Libyaâ€™s Qadaffi is not only wooing sub-Saharan Africans with diplomatic and cultural initiatives. He is quietly spending billions of dollars buying assets in the region, placing a big bet on the last uncharted frontier in global capitalism. To understand what Qadaffi hopes to gain, we look at one of Libyaâ€™s newest investments, Rwandatel, which is the largest Internet provider and second-largest cell-phone provider in this post-genocidal central African country. Qadaffiâ€™s African investment company paid $80 million for Rwandatel in 2007 and hopes to use Rwanda as a platform to take advantage of the sub-Saharan mobile-phone market, considered the fastest-growing in the world.
The Libyans have long been players in Africaâ€™s unorthodox business scene, but now the stakes are higher and the Libyans â€“ flush with oil money and emboldened by a period of relative prosperity in much of Africa â€“ are positioned to turn what once seemed like a costly political strategy â€“ wooing African governments through friendly investments in prestige projects such as hotels and infrastructure â€“ into a profitable growth-oriented portfolio. Mobile-phone operations in Africa are the worldâ€™s most profitable on a percentage basis.
There is a back story to the Libyan saga. Rwandatel was previously owned by a reclusive American tycoon, Greg Wyler, who invested in Rwanda a few years ago in a act of misguided altruism. Wylerâ€™s problems in Rwanda were chronicled by the WSJ in a page one story about two years ago and I described how Wylerâ€™s Rwanda operation was resurrected as part of a profile on American investor in Rwanda, published in Business 2.0 in the summer of 2007. About a month later (and a few days after a glowing story appeared in the Sunday Non Rwandatel and Wyler), the Rwandan government issued an ultimatum to Wyler: sell out immediately or risk having Rwandatel seized by the governmentâ€™s battle-tested troops.
After three days of â€œnegotiations,â€ Wyler â€“ who had pissed off and disrespected the Rwandans for years by failing to make good on promises and behaving like a moron generally — sold out for about $12 million. The Rwandan government then turned around and sold the company to the Libyans for $80 million.
What Libyan capital and Rwanda’s telco market will yield remains to be seen.