo, France,Netherlands, and Spain.Natural resources: Gold, timber, diamonds, bauxite, manganese, fish.Agriculture Products: cocoa, coconuts, coffee, tea, cork and wood manufactures, pineapples,cashews, spices, other food crops, and rubber.Land: 70 per cent arable and forested. By West African standards, Ghana has a relatively diverseand rich natural resource base.Minerals: principally gold, diamonds, manganese ore, and bauxite are produced and exported.In 2007, a major oil discovery off the coast of Ghana led to greater multinational interestin entering the Ghanaian market. Ghana’s industrial base is relatively advanced comparedto many other African countries.Key economic challenges include the following:Overcoming infrastructure bottlenecks, especially in energy and water.Poor management of natural resources; improving human resource capacity anddevelopment.Establishing a business and investment climate that encourages and allows privatesector-led growth, and privatizing remaining state-owned enterprises, several of whichare significant budget liabilities.Government type: Republic.Independence: 6 March 1957.Branches: Executive—President popularly elected for a maximum of two four-year terms;Council of State, a presidential appointed consultative body of twenty-five members required bythe constitution.Legislative: Unicameral parliament popularly elected for four-year terms.The 1993 constitution that established the Fourth Republic provided a basic charter for therepublican democratic government. The constitution calls for a system of checks and bal-ances, with power shared between a president, a unicameral parliament, an advisory Councilof State, and an independent judiciary.4. Principal Government OfficialsPresident: John Agyekum Kufuor.Vice-President: Alhaji Aliu Mahama.Minister of Foreign Affairs: Nana Akufo-Addo.Minister MCIT1: Alan Kyeremateng.•••1Ministry of Communications and Information Technology09_Africa_Report09_Ghana.indd 21309_Africa_Report09_Ghana.indd 213 2/25/09 4:25:31 PM2/25/09 4:25:31 PM
  • 225. 214Country Report for GhanaOUTSOURCINGTOAFRICA5. Foreign RelationsGhana is active in the United Nations and many of its specialized agencies, as well as theWorld Trade Organization, the Nonaligned Movement, the African Union (AU), and theEconomic Community of West African States (ECOWAS). Generally, Ghana follows the con-sensus of the Non-aligned Movement and the AU on economic and political issues that donot directly affect its own interests. Ghana is a critically important peacekeeping partner; itis the largest African peacekeeping contributor nation to multinational peacekeeping opera-tions (PKO) and the sixth-largest among all peacekeeping contributing nations.It has large contingents deployed in Democratic Republic of the Congo (DRC), the Darfurregion of Sudan, Lebanon, Liberia, and Cote d’Ivoire, with smaller contingents deployed inChad, Western Sahara, Kosovo, Southern Sudan, and Georgia. Ghana contributes militaryand police personnel to UN Peacekeeping Operations outside of Africa, including nearly900 troops to the UN Interim Force in Lebanon.6. Living, Security, and Safety PerceptionsPickpocketing, purse snatching, and various types of scams are common forms of crime con-fronting visitors. Travellers have reported these types of theft at crowded markets, beaches,parks, and tourist attractions.Incidents of violent crime, such as armed robbery, do take place; there are reports of armedrobberies in expatriate residential areas.Use of credit cards in Ghana should be avoided, if possible, as a growing number of travel-lers have been victims of credit card fraud.Another type of fraud is committed by persons claiming to live in Ghana or who claim tobe travelling to Ghana on business, and who profess friendship or romantic interest overthe Internet.Medical facilities in Ghana are limited, particularly outside Accra, the capital. Travellersshould carry adequate supplies of any needed prescription medicines, along with copies oftheir prescriptions, the generic name of the drugs, and a supply of preferred over-the-countermedications. Medical insurance is essential.Primary roads are generally paved and well maintained. However, some side roads withinmajor cities and roads outside of major cities are in poor condition.09_Africa_Report09_Ghana.indd 21409_Africa_Report09_Ghana.indd 214 2/25/09 4:25:31 PM2/25/09 4:25:31 PM
  • 226. Country Report for Ghana215OUTSOURCINGTOAFRICA7. ICT Policy, Infrastructure, and ServiceGhana’s ICT PolicyGhana ICT For Accelerated Development (ICT4AD), 2003Sets out Vision for Ghana in information age.Expanding bandwidth.Establishment of Technology Parks.Well-educated workforce with ever-improving computer literacy.Political instability.Proactive government policy towards DFI.Establishment of IT-Enabled Services Secretariat of Ministry of Communication to pro-mote and facilitate Ghana’s BPO potential.A scan of Ghana’s ICT performance as measured by the World Bank is shown as follows:Telecommunications Revenue, 2000–06Percentage of GDPGhana Sub-Saharan Africa Region2000432102001 2002 2003 2004 2005 2006Price of Call to the United States, 2000–05US$ per 3 minutesGhana Sub-Saharan Africa Region86422000 2001 2002 2003 2004 20050••••••••09_Africa_Report09_Ghana.indd 21509_Africa_Report09_Ghana.indd 215 2/25/09 4:25:31 PM2/25/09 4:25:31 PM
  • 227. 216Country Report for GhanaOUTSOURCINGTOAFRICAICT Access Indicators, 2000–06Number per 100 peopleFixed + mobile subscribersInternet usersPCs30201002000 2001 2002 2003 2004 2005 2006Physical InfrastructureOffice market: In the capital city of Accra, a number of major high-rise office buildingshave been developed in the last ten years by the Social Security and National InsuranceTrust (SSNIT), a state pension fund. All these buildings are fully let. Alternative goodquality office accommodation is difficult to find although a number of smaller newoffice buildings are planned.Retail market: Retailing in Accra has until recently been a combination of the estab-lished old-style central city locations together with street traders. Opening shortly, how-ever, will be the first shopping mall, which will have anchor tenants including Gameof Africa and Shoprite. The centre extends to some 20,000 sq m and will undoubtedlybecome a major force, which will help with the emergence of other competing retailschemes.Industrial market: Small-scale industrial concerns continue to dominate the Accra mar-ket where there is little demand for high-quality buildings. The historical agriculturalbase of the economy generates little demand for industrial premises. Should offshoreoil or gas fields of sufficient commercial quantities be discovered, Accra will undergoa renaissance similar to that experienced in other similar countries.Residential market: High-quality houses are continuing to be developed in the bestresidential areas where the demand for housing is very strong. Many of the sites beingdeveloped comprise larger plots which are now being subdivided. Rental levels are nowrising, having been stagnant throughout 2006. A three bed-room house in a gated com-munity would typically cost circa US$ 300,000, whilst a four bed-room house would sellfor circa US$ 350,000. Many of the purchasers are non-resident Ghanaians.••••09_Africa_Report09_Ghana.indd 21609_Africa_Report09_Ghana.indd 216 2/25/09 4:25:32 PM2/25/09 4:25:32 PM
  • 228. Country Report for Ghana217OUTSOURCINGTOAFRICAPrime rents Prime yieldsOffices US$ 14 per sq m per month 10.00%Retail US$ 20 per sq m per month 8.00%Industrial US$ 3 per sq m per month 12.00%Residential US$ 4,000 per month* 11.00%*four bedroom executive house--prime location(Source: Knight Frank LLP)8. ICT and BPO Industry EnvironmentAlthough Ghana comes after Botswana in the outsourcing attractiveness score, it has a verystrong BPO and outsourcing industry. BPO was a $128.8 billion market in 2005 and is fore-cast to be a $191.3 billion market by 2010 (Gartner). Offshore IT industry is growing at21per cent and IT-enabled services at 49 per cent.Some BPO/KPO services in place are as follows:24-hour call centre operationsProfessional development supportOutsourced servicesMicrosoft Navision ERP SolutionsHR & Payroll solutionsCustom business software built on Microsoft NavisionFinancial Analysis & ReportingCash Book and General Ledger A/CInventory ManagementPurchasing & Payable ManagementFixed Asset ManagementMulti-currency functionality9. Human Resource Efficiency and CostThe human resources in Ghana are the most cost-effective but need to improve in quality,ICT exposure, language, and domain skills.India US/UK *GhanaAverage per agent labour costs per month $400 $2,084 $233Labour costs as percentage of total costs 33% 67% 22%Total costs assuming 150 agents $2,181,818 5,598,805 $1,112,481Annual cost savings for Ghana operations vs. India $1,069,337*Estimated(Source: Data Monitor CRM Research Program)••••••••••••09_Africa_Report09_Ghana.indd 21709_Africa_Report09_Ghana.indd 217 2/25/09 4:25:32 PM2/25/09 4:25:32 PM
  • 229. 218Country Report for GhanaOUTSOURCINGTOAFRICA10. Legal and Enforcement IssuesThe protection of intellectual property is a fluid area of law in Ghana but efforts havebeen made recently to give protection to a variety of intellectual property under bothlocal and international law of WIP and the English-speaking African Regional IndustrialProperty Organization (ESARIPO).11. Labour and Expatriate Workers PermitsAn investment of US$ 10,000 to $100,000 entitles an enterprise to two automatic immi-grant quotas. An investment of US$ 500,000 and above gives an enterprise four auto-matic immigrant quotas. Expatriates can be applied for, but it is incumbent on theinvestor to justify why a foreigner must be employed rather than a Ghanaian. There areno restrictions on issuing of work and residence permits to investors and employees.US$100,000US$500,00Less than US$ 500,00 paid-up capitalFrom US$ 500,000 paid-up capital2 quotas/persons4 quotas/persons1 quota/personLess than US$ 100,000 paid-up capitalUS$10,000IMMIGRANT QUOTAS FOR EXPATRIATE PERSONNEL12. Revenue, Tax & Repatriation IssuesEstablished capital market with free transferability of profits, dividends, and capital.There are no restrictions on the conversion and transfer of funds once there is docu-mentary evidence to support it. Ghanaian cedis are fully exchangeable with foreigncurrencies and Ghana’s investment the investor the transfer, in convertible currency,out of Ghana of the following:Dividends or net profits attributable to the investment; payments for loan servicingwhere a foreign loan has been obtained; transfer fees.The remittance of proceeds in the sale or liquidation of the enterprise.Corporate tax is 35 per cent for all sectors except income from non-traditional exports,which is 8 per cent (noteworthy in the case of the ICT sector). Location incentivesusing tax rebates are also allowance in the form of accelerated depreciation. Allowanceis also applicable in all sectors except banking, finance, commerce, insurance, mining,•••••••09_Africa_Report09_Ghana.indd 21809_Africa_Report09_Ghana.indd 218 2/25/09 4:25:32 PM2/25/09 4:25:32 PM
