By Debo Onifade
Though Mexico and Canada will continue to be the top two trading partners of the United States for many years, the rising US-China feud over trade and corona virus can certainly help grow jobs in Nigeria and other African countries if African politicians brace up to rival China.
US president Donald Trump ran for election on a promise to make trade fairer for the US, and China has been the hardest hit trade partner so far. China did many things right in the last couple of decades that attracted huge American investment especially to their manufacturing sector. While American conglomerates sought to earn greater profits by producing goods at cheaper rates in China, Chinese factories offered highly skilled and cheap labor, adequate infrastructure, as well as a very high work rate that was uncommon in other parts of the world.
Today, Chinese labor rates have gone up significantly and many other countries have built adequate infrastructure for manufacturing. In fact, a group of countries often referred to as “MITI-V” or “Mighty Five” have emerged in the last decade as direct competitors to China. They are Malaysia, India, Thailand, Indonesia, and Vietnam.
Each of these alternative manufacturing countries has their unique pluses and drawbacks. These are the countries Nigeria and other African countries need to learn from and compete with for outsourcing jobs from the United States.
Apart from manufacturing, American companies also outsource software development, customer service, medical billing, digital marketing, and other services to providers in Asia, Eastern Europe, and the Caribbean. In the past, phone customer service in the United States was mostly outsourced to India. But many US companies today are outsourcing phone customer service to providers in the Philippines and the Caribbean perhaps because of their more neutral English accent and similar levels of education and skills as the Indians.
India however continues to be the number one source of software developers to the United States. According to Delon Jobs, the #1 provider of IT recruitment service in Nigeria, a few Nigerian companies are getting opportunities to hire software developers for US companies but the country needs to do a lot more to be more competitive in the software development outsourcing global industry.
Ironically, most small countries in Africa patronize expensive software development companies in Europe and Asia because of the dearth of local resources in their countries. For example, I spoke with a Malawian friend a few weeks ago and she told me virtually all major software development services in Malawi are provided by European and Asian companies. It should be the other way round.
Africans must develop adequate expertise to meet their local needs and export services to the West to earn good foreign exchange.
Talking about medical billing, local DME Billing service in Massachusetts and other states across the United States are competing with Indian offshore billing companies. New medical billing specialties like acupuncture billing are still largely serviced by local resources but most of the traditional specialties like primary care, dermatology, neurology, family care, radiology and others are commonly outsourced to India.
As the United States feud with China continues, US companies will be seeking alternate countries to outsource manufacturing and services to. And Africa must work hard to compete for those jobs. Many African residents in Nigeria, South Africa, Ghana, Kenya, Zambia, Uganda, Tanzania, and others speak English as a first Language.
On the average, they speak more English than people in “MITI-V” and China. This is the biggest value Africans have to offer American companies seeking new partners outside China.
Unlike the manufacturing outsourcing industry that requires enormous physical infrastructure, software development, phone customer support and medical billing mostly require excellent communication and technical skills. Given that Nigerians always rank among the smartest people in the world and communicate more primarily in English than the Indians, they should be competing very much for outsourcing deals from the United States.
Nigeria should take the leadership position and bring along other African countries to start earning good outsourcing income from the United States.
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If the United States adopts a policy that favors Africa for some of their offshore outsourcing needs in place of China, they wouldn’t have to worry about military or global rivalry, intellectual theft, trade imbalance, or cyber threats as they are currently experiencing with China.
Nigeria, and indeed the rest of Africa must recognize that negotiating with United States to seek outsourcing opportunities is not just good for foreign exchange earnings, it will greatly lower unemployment rates across the continent. There are many small companies in China that went from ten employees to two hundred employees only because of outsourcing opportunities from the United States. Same thing can happen in Africa. Outsourcing opportunities can generate millions of jobs across Africa and transform people’s lives
Based on recent employment number estimates on a top job portal in Lagos, Nigeria – Jobs.delon.ng, Nigeria’s unemployment and underemployment rate was certainly close to 50% as at the end of May 2020. A significant number of the underemployed people are very smart people that can become highly trained like typical Chinese workers. Software development companies in Nigeria should partner with state governments in Nigeria to provide apt training to software developers to help them become more attractive to foreign customers.
The Nigerian government should also improve their trade policies and engagement to promote the outsourcing industry. Imagine the amount of growth that Africa will enjoy if we develop coffee processing in Uganda, processed juice and textile in Morocco, remote customer service infrastructure in Ghana, and software development in Zambia.
Finally, Africa must fix its infrastructure and politics to make it easier to negotiate outsourcing with the United States government. China did not have to adopt western democracy to negotiate, but they gave enough assurance to the Americans that there will be stability in business policies despite any change in government.
China also did not have to guarantee 24-hr power supply across the entire country or the elimination of poverty. But they provided word-class infrastructure in several industrial cities that were adequate for manufacturing and transportation.
Africa can do the same, and Nigeria should lead the effort.