The Remarkable Part of the Chicken Republic Story
Regarding Nigerian entrepreneur Deji Akinjanju’s story two posts ago, there quite a few things that hit home and/or are signs of the time, like that he was about my age when he started, that he did consulting work in London (which I’ve also done), that he believes strongly in investing in Africa, and that he left a good paying job in Western Europe to become an entrepreneur in West Africa.
However, the most remarkable thing about Akinjanju’s story is that something like this didn’t happen:
Part of Uzbekistan is also ideal for growing tea. Interspan, a US company, invested heavily. But by 2006, Karimov’s daughter, Harvard graduate and international jet setter, Gulnora Karimova, had taken an interest in this market. Gulnora is a woman of many talents as you can see from her webpage: http://gulnarakarimova.com/en/.
For example she hangs out with rock stars like Sting and even duets with Julio Iglesias: http://www.youtube.com/watch?v=oFDVWJ0N89U
Gulnora’s interest meant taking over Interspan’s assets and business. And this was not going to be by making an attractive offer. The company reports that men with machine guns, allegedly working for the Uzbek intelligence services, entered its offices and warehouses, and seized its assets and inventory. Its personnel were arrested and tortured. By August 2006, the company pulled out of Uzbekistan, and tea was now a Karimov family monopoly.
Or something like this, from the bad (hopefully/probably) old days in the Ivory Coast:
Washington, DC 27 October 2003 — The American owners of a cellular telephone operator in Côte d’Ivoire that was shut down earlier this month are preparing a claim for damages. They charge the Ivorian government with failing to protect their investment.
The expropriation claim is being prepared by lawyers for Western Wireless, a Bellevue, Washington-based communications services provider, and Modern Africa, a $110 million fund with investments in nine African-based companies. Together, Western Wireless and Modern Africa report they have invested about $40 million in the mobile phone firm, known as Cora de Comstar.
On Friday the Bush administration weighed in with diplomatic backing for the American firms. Assistant Secretary of Commerce William H. Lash, III delivered what he termed “a very harsh demarche” to an official of the Ivorian embassy in Washington.
“This is the worst treatment of an investor and the worst example of state-sponsored thuggery I have seen anywhere,” Lash said he told the Ivorian official summoned to the Commerce Department, standing in for Ambassador Youssoufou Damba, who was recalled to Abidjan last week for consultations. He said the treatment of Cora de Comstar could turn Cote d’Ivoire into a “poster child” for negative investment climates.
Although a legal dispute over ownership of Cora de Comstar has been brewing for more than two years, the current crisis was prompted by the takeover of the company’s offices on October 9 by Alexander Galley, accompanied by 25 policemen who forcibly evicted the company’s management and staff, according to the U.S. owners. They said Galley based his action on a decision by an Ivorian judge, whose order was subsequently cancelled by the Ivorian Supreme Court.
According to Brad Horwitz, president of Western Wireless International, the government of President Laurent Gbagbo is to blame for what has happened to the cellular company. “The government clearly had a choice to make: it could deal with a convicted criminal or it could protect a U.S. investment,” he said. “We have given them numerous opportunities,” adding that negotiations on the matter have dragged on for more than two years.
For the past several months, the investors operated Cora de Comstar on a cash basis, because a court had handed control over company bank accounts to Galley. But after the October 9 incursion, they shut the network down, cutting off service to some 33,000 customers, Horwitz said: “We have furloughed 200 employees. We have lost all revenues. Our offices have been systematically looted and trashed, safes wrenched out of the walls and stolen, all this with the complicity of the government. It comes to a point where enough is enough.”
For most African states (and some central Asian ones too) that’s how it’s been most of the time since independence. You have had, and I quote from the excellent http://whynationsfail.com/blog/ “extractive economic institutions — economic institutions designed to extract resources from the population and businesses for the benefit of a narrow elite.”
But it’s actually looking like it’s changing now – in West Africa at least (Im not sure about Central Asia) – and that’s pretty cool.
Imagining Dominique Ouattara using thugs to steal one’s business in the Ivory Coast feels just as surreal as imagining Filippa Reinfeldt (spouse of Sweden’s Prime Minister) doing it in Sweden. On the other hand I could maybe imagine the son of Senegal’s President Karim Wade taking over other people’s businesses, but it looks like the good people of Senegal are removing Karim from any position of power now.