  • 230. Country Report for Ghana219OUTSOURCINGTOAFRICAand petroleum. All imports are subject to import. The sales tax of 15 per cent wasreplaced by a value-added sales tax (VAT) of 10 per cent.Currency risk is a problem, but it is much better than in Botswana or South Africa13. Investment Policy and IncentivesIncentives under Ghana Investment Promotion Centre (GIPC) Act are as follows:Sector-specific tax holidays ranging from 3–10 years.Automatic immigrant quotas for expatriate personnel depending on paid-up capital;additional quotas on request.14. Government Agencies Giving Support to OutsourcingEstablishment of IT-Enabled Services Secretariat of Ministry of Communication to pro-mote and facilitate Ghana’s BPO potential.The GIPC was re-established as a government agency under the GIPC Act 1994 [Act478]. Its role is to encourage, promote, and facilitate investments in all sectors of theeconomy excluding mining, petroleum, free-zone activities, privatization of governmententerprises, and portfolio investment.15. Overall Assessment and RecommendationsMany ICT-training institutions like India-Ghana Kofi Annan Centre of Excellence, GTUniversity College, IPMC, and several others. (There is need to set up and enforcequality standards for the industry.)Ghana needs a legal and regulatory framework that will take advantage of the rapidlychanging technologies, promote innovation, and enhance consumer choices, whilereinforcing fair competition in the industry.Focus of on-going reforms is on regulating cyber activities to address promotion ofelectronic commerce, protection of intellectual property, data protection and security,dealing with cyber fraud, and generally integrating Ghana into info age.16. Contact DetailsInvestment Promotion Agency (s)The Chief ExecutiveGhana Investment Promotion CentreAddress: P.O. Box M.193, Accra–GhanaTel: (+233) 21-665125-9; Fax: (+233) 21-663801E-mail:••••••••09_Africa_Report09_Ghana.indd 21909_Africa_Report09_Ghana.indd 219 2/25/09 4:25:35 PM2/25/09 4:25:35 PM
  • 231. 220Country Report for GhanaOUTSOURCINGTOAFRICA Office of the PresidentTel: 666392/665415; Fax: 666392Ministry for Private Sector DevelopmentTel: 678361E-mail: Export Promotion CouncilTel: 228830/228813; Fax: 668263/233725E-mail: gepc@ighmail.comGhana Free Zones BoardTel: 780537/780532-5; Fax: 780534/6E-mail: National Petroleum CorpTel: (+022) 206020; Fax: (+022) 205499Minerals CommissionTel: 772783/772786; Fax: 773324EMPRETEC Ghana LtdTel: 226090/231238; Fax: 231239E-mail: Tourist BoardTel: 231779/222153; Fax: 231779E-mail: Trade Fair Company LtdTel: 775187/776613-5; Fax: 772012E-mail: gtfc@ighmail.comMinistry of CommunicationsTel: 229870; Fax: 229786Ministry of Foreign AffairsTel: 664951-3/664621; Fax: 665363Ministry of Trade, Industry and Presidential InitiativesTel: 665421; Fax: 662428Customs, Excise & Preventive ServiceTel: 666841-2; Fax: 668263Website: http://www.cepsghana.org09_Africa_Report09_Ghana.indd 22009_Africa_Report09_Ghana.indd 220 2/25/09 4:25:35 PM2/25/09 4:25:35 PM
  • 232. Country Report for Ghana221OUTSOURCINGTOAFRICA Ghana Immigration ServiceTel: 221667; Fax: 226996Internal Revenue ServiceTel: 664961; Fax: 664938Registrar General’s DepartmentTel: 666469; Fax: 6662043Electricity Company of GhanaTel: 664941/676747; Fax: 6662626E-mail: ecgho@ghana.ghGhana TelecomTel: 200215-6; Fax: 667979Ghana Water Company LtdTel: 666781-5; Fax: 663552E-mail: Civil Aviation AuthorityTel: 776171/777320; Fax: 773293E-mail: gcaa@ighmail.comGhana Ports and Harbours AuthorityTel: (022) 202632-9; Fax: (022)204136Ghana Standards BoardTel: 501495/501937; Fax: 5000092E-mail: gsbnimo@ghana.comNational Communications AuthorityTel: 776621/771701; Fax: 763449E-mail: of Ghana IndustriesTel: 779023-4/779793; Fax: 773143E-mail: Stock ExchangeTel: 669908/669914; Fax: 669193E-mail: Implementation CommitteeTel: 772049/773119; Fax: 773126E-mail: 22109_Africa_Report09_Ghana.indd 221 2/25/09 4:25:35 PM2/25/09 4:25:35 PM
  • 233. 222Country Report for GhanaOUTSOURCINGTOAFRICA Embassy of Ghana in China, France, Germany, India, UK, USAEmbassy of Guyana in Beijing, China8, San Li Tun LuBeijing 100600ChinaTel: (+86) (10) 6532-1319/1544; Fax: (+86) (10) 6532-3602Embassy of Ghana in France8, villa Saïd - 75116 ParisTel:; Fax: of Ghana in Washington DC3512 International Drive NW,Washington DC 20008United StatesCity: Washington DCTel: (+202) 686-4520 to 4526; Fax: (+202) 686-4527Website: info@ghanaembassy.orgGhanaian Consulate in New YorkGhana Permanent Mission to the UN19 East 47th StreetNew York, NY 10017United StatesTel: (+212) 832-1300; Fax: (+212) 751-6743(Office hours: Mondays through Thursdays; 9:30 a.m. to 3:00 p.m.)Ghanaian Consulate in HoustonThe Honorary Consulate of GhanaJack M. Webb (Honorary Consul of Ghana)3434 Locke LaneHouston, Texas 77027Tel: (+713) 960-8806; Fax: (+713) 960-8833(Office hours: Working hours; 9 a.m. to 5 p.m. [by appointment only])09_Africa_Report09_Ghana.indd 22209_Africa_Report09_Ghana.indd 222 2/25/09 4:25:35 PM2/25/09 4:25:35 PM
  • 234. Country Report for Ghana223OUTSOURCINGTOAFRICAUseful LinksThe World Fact book 2007. Brief: Ghana. World Bank. 2007.,,menuPK:351962~pagePK:141132~piPK:141107~theSitePK:351952,00.html“Beyond Scarcity: Power, Poverty, and the Global Water Crisis.” Human DevelopmentReport 2006. 2006. UNDP. System. IAU, World Higher Education Database. n.d. Education Profile: Ghana. n.d. World Bank., Ghana“The Ghana ICT for Accelerated Development (ICT4AD) Policy”. The Republic ofGhana. 2003. an African e-Index: SME e-Access and Usage. 2006. 22309_Africa_Report09_Ghana.indd 223 2/25/09 4:25:36 PM2/25/09 4:25:36 PM
  • 235. 09_Africa_Report09_Ghana.indd 22409_Africa_Report09_Ghana.indd 224 2/25/09 4:25:36 PM2/25/09 4:25:36 PM
  • 236. 225OUTSOURCINGTOAFRICACountry Report for ZambiaDisclaimerThis short Country Report, a result of a larger Survey of ICT Outsourcing in Africa, provides a general over-view of the current activities and issues related to ICT Outsourcing in the country.The data presented hereshould be regarded as illustrative rather than exhaustive. ICT Outsourcing is at a particularly dynamic stagein Africa with new developments and announcements happening on a daily basis somewhere or the otheron the continent.Therefore, these reports should be seen as ‘snapshots’ that were current at the time theywere taken; it is expected that certain facts and figures presented may become outdated very quickly.The findings, interpretations, and conclusions expressed herein are a faithful representation of the respondentsof the interviews and secondary data collected from the countries and published literature. Strict analysis hasbeen carried out with the minimal influence of the authors/team members. References to data sources havebeen made as far as possible. In the case of the detailed data parameters used for scores and ranking, thesame data source and timeline has been used for all the fifteen countries compared. In the descriptive sec-tion of the country reports, all data received from the individual country has been used in order to give ascomplete an assessment as possible. Thus in this part those countries that have provided more informationhave a better coverage than those who have not been able to provide data to the research team.Board of Executive Directors of the CBC or Cyber Media cannot guarantee the accuracy of the dataincluded in this work. The boundaries, colours, denominations, and other information shown on any mapin this work do not imply on the part of the CBC and Cyber Media any judgement of the legal status ofany territory or the endorsement or acceptance of such boundaries.It is expected that individual Country Reports from the Survey of ICT Outsourcing in Africa will be updatedin an iterative process over time, based on additional research and feedback received through the CBCand Cyber Media website.ZIMBABWELUSAKANAMBIATANZANIADEMOCRATICREPUBLIC OF THECONGOBOSTWANAMonguNdolaSolweziMufuliraKitweLivingstoneKabweKapiri MposhiChipata MALMOZKasamaMpulunguMatingaHillsLakeMweruLakeTanganyikaLakeBangweuluLakeKanbaLuapulaZambeziZambezi251015 1530250 100 200 Km0 100 200 KmANGOLA10_Africa_Report09_Zambia.indd 22510_Africa_Report09_Zambia.indd 225 2/25/09 4:26:24 PM2/25/09 4:26:24 PM
  • 237. 226Country Report for ZambiaOUTSOURCINGTOAFRICA1. OverviewThe Republic of Zambia is a landlocked country in southern Africa. The neighbouring countriesare the Democratic Republic of the Congo to the north, Tanzania to the north-east, Malawi tothe east, Mozambique, Zimbabwe, Botswana, and Namibia to the south, and Angola to the west.The capital city is Lusaka, located in the south-east of the country. The population is concen-trated mainly around the capital Lusaka in the south and the Copper belt to the north-west.Zambia has been inhabited for thousands of years by hunter gatherers and migrating tribes. Aftersporadic visits by European explorers starting in the eighteenth century, Zambia was graduallyclaimed and occupied by the British a as protectorate of Northern Rhodesia towards the end ofthe nineteenth century. On 24 October 1964, the protectorate gained independence with thenew name of Zambia, derived from the Zambezi River which flows through the country. Afterindependence the country moved towards a system of one-party rule with Kenneth Kaunda as thepresident. Kaunda dominated Zambian politics until multi-party elections were held in 1991.Zambia’s economy has been traditionally dominated by the copper mining industry; however,the government has recently been pursuing an economic diversification programme. Duringthe 1970s, the country began sliding into a poverty from which it has not recovered. Zambia’stotal foreign debt exceeded $6 billion in 2000; the growing population strains the economicgrowth and HIV/AIDS is widespread. The average per capita income is US$ 800 (WorldBank, 2007), placing Zambia as one of the world’s poorest countries. About 51 per cent ofthe population is reportedly living on less than one dollar per day.2. Zambia’s Position in Africa’s Fifteen CountriesZambia is in the third position in the yet upcoming band of countries from the outsourcingattractiveness point of view. The map and table below show where Zambia is positioned inamong the fifteen studied countries.Morocco *MoroccoTunisia *Geographical Coverage and RankTunisiaEgypt *EgyptSenegal *SenegalGhanaGhanaNigeriaNigeriaUgandaUgandaKenyaKenyaTanzaniaTanzaniaZambiaZambiaMozambique MozambiqueBotswanaBotswanaNamibiaNamibiaSouthAfricaSouth AfricaMauritiusAfrica*Non-Commonwealth CountriesMauritius10_Africa_Report09_Zambia.indd 22610_Africa_Report09_Zambia.indd 226 2/25/09 4:26:25 PM2/25/09 4:26:25 PM
  • 238. Country Report for Zambia227OUTSOURCINGTOAFRICAContributing scores and ranks are as under.OverallBand Score (PS & BE) RankUpcoming 5.91 ThirdInfrastructureScore Rank Band5.5 12 UpcomingWhile achieving the twelfth position in score for ‘Infrastructure’, Zambia is fifth in electric-ity availability, ninth in telecommunications and data transfer costs, fourteenth in networkreadiness, eleventh in infrastructure cost, eleventh in availability and penetration, twelfth inthe road/rail network and air travel, and tenth in international Internet bandwidth.People and Skills (PS)Score Rank2.884 12Zambia is the twelfth in the case of ‘People and Skills’, being eleventh in quantity, fourteenthfor quality, fourteenth in working satisfaction, and eleventh in ICT exposure; it has rankedthirteenth in human resource costs and twelfth in education, language, and domain skills.Business Environment (BE)Score Rank3.026 8Zambia is ranked eighth in this lower level abstraction. In achieving this position it hascome fourteenth in ICT security, Cyber and IPR laws, thirteenth in share of services in GDP.Zambia has the fourteenth highest foreign exchange reserves and is the tenth in ease andcost of finances, fifteenth for share in ICT in exports, and ninth in legislative risk. In thetax rate, Zambia is the lowest, and in share of services in exports it has come last. Zambia’sposition is sixth and eleventh respectively in geopolitical risk and currency risk.10_Africa_Report09_Zambia.indd 22710_Africa_Report09_Zambia.indd 227 2/25/09 4:26:26 PM2/25/09 4:26:26 PM
  • 239. 228Country Report for ZambiaOUTSOURCINGTOAFRICA3. Country, Political, and Economic ProfileGeographyArea: 752,614 sq km (290,585 sq mi); slightly larger than Texas.Cities: Capital—Lusaka (population approx. 1 million).Other cities: Kitwe, Ndola, Livingstone, Kabwe.Terrain: Varies; mostly savannah plateau land.Climate: Generally dry and temperate.PeopleNationality: Zambian(s) (noun and adjective).Population (2006): Approx. 11.9 million.Annual growth rate (2006): 1.6 per cent.Ethnic groups: More than seventy ethnic groups.Religions: Christian, indigenous beliefs, Muslim, Hindu.Languages: English (official), about seventy local languages and dialects, including Bemba, Lozi,Kaonde, Lunda, Luvale, Tonga, and Nyanja.Education: No compulsory education; seven years of free education.Literacy: Women—60.6 per cent; men—81.6 per cent.Health: Infant mortality rate 102/1,000.Life expectancy: Thirty-seven years.HIV prevalence (15–49): 17 per cent.Work force: Agriculture—75 per cent.Mining and manufacturing: 6 per cent.Services: 19 per cent.Government type: Republic.Independence: 24 October 1964.Constitution: 1991 (as amended in 1996).Branches: Executive—President (Chief of state and head of government), cabinet.Legislative: Unicameral National Assembly.Judicial: Supreme Court, High Court, magistrate courts, and local courts.Ruling political party: Movement for Multi-party Democracy (MMD).Suffrage: Universal adult.Subdivisions: Nine provinces subdivided into seventy-two districts.EconomyGDP (2007, current prices): $11.4 billion.Annual growth rate (2008, preliminary): 6 per cent.Per capita GDP (2006, current prices): $956.10_Africa_Report09_Zambia.indd 22810_Africa_Report09_Zambia.indd 228 2/25/09 4:26:26 PM2/25/09 4:26:26 PM
  • 240. Country Report for Zambia229OUTSOURCINGTOAFRICA Natural resources: Copper, cobalt, zinc, lead, coal, emeralds, gold, silver, uranium, hydroelectricpower, fertile land.Agriculture: Products—corn, sorghum, rice, groundnuts, sunflower seeds, vegetables,horticultural products, tobacco, cotton, sugar cane, livestock, coffee, and soya beans.Industry types: Mining, transport, construction, foodstuffs, beverages, chemicals, and textiles.Trade (2007): Exports—$4.3 billion; copper, cobalt, lead, and zinc, cut vegetables, cotton,tobacco.Major markets: South Africa, United Kingdom, Tanzania, Malawi, Zimbabwe, Japan.Imports ($3.6 billion): Crude oil, refined petroleum products, manufactured goods, machinery,transport equipment, foodstuffs, chemicals.Major suppliers: South Africa, China, Tanzania, United Kingdom.Major donors: Donors provided $1.4 billion in development assistance to Zambia in 2007.The World Bank is Zambia’s largest multilateral donor. Other key multilateral donors includethe International Monetary Fund (IMF), the European Union, UN agencies, and the AfricanDevelopment Bank. Counting direct bilateral assistance and assistance through multilateralagencies, the United States is Zambia’s largest country donor.People: Zambia’s population comprises more than Bantu-speaking ethnic groups. Some ethnicgroups are small, and only two have enough people to constitute at least 10 per cent of thepopulation. Most Zambians are subsistence farmers. The predominant religion is a blend oftraditional beliefs and Christianity; Christianity is the official national religion. Expatriates, amajority of whom are British (about 15,000) and South African, live mainly in Lusaka and inthe Copperbelt in northern Zambia, where they are employed in mines and related activities.Zambia also has a small but economically important Asian population, most of whom areIndians. The HIV/AIDS epidemic is ravaging Zambia. Approximately 14.3 per cent of Zambiansare infected by HIV. Over 800,000 Zambian children have lost one or both of their parents dueto HIV/AIDS. Life expectancy at birth is forty-two years.Government: Zambia became a republic immediately upon attaining independence inOctober 1964. The constitution promulgated on 25 August 1975, abrogated the original 1964constitution. The new constitution and the national election that followed in December 1973were the final steps in achieving what was called a ‘one-party participatory democracy’.The 1973 constitution provided for a strong president and a unicameral NationalAssembly. National policy was formulated by the Central Committee of the United NationalIndependence Party (UNIP), the sole legal party in Zambia. The cabinet executed thecentral committee’s policy.Economy: About two-thirds of Zambians live in poverty. Per capita annual incomes are wellbelow their levels at independence and, at $921, place the country among the world’s poorestnations. Social indicators continue to decline, particularly in measurements of life expectancyat birth (about forty-two years) and maternal mortality (729 per 100,000 pregnancies). Thecountry’s rate of economic growth cannot support rapid population growth or the strainwhich HIV/AIDS-related issues (i.e. rising medical costs, decline in worker productivity) placeon government resources. Zambia is also one of sub-Saharan Africa’s most highly urbanizedcountries. Over one-third of the country’s 12 million people are concentrated in a few urbanzones strung along the major transportation corridors, while rural areas are under populated.Unemployment and underemployment are serious problems.10_Africa_Report09_Zambia.indd 22910_Africa_Report09_Zambia.indd 229 2/25/09 4:26:26 PM2/25/09 4:26:26 PM
  • 241. 230Country Report for ZambiaOUTSOURCINGTOAFRICA4. Principal Government OfficialsPresident: Rupiah Banda.Vice-President and Minister of Justice: George Kunda.Minister of Communications: Ms Dora Siliya.5. Foreign RelationsZambia is a member of the Non-Aligned Movement (NAM), the African Union, theSouthern African Development Community (SADC), and the Common Market forEastern and Southern Africa (COMESA), which is headquartered in Lusaka.President Kaunda was a persistent and visible advocate of change in Southern Africa,supporting liberation movements in Angola, Mozambique, Namibia, Southern Rhodesia(Zimbabwe), and South Africa. Many of these liberation organisations were based inZambia during the 1970s and 1980s.President Chiluba assumed a visible international role in the mid- and late- 1990s.His government sponsored Angola peace talks that led to the 1994 Lusaka Protocols.Zambia provided troops to the UN peacekeeping initiatives in Mozambique, Rwanda,Angola, and Sierra Leone. Zambia was the first African state to cooperate with theInternational Tribunal investigation of the 1994 genocide in Rwanda.In 1998, Zambia took the lead in efforts to establish a ceasefire in the DemocraticRepublic of Congo. After the signing of a ceasefire agreement in Lusaka in July andAugust 1999, Zambia was active in supporting the Congolese peace effort, althoughactivity diminished considerably after the Joint Military Commission tasked with imple-menting the ceasefire relocated to Kinshasa in September 2001.During President Mwanawasa’s administration, Zambia contributed troops to supportthe UN peacekeeping operations in Sudan. In 2007, the Zambian Government publiclyappealed to other African nations to contribute to a joint African Union-United Nations(UNAMID) peacekeeping force in Darfur. During his tenure as SADC Chair, PresidentMwanawasa’s brought the issue of Zimbabwe to the SADC fore.Zambia’s history of stability and its commitment to regional peace has made it a havenfor large numbers of refugees. Currently, Zambia hosts approximately 87,000 refugees(down from a high of 203,000 in 2002), including roughly 51,000 Congolese, 27,000Angolans, and 9,000 other nationalities (mainly Rwandans, Burundians, and Somalis).In recent years, Zambia has made serious efforts to repatriate many of these refugees,including organized repatriation for 74,000 Angolan and 17,000 Congolese refugees.6. Living, Security, and Safety PerceptionZambia is a pleasant place to live in, but caution is necessary as follows:Travel in many sections of Lusaka, Livingstone, and most other major cities as well as inthe major game parks, is generally safe during daylight hours. Travellers using publictransportation or visiting high pedestrian traffic areas are advised to be vigilant againstrobbery and pickpocketing.•••••••10_Africa_Report09_Zambia.indd 23010_Africa_Report09_Zambia.indd 230 2/25/09 4:26:26 PM2/25/09 4:26:26 PM
  • 242. Country Report for Zambia231OUTSOURCINGTOAFRICAVehicle thefts, burglaries, and armed robberies occur throughout the country. Carjack-ing remains an ongoing problem, especially in Lusaka and other major cities. Carjack-ers generally employ a strategy of blocking the back of one’s car when the car is waitingto pass through a security gate into a residence or other facility. It is recommendedto drive with doors locked and windows closed at all times and remain vigilant whenentering or exiting one’s residence.Land mines and unexploded ordnance along the western, southern, and eastern bor-ders make off-road travel to those areas potentially hazardous.Medical facilities are expensive and medical insurance with provision for evacuationis necessary.7. ICT policy, Infrastructure, and ServiceICT Policies: The Zimbabwean government adopted a national ICT policy in 2005 thatwas informed both by a Harvard University-guided e-readiness survey, which suggestedthe country was not uniformly e-ready, and by a host of preceding general and secto-ral policies including Vision 2020, the national science and technology policy adoptedin 2002, and the Nziramasanga Education Commission Report which in 1999 recom-mended the promotion of the educational use of computers for teaching and learningin educational institutions.The policy’s vision is to transform Zimbabwe into a knowledge-based society by 2020,while its mission is to accelerate the development and application of ICTs in support ofeconomic growth and development. The policy’s objectives are to promote the develop-ment of ICT infrastructure, provide education and training programmes to produceknowledge workers and qualified human resources, to establish relevant structures andinstitutional mechanisms to promote ICTs, and to encourage equitable access to ICTsacross genders and to the youth, the elderly, and people with disabilities. It also hasa separate section on human resource development where it promotes skills trainingand capacity-building at all levels in the private and public sectors and in all trainingcentres and institutions of learning.A major boost to Zimbabwe’s ICT infrastructure is the impending establishment ofthe East African Submarine Cable System (EASSy), which is a submarine optical fibresystem running along the east coast of Africa and which includes Zimbabwe. Thisproject is facilitated by the New Partnership for Africa’s Development (NEPAD) e-AfricaCommission in partnership with a host of telecom companies in Africa.••••••10_Africa_Report09_Zambia.indd 23110_Africa_Report09_Zambia.indd 231 2/25/09 4:26:27 PM2/25/09 4:26:27 PM
  • 243. 232Country Report for ZambiaOUTSOURCINGTOAFRICATo get a glimpse of the Status of ICT in Zambia today some data from the World BankICT at a Glance is presented as follows:ICT Access Indicators 2000–2006Number per 100 peopleFixed + mobile subscribersInternet users201510502000 2001 2002 2003 2004 2005 2006Price of Call to the United States 2000–2005US$ per 3 minutesZambia Sub-Saharan Africa Region86422000 2001 2002 2003 2004 20050•10_Africa_Report09_Zambia.indd 23210_Africa_Report09_Zambia.indd 232 2/25/09 4:26:27 PM2/25/09 4:26:27 PM
  • 244. Country Report for Zambia233OUTSOURCINGTOAFRICATelecommunications Revenue 2000–2006Percentage of GDPZambia Sub-Saharan Africa Region2000432102001 2002 2003 2004 2005 2006Physical InfrastructureOffice market: The capital Lusaka has a severe shortage of good quality modernoffices with easy access and ample parking. Demand has been growing for secureoffice space away from the city centre. The office market is expected to expand as aresult of an imminent boom in the local economy. Prime rents are in the range ofUS$ 17–19 per sq m per month, and there are a number of new office developmentslikely to start before the end of 2007.Retail market: The new 6,000 sq m Crossroads Shopping Mall anchored by SUPERSPAR, on the east side of Lusaka, which opened in December 2006, illustrates the grow-ing demand for suburban retail space. There are no modern shopping centres on thesouth, north, and west sides of the city although Southgate Park, a major retail, officeand housing estate with an eighteen-hole signature golf course is planned on the southof Lusaka. Construction is due to commence by the second quarter of 2008.Industrial market: There are signs of increased manufacturing output; however, mostof the country’s warehousing stock is old and in poor condition. Owner occupiers arestarting to build for themselves, and there is growing demand for space in the orderof 1,000–2,500 sq m.Residential market: Rental values have risen steadily in the last year with increaseddemand for all types of property in the prime residential areas. Typically, prime rentsare in the range of US$ 2,000–3,500 per month. Demand for property to purchase,be it stand-alone houses in need of refurbishment or plots, is also high. Properties inthe prime residential areas of Lusaka are selling for US$ 250,000 upwards regardlessof condition or plot size. Developers are starting to look at providing houses and flatsfor the sale market and marketing them ‘off plan’.••••10_Africa_Report09_Zambia.indd 23310_Africa_Report09_Zambia.indd 233 2/25/09 4:26:28 PM2/25/09 4:26:28 PM
  • 245. 234Country Report for ZambiaOUTSOURCINGTOAFRICAPrime rents Prime yieldsOffices US$ 19 per sq m per month 12%Retail US$ 25 per sq m per month 11%Industrial US$ 4 per sq m per month 15%Residential US$ 3,500 per month* 14%*four bedroom executive house—prime location(Source: Knight Frank LLP)8. ICT and BPO Industry EnvironmentIt has not been possible to find significant data of outsourcing operations in Zambia.Recent reports have indicated that the government has recently decided to liberaliseinternational gateways.Report is also available of some outsourcing activity starting and research and academicpresentations comparing Zambian ICT capabilities with India.Numerically, it is within the first five in terms of the share of ICT in export of services.Thus there is a potential, but this capability has not been projected.9. Human Resource Efficiency and CostThe penetration levels of ICTs in Zambia’s education institutions remains low, with thoseschools that are equipped mostly utilizing second-hand and refurbished computers.The integration of ICTs in learning and teaching practice has been limited, although theintroduction of computer studies as a school study subject has begun to change this.The recent adoption of a national ICT policy, as well as the development of a draftICT policy for education and an associated implementation framework, provides anenabling policy environment to promote far greater access and use of ICTs acrossall sectors of Zambia’s education system, including a system for enhancing educationmanagement, administration, and teaching and learning. While the goals and targetsset in these policy documents seem realistic, realizing them within the established timeframes remains a challenge.Thus Zambia, though having the potential, has scored low.Zambia has ranked twelfth in People and Skills fairing as low as eleventh in quantityand fourteenth in quality.••••••••10_Africa_Report09_Zambia.indd 23410_Africa_Report09_Zambia.indd 234 2/25/09 4:26:28 PM2/25/09 4:26:28 PM
  • 246. Country Report for Zambia235OUTSOURCINGTOAFRICAZambia should do much better as factors influencing ICT adoption are as follows:Factors Enabling features Constraining featuresPolicy framework andimplementationZambia has a national ICTpolicy that includes referencesto ICTs in education. Zambiaalso has a draft national ICTfor education policy andimplementation frameworkdeveloped by its Ministryof Education which is theoutcome of a multi-stakeholderconsultative process.Advocacy leadership Zambia has had dedicatedchampions for the cause ofICTs for development bothwithin government and civilsociety.Gender equity The national ICT policymentions a stated commitmentto gender equality andwomen’s empowerment.While the ICT for education policyand implementation frameworkmake some references to gender,they do not explicitly refer to thepromotion of gender equalitly andwomen’s empowerment. Theseconsiderations may well be includedin subsequent drafts.Infrastructure andaccessZambia’s national policiespromote a commitmentto universal access, and arange of organisations andgroups have made headway inimproving the country’s ICTinfrastructure.CollaboratingmechanismsZambia’s national ICT policyand draft ICT for educationpolicy both promote multi-stakeholder collaboration andpropose the establishmentof dedicated structures tofacilitate collaboration.Human resourcecapacityZambia has extremely limitedhuman resource capacity.Fiscal resources Zambia’s ICT for developmentstrategy is strongly dependent onexternal donor funding.•10_Africa_Report09_Zambia.indd 23510_Africa_Report09_Zambia.indd 235 2/25/09 4:26:28 PM2/25/09 4:26:28 PM
  • 247. 236Country Report for ZambiaOUTSOURCINGTOAFRICA10. Legal and Enforcement IssuesZambia has scored second last in ICT Security and enforcement of IPR and Cyber Lawsbut it is midway in overall legislative risk.11. Labour and Expatriate Workers PermitsLabour availability: Zambia has abundant reserves of unemployed labour force compris-ing both skilled and unskilled personnel. Unemployment levels are higher in urbanthan rural areas. Government’s liberalised economic policies, since 1991, necessitatedrestructuring of both the public and parastatal (quasi-government) sectors leading tomassive redundancies of both skilled and unskilled labour force. Rationalisation aris-ing from stiff competition in both the private and parastatal sectors led to liquidationand receiverships, which further resulted in mass lay offs of the labour force. The highlevel of graduate turnout from the country’s high schools, colleges, and universitieshas not matched employment generation opportunities from private and public sectorinvestment. The availability of both skilled and unskilled labour thus exceeds availableemployment opportunities.Work permits for expatriate labout: Employers seeking to employ expatriate staff arerequired to apply for work permits from Immigration Headquarters. Such permits areusually issued for an initial period of one year with provision for subsequent extensionsor renewals. A company that holds an Investment License, invests US$ 250,000, andemploys a minimum of ten Zambians could be entitled to obtain work permits for upto five expatriate employees.Visa requirements: All visitors from Commonwealth countries except a few restrictedones can obtain visas at the port of entry. Visitors from EEC, USA, and South Africacan also obtain visas at the port of entry. Visitors from other countries need to obtainvisas prior to arrival in Zambia. Maximum visa duration is ninety days.Self employment permit or resident permit: Notwithstanding the provisions of theImmigration and Deportation Act, an investor who invests a minimum of US$ 250,000or equivalent in convertible currency and who employs a minimum of ten persons shallbe entitled to a self-employment permit or resident permit.12. Revenue, Tax and Repatriation IssuesExchange control: With effect from February 1994, the Exchange Control Act, whichwas restrictive in mobility of hard currency, was scrapped; an investor can now repat-riate all amounts of capital introduced into Zambia and can externalise dividends,management fees, interest earned, profits earned, technical fees, royalties, etc. freely.All earnings by expatriates can also be externalised without difficulties.In summary, there is no exchange control in Zambia for anyone doing business inZambia either as a resident or non-resident.•••••••10_Africa_Report09_Zambia.indd 23610_Africa_Report09_Zambia.indd 236 2/25/09 4:26:28 PM2/25/09 4:26:28 PM
  • 248. Country Report for Zambia237OUTSOURCINGTOAFRICALocal borrowings: With the abolishment of exchange control, any investor can borrowfor investing in Zambia, but certain financial institutions will not provide loans to inves-tors deemed as non-residents unless a wholly owned Zambian company participates inthe business.Taxation: In order to be liable to tax in Zambia, a person has to be in receipt of incomefrom a source within or deemed to be within the republic.A company incorporated in the republic is liable to tax on the trading profits,Zambian dividends, and interest.A partnership is not liable to tax in Zambia, but the income is divided among thepartners who are taxed on the partnership income.An individual ordinarily resident in Zambia is liable to tax on interest and dividendsreceived from a source outside the republic.A non-resident is liable to pay tax if he is in receipt of income from a source withinZambia.Double taxation: Zambia has double tax agreements with a few countries to preventthe taxation of the same income in either country.A foreign resident business undertaking will only be liable to tax if business is con-ducted in Zambia through a Permanent Establishment.Where a double taxation agreement exists between Zambia and another country,foreign tax payable by an investor to the other country in respect of any foreignincome shall be allowed as a credit for that investor against Zambia in respect ofthat foreign income.Tax rates: Profits from companies incorporated in Zambia are taxed at 35 per cent onthe taxable profit.Dividends: The rate applicable is 15 per cent. The dividend tax is paid in the samemanner as PAYE to the Zambia Revenue Authorities.There is no further tax on Zambian dividends.Income received by way of dividend from farming shall be exempt from tax for thefirst five years of operations.Other taxes: Employers are required to deduct tax (PAYE) from the remuneration ofemployees.Customs and excise taxes: Duties on imports at various rates.VAT: Value Added Tax has replaced Sales Tax. The rate is 17.5 per cent on all vatablesupplies.Personal levy: Charged by councils on gross salaries of employees at 1 per cent afteran allowance of K300,000 allowances.Rates: Payable to the council on all rateable properties at a rate of 1,015 per cent.Withholding tax: A withholding tax rate of 15 per cent is levied on income from divi-dends, rent, entertainment, contractor, and supplies and interest (above K60,000).•••••••••••••••••••10_Africa_Report09_Zambia.indd 23710_Africa_Report09_Zambia.indd 237 2/25/09 4:26:29 PM2/25/09 4:26:29 PM
  • 249. 238Country Report for ZambiaOUTSOURCINGTOAFRICAIndividuals: The tax rates applicable to individuals are as follows (husband and wifeare each entitled to separate rates):First K600,000 Free; available as a tax credit of K60,000Next K600,000 10 per centNext K600,000 20 per centOver K1,800,000 30 per cent13. Investment Policy and IncentivesThe Government of Zambia does incentives for investors and exporters. The informa-tion is available in the website of the new Zambia Development Agency ( we complete this report, parts of this website are under construction but the basicinformation is available. The agency at the moment has the look and feel of a regula-tor rather than a promoter of investment.There are no specific incentives for outsourcing or BPO as in South Africa or Botswana.The incentives available are listed, and it has to be determined what will be applicableto outsourcing.General IncentivesIncome from farming shall be taxed at a rate of 15 per cent.Portion of income which is determined by the Commissioner of Taxes as originatingfrom the export of non-traditional products is taxed at a rate of 15 per cent.Income received from a rural enterprise for each of the first five years of operationwill be exempt from tax.Capital allowances: An investor will be entitled to a capital allowance which shall bededucted in ascertaining the gains or profits at the following special rates:Building used for manufacturing, mining, and hotels qualify for a wear and tearallowance of 5 per cent per year plus an initial allowance of 10 per cent of the costin the year in which the building was first used.Implements, machinery, and plant used exclusively for farming, manufacturing andtourism qualify for a wear and tear allowance of 50 per cent per year of the cost inthe first two years (straight line).Capital expenditure on farm improvements qualify for a farm improvement allowanceof 100 per cent in the year the expenditure is incurred.The wear and tear allowance on non-commercial vehicles is 20 per cent (straightline).Expenditure on other assets used in creating income qualifies for a wear and tearallowance of 25 per cent (straight line).Income tax deductions: An investor shall be entitled to the following deductions inascertaining the gains or profits:Any loss incurred other than in investment in mining in any charge year shall bededucted only from the income of the investor from the same source as that in which••••••••••••••••••••10_Africa_Report09_Zambia.indd 23810_Africa_Report09_Zambia.indd 238 2/25/09 4:26:29 PM2/25/09 4:26:29 PM
  • 250. Country Report for Zambia239OUTSOURCINGTOAFRICAloss was incurred. Such loss shall be deducted from his income in the following yearfrom year to year.Any payments made for the purpose of technical education by a business enterprise,or for the purpose of obtaining further experience, training, or qualification, relat-ing to that business enterprise.Any expenditure, not being expenditure of a capital nature incurred by a busi-ness enterprise during the current year on experiments or research relating to thatbusiness enterprise.Bonded facility: An investor may apply to be appointed and licensed by the CommissionerGeneral to establish and operate a bonded factory under Section 65 of the Customsand Excise Act.Special incentives: An investor who qualifies in one of the five categories below shallbe entitled, in addition to the general incentives, to an exemption from customs dutiesand sales duties on all machinery and equipment (other than motor vehicles) requiredfor the establishment, rehabilitation, or expansion of that enterprise:An exporter of non-traditional products (other than copper) which result in netforeign exchange earnings, orProduces products for the use locally in agriculture and the production of agricul-tural commodities or other agro-related products for export, orIs engaged in tourism resulting in foreign exchange earnings in excess of 25 percent of the gross annual earnings of the business unit, orIs engaged in an import substitution industry using a significant proportion oflocal raw materials resulting in net foreign exchange savings, or is located in arural area.14. Government Agencies Giving Support to OutsourcingThese are no agency specifically for ICT or the Outsourcing Industry. A potentialinvestor would have to approach the Zambia Development Agency.Zambia Development AgencyXY Building (Privatization House)New Government Complex AnnexNasser RoadLusakaTel: (+260) 1-220177/223859 (main),(+260) 1-222176 (Small Enterprises),(+260) 1-254214 (Investments),(+260) 1-228106 (Exports); Fax: (+260) 1-225270Websites:•••••••••10_Africa_Report09_Zambia.indd 23910_Africa_Report09_Zambia.indd 239 2/25/09 4:26:29 PM2/25/09 4:26:29 PM
  • 251. 240Country Report for ZambiaOUTSOURCINGTOAFRICA15. Overall Assessment and RecommendationsZambia is the third in the up and fifth in the share of ICT in service exports. Thusthere is a potential to be exploited.Zambia could, like Kenya, approach the Indian Fund for Technical Cooperation or theCommonwealth Fund for Technical Cooperation (CFTC) to finance a study to map astrategy to make the best of this potential.16. Contact DetailsEmbassy of Zambia in China, France, Germany, India, UK, USAZambian Embassy in BeijingEmbassy of Zambia5 Dong Jie San Li TunBeijing 100600P.R. of ChinaBeijingTel: (+86-10) 65321778, 65321554; Fax: (+86-10) 65321891E-mail: Embassy in ParisEmbassy of ZambiaParis, FranceParisTel: (+33-1) 56881270; Fax: (+33-1) 4225698Zambian Embassy in BerlinZambia Embassy in GermanyAxel-Springer-Str. 54a10117 BerlinGermanyBerlinTel: (+49-228) 2062940; Fax: (+49-228) 20629419Zambian Consulate in New DelhiZambia High CommissionF-8/22 Vasant ViharNew Delhi 110057IndiaNew DelhiTel: (+91-11) 26877681, 26877848, (+91-11) 24101289; Fax: (+91-11) 26147928E-mail:,••10_Africa_Report09_Zambia.indd 24010_Africa_Report09_Zambia.indd 240 2/25/09 4:26:29 PM2/25/09 4:26:29 PM
  • 252. Country Report for Zambia241OUTSOURCINGTOAFRICA Zambian Consulate in LondonZambia High Commission in London, United Kingdom2 Palace Gate, KensingtonLondon W8 5NGUnited KingdomLondonTel: (+44-20) 75896655; Fax: (+44-20) 75811353E-mail: zahcl@aol.comZambian Embassy in Washington DCEmbassy of Zambia in Washington DC, United States2419 Massachusetts AvenueNW Washington DC 20008Washington DCTel: (202) 265-9717; Fax: (202) 265- 9718E-mail:, embzambia@aol.cWebsite: http://www.zambiaembassy.orgUseful LinksThe World Fact book 2007. Issues for Children, ESARO. 2007. UNICEF. We Work – Zambia. 2007. World Food Program., O. and P. Esselaar. “A Country ICT Survey for Zambia.” 2003. Sida.List of Countries by Human Development Index. Wikipedia. Zambia. Ministry of Education. 2006. National ICT Policy. Issues for Children. ESARO. 2007. UNICEF. 24110_Africa_Report09_Zambia.indd 241 2/25/09 4:26:30 PM2/25/09 4:26:30 PM
  • 253. 242Country Report for ZambiaOUTSOURCINGTOAFRICA The World Fact book 2007. Zambia. Telecommunications Development Report. 2006. ITU.“NEPAD ICT Infrastructure Program: Addressing Africa’s ICT Infrastructure ChallengesUsingBroadband Networks.” E-Africa Commission., B. “Zambia’s National Development Plan 2006-2010.” ICT Journalist. 19 August 2006.“Zambia: New National ICT Policy.” Pambazuka News. 30 March 2007. ICT Policy. 2006. Ministry of Education. 2006.SURVEY OF ICT AND EDUCATION IN AFRICA: Zambia Country Report Zambia—12.http://www.infodev.orgDraft MOE ICT Policy: Implementation Framework: Objectives, Activities, Timeframes,Budgets.January 2007. Ministry of Education. 24210_Africa_Report09_Zambia.indd 242 2/25/09 4:26:30 PM2/25/09 4:26:30 PM
  • 254. 243OUTSOURCINGTOAFRICACountry Report for NamibiaDisclaimerThis short Country Report, a result of a larger Survey of ICT Outsourcing in Africa, provides a general over-view of the current activities and issues related to ICT Outsourcing in the country.The data presented hereshould be regarded as illustrative rather than exhaustive. ICT Outsourcing is at a particularly dynamic stagein Africa with new developments and announcements happening on a daily basis somewhere or the otheron the continent.Therefore, these reports should be seen as snapshots that were current at the time theywere taken; it is expected that certain facts and figures presented may become outdated very quickly.The findings, interpretations, and conclusions expressed herein are a faithful representation of the respondentsof the interviews and secondary data collected from the countries and published literature. Strict analysis hasbeen carried out with the minimal influence of the authors/team members. References to data sources havebeen made as far as possible. In the case of the detailed data parameters used for scores and ranking thesame data source and timeline has been used for all the fifteen countries compared. In the descriptive sec-tion of the country reports all data received from the individual country has been used in order to give ascomplete an assessment as possible. Thus in this part those countries that have provided more informationhave a better coverage than those who have not been able to provide data to the research team.Board of Executive Directors of the CBC or Cyber Media cannot guarantee the accuracy of the dataincluded in this work. The boundaries, colours, denominations, and other information shown on any mapin this work do not imply on the part of the CBC and Cyber Media any judgement of the legal status ofany territory or the endorsement or acceptance of such boundaries.It is expected that individual Country Report from the Survey of ICT Outsourcing in Africa will be updatedin an iterative process over time, based on additional research and feedback received through the CBCand Cyber Media website.ZAMBIAANGOLAWINDHOEKSOUTHAFRICABOTSWANAKatimaMuliloRunduOndangwaGrootfonteinGobabisKalahariDesertRehobothKeetmanshoopKarasburgLuderitzSouthAtlanticOcean0NamibDesert100 200 km0 100 200 miWalvis Bay¨Swakopmund11_Africa_Report09_Namibia.indd 24311_Africa_Report09_Namibia.indd 243 2/25/09 4:27:01 PM2/25/09 4:27:01 PM
  • 255. 244Country Report for NamibiaOUTSOURCINGTOAFRICA1. OverviewNamibia, officially the Republic of Namibia, is a country in southern Africa on the Atlanticcoast. It shares borders with Angola and Zambia to the north, Botswana to the east, andSouth Africa to the south. It gained independence from South Africa in 1990, and its capi-tal city is Windhoek (German: Windhuk). Namibia is a member state of the United Nations(UN), the Southern African Development Community (SADC), the African Union (AU),and the Commonwealth of Nations. It is named after the Namib Desert and is the secondmost sparsely populated country in the world (after Mongolia).Once a colony of Germany and later occupied by South Africa’s apartheid government,Namibia gained full independence in 1990 following South Africa’s withdrawal from Angola.Namibia is one of Africa’s most developed and stable countries, with a stable multi-partyparliamentary democracy and an estimated population of 1,820,916. Tourism and diamondmining form the backbone of Namibia’s economy.Namibia’s economy consists primarily of mining and manufacturing which represent 8 percent of the gross domestic product (GDP) respectively. Namibia has a 30–40 per cent unem-ployment rate and recently passed a 2004 labour act to protect people from job discrimina-tion stemming from pregnancy and HIV/AIDS status. Namibia’s economy is tied closely toSouth Africa’s due to their shared history. The Central Plateau serves as a transportationcorridor from the more densely populated north to South Africa, the source of four-fifthsof Namibia’s imports. Namibia is the fourth largest exporter of non-fuel minerals in Africaand the world’s fifth largest producer of uranium. There has been significant investment inuranium mining, and Namibia is set to become the largest exporter of uranium by 2015.Rich alluvial diamond deposits make Namibia a primary source for gem-quality diamonds.Namibia also produces large quantities of lead, zinc, tin, silver, and tungsten.2. Namibia’s Position in Africa’s Fifteen CountriesNamibia is in the fourth position in the yet upcoming band of countries from the outsourc-ing attractiveness point of view. The map and table below show where Namibia is positionedamong the fifteen studied countries.11_Africa_Report09_Namibia.indd 24411_Africa_Report09_Namibia.indd 244 2/25/09 4:27:02 PM2/25/09 4:27:02 PM
  • 256. Country Report for Namibia245OUTSOURCINGTOAFRICAMorocco *MoroccoTunisia *Geographical Coverage and RankTunisiaEgypt *EgyptSenegal *SenegalGhanaGhanaNigeriaNigeriaUgandaUgandaKenyaKenyaTanzaniaTanzaniaZambiaZambiaMozambique MozambiqueBotswanaBotswanaNamibiaNamibiaSouthAfricaSouth AfricaMauritiusAfrica*Non-Commonwealth CountriesMauritiusContributing scores and ranks are as under.OverallBand Score (PS & BE) RankUpcoming 5.91 FourthInfrastructureScore Rank Band5.7 11 UpcomingWhile achieving the thirteenth position in score for ‘Infrastructure’, Namibia is eight inelectricity availability, last in telecommunications and data transfer costs, tenth in networkreadiness, thirteenth in infrastructure cost, sixth in availability and penetration, second inthe road/rail network and air travel, and eighth in international Internet bandwidth.People and Skills (PS)Score Rank2.933 11Namibia is the eleventh in the case of ‘People and Skills’, being fifteenth in quantity,eighth in quality, sixth in working satisfaction, and fifth in ICT exposure; it has ranked11_Africa_Report09_Namibia.indd 24511_Africa_Report09_Namibia.indd 245 2/25/09 4:27:03 PM2/25/09 4:27:03 PM
  • 257. 246Country Report for NamibiaOUTSOURCINGTOAFRICAsixth in human resource costs and has the last position in education, language, anddomain skills.Business Environment (BE)Score Rank2.976 9Namibia ranked ninth in this lower level abstraction. In achieving this position it has comeeighth in ICT security, Cyber, and IPR laws, sixth in share of services in GDP. Namibia hasthe lowest foreign exchange reserves and is the sixth in ease and cost of finances, twelfthfor share in ICT in exports and fourth position in legislative risk. In the tax rate Namibia isfourth, and in share of services in exports it has come eighth. Namibia has scored seventhand fourteenth respectively in geopolitical risk and currency risk.3. Country, Political, and Economic ProfileGeographyArea: 823,145 sq km (320,827 sq mi); the size of Texas and Louisiana combined.Cities: Capital—Windhoek (2001 census) pop. 233,529.Other cities: Grootfontein, Katima Mulilo, Keetmanshoop, Luderitz, Ondangwa, Oranjemund,Oshakati, Otjiwarongo, Swakopmund, Tsumeb, Walvis Bay.Terrain: Varies from coastal desert to semi-arid mountains and plateau.Climate: Semi desert and high plateau.PeopleNationality: Noun and adjective—Namibian(s).Population (2008, projected): 2.1 million.Average annual growth rate (2001 est.): 2.6 per cent. The population growth rate is depressedby an HIV/AIDS prevalence rate estimated to be 15.3 per cent.Ethnic groups: About 50 per cent of the population belong to Ovambo ethnic group, and9 per cent to the Kavango ethnic group. Other ethnic groups are: Herero 7 per cent, Damara7 per cent, Nama 5 per cent, Caprivian 4 per cent, San 3 per cent, Baster 2 per cent, andTswana 0.5 per cent.Religions: Predominantly Christian; also indigenous beliefs.Languages: English (official); Afrikaans, German, Oshivambo, Herero, Nama/Damara, otherindigenous languages.Education: Years compulsory—to age sixteen.Attendance (2001): 82 per cent.Adult literacy rate (2005): 85 per cent.Work force (2004): 493,448.11_Africa_Report09_Namibia.indd 24611_Africa_Report09_Namibia.indd 246 2/25/09 4:27:03 PM2/25/09 4:27:03 PM
  • 258. Country Report for Namibia247OUTSOURCINGTOAFRICAGovernmentType: Republic.Independence: 21 March 1990.Branches: Executive—President (elected for five-year term), Prime Minister.Legislative—bicameral parliament: National Assembly and National Council.Judicial: Supreme Court, the High Court, and lower courts.Subdivisions: Thirteen administrative regions.Major political parties: South West Africa People’s Organization (SWAPO), DemocraticTurnhalle Alliance (DTA), United Democratic Front of Namibia (UDF), Congress of Democrats(COD), Republican Party (RP), National Unity Democratic Organization (NUDO), MonitorAction Group (MAG).Suffrage: Universal adult.EconomyGDP (2007): $6.7497 billion.Annual growth rate (2007): 5.9 per cent.Per capita GNI (2007): $3,360.Inflation rate (2008): 8.4 per cent.Natural resources: Diamonds, uranium, zinc, gold, copper, lead, tin, fluorspar, salt, fisheries,and wildlife.Agriculture (10.6 per cent of GDP, 2007): Products—livestock and meat products, fish and fishproducts, grapes.Mining (12.4 per cent of GDP, 2007): Gem-quality diamonds, uranium, zinc, copper, other.Trade: Exports (2007)—$4.36 billion; diamonds, uranium, zinc, copper, lead, beef, cattle, fish,karakul pelts, and grapes.Imports (2007): $4.56 billion; foodstuffs, construction material, manufactured goods.Major partners: South Africa, Angola, Botswana, Germany, UK, US.Sources: Namibia Central Bureau of Statistics (CBS); Namibia Labour Force Survey; NamibiaPopulation and Housing Census; Bank of Namibia; World Bank; UN Human DevelopmentReport.PeopleNamibians are of diverse ethnic origins. The principal groups are the Ovambo, Kavango,Herero/Himba, Damara, mixed race (‘colored’ and Rehoboth Baster), white (Afrikaner,German, and Portuguese), Nama, Caprivian, San, and Tswana.The Ovambo make up about half of Namibia’s people. The Ovambo, Kavango, and EastCaprivian peoples, who occupy the relatively well watered and wooded northern part of thecountry, are settled farmers and herders. Historically, these groups had little contact with theNama, Damara, and Herero, who roamed the central part of the country vying for controlof sparse pastureland. German colonial rule destroyed the war-making ability of the tribes11_Africa_Report09_Namibia.indd 24711_Africa_Report09_Namibia.indd 247 2/25/09 4:27:03 PM2/25/09 4:27:03 PM
  • 259. 248Country Report for NamibiaOUTSOURCINGTOAFRICAbut did not erase their identities or traditional organization. People from the more populousnorth have settled throughout the country in recent decades as a result of urbanization,industrialization, and the demand for labour.Missionary work during the 1800s drew many Namibians to Christianity. While most NamibianChristians are Lutheran, there also are Roman Catholic, Methodist, Anglican, Jewish, AfricanMethodist Episcopal, and Dutch reformed Christians represented.Education and services have been extended in varying degrees to most rural areas in recentyears. Although the national literacy rate is quite high (estimated to be 85 per cent), it isimportant to note that the number of Namibians that are functionally literate and have theskills that the labour market needs is significantly lower.4. Principal Government OfficialsPresident: Hifikepunye Pohamba.Prime Minister: Nahas Angula.Deputy Prime Minister: Libertina Amathila.Minister of Trade and Industry: Hage Geingob.Minister of Information and Communication Technology: Joel Kaapanda.5. Foreign RelationsNamibia follows a largely independent foreign policy, with lingering affiliations withstates that aided the independence struggle, including Libya, the People’s Republic ofChina and Cuba.Namibia is developing trade and strengthening economic and political ties within theSouthern African region. A dynamic member of the Southern African DevelopmentCommunity (SADC) and the Southern African Customs Union (SACU), Namibia is avocal advocate for greater regional integration.Namibia became the 160th member of the United Nations on 23 April 1990, and thefiftieth member of the British Commonwealth upon independence.6. Living, Security, and Safety PerceptionsCrime is a concern in Namibia, but visitors who employ common-sense preventivemeasures normally enjoy an incident-free stay.Incidents of violent crime directed specifically against foreigners are rare, but thenumber of overall incidents continues to increase.The most common crimes are property-motivated crimes of opportunity, including pick-pocketing, purse snatching, vehicle theft, and vehicle break-ins.Taxi drivers have robbed several passengers; if taxis must be used, radio taxis that dis-play the NABTA logo (Namibia Bus and Taxi Association) are the most reliable.•••••••11_Africa_Report09_Namibia.indd 24811_Africa_Report09_Namibia.indd 248 2/25/09 4:27:03 PM2/25/09 4:27:03 PM
  • 260. Country Report for Namibia249OUTSOURCINGTOAFRICAViolent crimes are less frequent than non-violent incidents. Common sense measuressuch as being alert to one’s surroundings, avoiding isolated areas of town, not leavingvaluables in parked cars, keeping car doors locked and windows up while driving, safe-guarding purses, wallets, and especially cellular phones are the best deterrents againstbecoming a victim.Drivers should exercise caution at rest stops outside of towns or away from gasolinestations.Medical care is expensive, and it is necessary to have a valid medical insurance withprovision of evacuation to South Africa in the case of emergencies.7. ICT Policy, Infrastructure, and ServiceICT PoliciesThe Namibian government developed Vision 2030 as its national plan to ‘improve thequality of life of the people of Namibia to the level of their counterparts in the devel-oped world by 2030.’The policy aims to transform Namibia into a healthy and food-secure nation, in whichall preventable, infectious, and parasitic diseases (including HIV/AIDS) are under con-trol, and where people enjoy a high standard of living, good quality life, and have accessto quality education, health, and other vital services.All of these aspirations translate into a long life expectancy and sustainable populationgrowth. In support of the objectives of 2030, capacity-building will be pursued by boththe private and public sectors and will continue to be promoted by the existence of asuitable enabling environment in terms of political stability and freedom, a sound legalsystem, economic resources and opportunities, and social norms that are conducive tosustained development.As required by Vision 2030, the country will operate a totally integrated, unified, flex-ible, and high-quality education and training system that prepares Namibian learnersto take advantage of a rapidly changing global environment, including developmentsin science and technology.Arising from the overall capacity-building investments, Namibia will be transformedinto a knowledge-based society.InfrastructureAccording to the World Economic Forum’s Global Information Technology Report, Namibiaranks seventy-eighth out of 115 economies using the networked readiness index (NRI)which measures the degree of preparation of a nation to participate in and benefit fromICT developments. Namibia’s rank is ahead of Uganda, Nigeria, Mali, Mozambique,and Zimbabwe.•••••••••11_Africa_Report09_Namibia.indd 24911_Africa_Report09_Namibia.indd 249 2/25/09 4:27:04 PM2/25/09 4:27:04 PM
  • 261. 250Country Report for NamibiaOUTSOURCINGTOAFRICAThe following table and graphs provide a brief snapshot of Namibia’s ICT infrastructure.IndicatorFixed-line subscribers 127,900 (2004)Mobile subscribers 495,000 (2005)Internet users 75,000 (2004)Television broadcast stations 8 (plus about 20 low powerrepeaters) (1997)Radio stations AM 2: FM 39; shortwave 4(2001)40Number per 100 peopleICT Access Indicators, 2000–200630201002000 2001 2002 2003 2004 2005 2006Fixed + mobile subscribersInternet usersPCsTelecommunications Revenue, 2000–2006Percentage of GDPNamibia sub-Saharan Africa Region200064202001 2002 2003 2004 2005 200611_Africa_Report09_Namibia.indd 25011_Africa_Report09_Namibia.indd 250 2/25/09 4:27:04 PM2/25/09 4:27:04 PM
  • 262. Country Report for Namibia251OUTSOURCINGTOAFRICANamibia’s close economic and historical links to South Africa means that its telecommarket is one of the most developed on the continent. Its modern, fully digital telecomnetwork has helped to drive growth in the Internet and mobile telephony sectors.While mobile and fixed-line services are still a monopoly, plans are underway to intro-duce competition in both sub-sectors. The Internet sector is open to competition,although the telecoms industry in general ranks comparatively low in terms of opennessof the telecommunications market.The Telecommunications Policy and Regulatory Framework (1999) describe a vision ofuniversal access and liberalization of the telecommunications sector.The draft Telecommunications Bill provides for the regulation of telecommunicationactivities including the use and allocation of radio spectrum and the establishment ofan independent Namibian Communications Authority.The bill’s aim of universal access is pivotal to Namibia’s vision, and a universal servicefund (USF) will be established and administered by the regulator. The existing telecom-munications regulatory framework provides for a universal service obligation (USO)by the monopolies.The liberalisation of the telecommunications sector will introduce competition as ameans of accelerating infrastructure development, increasing efficiency, and diversify-ing services, thereby making government’s decentralisation efforts cheaper and increas-ing Namibia’s attractiveness for foreign investment.Physical InfrastructureOffice market: Following a period of sustained rental and capital value growth in thecapital Windhoek, demand mainly from overseas companies looking to invest in theexpanding mineral extraction field has reduced. The office market has now cooled asa result of this demand for accommodation having been satisfied. Consequently, rentallevels have stabilised. There is approximately 5,000 sq m of modern office space cur-rently available.Retail market: The profile of demand in the retail sector is similar to the office market,with sustained growth over the last few years. Increased demand has now been satis-fied by the refurbishment of Town Square, which comprises a mixed use commercialdevelopment in Windhoek city centre as well as the 40,000 sq m Maerua Mall, whichis located to the south of the city centre.Industrial market: The industrial property sector is limited, due to the fact that Namibiadoes not have a large industrial market. Most space is either taken for warehouse pur-poses or as smaller ‘lock-up’ units by companies providing service industries rather thanmanufacturing. There is currently an oversupply of older industrial space.Residential market: The residential market has been healthy in recent years, with strongdemand evident from the public wanting to buy their own homes, coupled with aninflux of ex-residents returning from abroad as a result of the perception that thecountry’s economy has now stabilised. There have been year-on-year price increasesfor over a decade, most notably in the high-cost areas of Ludwigsdorf, Eros, and KleinWindhoek, where price increases have been between 12–15 per cent per annum overthe last few years.••••••••••11_Africa_Report09_Namibia.indd 25111_Africa_Report09_Namibia.indd 251 2/25/09 4:27:05 PM2/25/09 4:27:05 PM
  • 263. 252Country Report for NamibiaOUTSOURCINGTOAFRICAPrime rents Prime yieldsOffices US$ 15 per sq m per month 10.5%Retail US$ 31 per sq m per month 10.5%Industrial US$ 6 per sq m per month 12.5%Residential US$ 1,950 per month* 10.5%*4 bedroom executive house--prime location(Source: Knight Frank LLP)8. ICT and BPO Industry EnvironmentThere is no significant outsourcing or BPO operation found in Namibia. The investmentguides do not consider this as a potential investment opportunity.9. Human Resource Efficiency and CostNamibia is in the top five in ICT exposure and sixth in work satisfaction. Namibia hasranked eleventh in people and skills fairing as low as fifteenth in quantity and eighthin quality.Namibia has played a pioneering and visionary role in Africa in the area of ICTs ineducation and serves as a beacon for many organizations and groups operating acrossthe continent. Namibia offers innovative options on affordable and sustainable accessto ICTs through the active involvement of local youth under the leadership of SchoolNet Namibia. In addition to a visionary national ICT for education policy, the Namibiangovernment has also taken the lead in committing a dedicated budget to support ICTsin education and the establishment of machinery for co-ordinated multi-stakeholdercollaboration.Thus Namibia has a potential to do better in the human resource scores.10. Legal and Enforcement IssuesThe Namibian legal system protects and facilitates acquisition and disposition of prop-erty rights. The Registrar of Companies, Patents and Trademarks in Windhoek admin-isters the registration of patents and designs. These laws include the Trademarks Actof 1963, the Designs Act of 1967 and the Patents Act of 1978; these provisions aregenerally in line with international norms.Namibia is a member of the Berne Convention for the Protection of Literary andArtistic Works. As a member of SADC, Namibia is expected to adopt and implementmeasures in accordance with the Trade Related Aspects of Intellectual Property Rights(TRIPS).Two ministries share responsibility for IPR protection. The Ministry of Information andBroadcasting manages copyrights and the Ministry of Trade and Industry’s Directoratefor International Trade oversees industrial property and is responsible for registrationsof companies, private corporations, patents, trademarks, and designs.••••••11_Africa_Report09_Namibia.indd 25211_Africa_Report09_Namibia.indd 252 2/25/09 4:27:05 PM2/25/09 4:27:05 PM
  • 264. Country Report for Namibia253OUTSOURCINGTOAFRICANamibia is a member of regional bodies, such as the African Industrial PropertyOrganization (ARIPO) and its Banjul Protocol governing trademarks and the HarareProtocol on patents.Namibia is a member of the World Intellectual Property Organization. Namibia iscurrently drafting copyright legislation containing measures to implement the WIPOInternet Treaties. In the absence of new legislation, Namibia lacks adequate enforcementmechanisms to address problems associated with piracy and copyright violations.11. Labour and Expatriate Worker’s PermitsThe criteria for obtaining business visas, short-term and long-term work and residencepermits and permanent residence are well defined and followed strictly. The websitesof the embassies provide this information.12. Revenue, Tax, and Repatriation IssuesThe standard corporate tax rate is 30 per cent and dividends accruing to local compa-nies and resident shareholders are tax exempt. Import or purchase of manufacturingmachinery is exempt from GST and Additional Sales Levy (ASL). GST is 10 per centon goods and services; the ASL rate varies between zero and 25 per cent, dependingon the perceived necessity or luxury status of the goods concerned.There is a 50 per cent tax deduction on taxable income from manufacturing enter-prises for five years which is then phased out on a proportional basis over the followingten years. In addition, for businesses setting up in Namibia, a special tax rate can benegotiated with the Ministry of Trade and Industry. There are also a variety of otherincentives accorded to exporters including support for export promotion and training.Non-resident shareholder’s tax is 10 per cent.The Namibian Stock Exchange is the second largest in Africa when measured by mar-ket capitalisation—a total of about US$ 30 billion at Namibia has a liberalised foreignexchange regime, and foreign investors may repatriate all profits and dividends.There are foreign exchange controls in Namibia, and procedures need to be followedwhile transferring funds in or out of Namibia.In terms of tax and cost and ease of finances Namibia is fourth and sixth,respectively.13. Investment Policy and IncentivesInvestment incentives concentrate on stimulating the manufacturing sector in Namibiaand promoting exports to the region and the rest of the world. Foreign investors aretreated on par with local special circumstances where the government will interveneto protect a local industry from being dominated by a foreign competitor. A varietyof tax incentives are in place to stimulate local and foreign trade under Free TradeZones and Taxation). Companies with over 75 per cent foreign ownership are affectedby exchange control regulations.•••••••••11_Africa_Report09_Namibia.indd 25311_Africa_Report09_Namibia.indd 253 2/25/09 4:27:05 PM2/25/09 4:27:05 PM
  • 265. 254Country Report for NamibiaOUTSOURCINGTOAFRICANamibia’s Foreign Investment Act of 1990 guarantees equal treatment of foreign andlocal investors. The act further provides for the following:Liberal foreign investment conditions.Non-discriminatory access to all sectors of the economy.No local participation requirement.Full protection of investments.Repatriation of capital.Right to remit profits.Access to foreign exchange.International arbitration in the case of disputes between investors and the govern-ment, and air compensation in the event of expropriation.A summary of incentives is in the following table. It is expected that the incentivesapplicable to exports and export processing zones.Summary of Special Incentives for Manufacturers and ExportersRegistered ManufacturersExporters ofManufactured GoodsExport ProcessingZone EnterprisesEligibility andregistration• Enterprises engaged inmanufacturing.• Application to the Ministryof Trade and Industry andapproval by the Ministry ofFinance.Enterprises thatexport manufacturedgoods whetherproduced in Namibiaor not. Applicationand approval by theMinistry of Finance.Enterprises engagedin manufacturing,assembly, packagingor break-bulk andexporting mainlyto outside of SACUmarkets.Application to the EPZCommittee throughthe ODC or EPZMC.Corporate tax Set at a rate of 18 per cent fora period of 10 years, whereafterit will revert to the generalprevailing rate.80 per cent allowanceon income derivedfrom exportingmanufactured goods.Exempt.VAT Exemption on purchase andimport of manufacturingmachinery and equipment.Normal treatment. Exempt.Stamp & transferdutyNormal treatment. Normal treatment. Exempt.Establishmenttax packageNegotiable rates and terms byspecial tax package.Not eligible. Not eligible.Special buildingallowanceFactory buildings written offat 20 per cent in first year andbalance at 8 per cent for 10years.Not eligible. Not eligible.TransportationallowanceAllowance for land-basedtransportation by road or railof 25 per cent deduction fromtotal cost.Not eligible. Not eligible.••••••••••Contd...11_Africa_Report09_Namibia.indd 25411_Africa_Report09_Namibia.indd 254 2/25/09 4:27:06 PM2/25/09 4:27:06 PM
  • 266. Country Report for Namibia255OUTSOURCINGTOAFRICARegistered ManufacturersExporters ofManufactured GoodsExport ProcessingZone EnterprisesExportpromotionallowanceAdditional deduction fromtaxable income of 25 per cent.Not eligible. Not eligible.Incentive fortrainingAdditional deduction fromtaxable income of between25 per cent and 75 per cent.Not eligible. Substantial, issuedby government onimplementation ofapproved trainingprogramme.Industrial studies Available at 50 per cent of cost. Not eligible. Not eligible.Cash grants 50 per cent of direct cost ofapproved export promotionactivities.Not eligible. Not eligible.14. Government Agencies Giving Support to OutsourcingThe Ministry of Trade and Industry has established the Investment Centre (IC) as theofficial investment promotion and service centre for the country.The Namibia Investment Center (NIC) is Namibia’s official investment promotion andfacilitation office and is often potential investors’ first point of contact. NIC’s compre-hensive services range from the initial inquiry stage through to operational stages. NICprovides general information packages and tailored advice on investment opportunities,incentives, and procedures. NIC can also help investors minimize bureaucratic obstaclesby working closely with key sector ministries and service and regulatory bodies.The Executive DirectorNamibia Investment CentreMinistry of Trade and IndustryPrivate Bag 13340Windhoek, NamibiaTel: (+264) 61-283-7335; Fax: (+264) 61-220278E-mail: Chief Executive OfficerOffshore Development CompanyPrivate Bag 13379Windhoek, NamibiaTel: (+264) 61-283-7360; Fax: (+264) 61-231001E-mail:••11_Africa_Report09_Namibia.indd 25511_Africa_Report09_Namibia.indd 255 2/25/09 4:27:06 PM2/25/09 4:27:06 PM
  • 267. 256Country Report for NamibiaOUTSOURCINGTOAFRICA15. Overall Assessment and RecommendationsNamibia has a sound and growing ICT infrastructure. It has a potential to have thepeople and skills.The IPR and Cyber Laws Enforcement and ICT security are among the top five.Last but the most important is that Namibia being an investor in the West African UnderseaOptic fibre cable has not negotiated having a landing station for its own use and also forproviding alternate routes to the land-locked sub-Saharan and central African nations.It would be worthwhile for Namibia to commission a strateg