Paredaim Plus

The Future of Business Process Outsourcing in Nigeria

Paredaim Plus
Why Economic Independence Matters for African Nations

Since its inception, Business Process Outsourcing (BPO) has been heralded as the magic formula for addressing unemployment and driving economic growth in the developing world, especially in Africa. Critics are for the opposite and the arguments put forward in support include that it promotes employment, encourages foreign direct investment and globalisation of local economies. On the other hand, historical and current experiences of workers across the African continent in BPO reflect a different discourse in which workers are used, underpaid and with structures of oppression and inequality reproduced.

Africa alone is deemed to have more than 1.4 billion people and overall youth unemployment is now standard across the continent at around 12%, as reported by the ILO. Unfortunately for developing countries, unemployment rates are much higher, particularly in South Africa, Nigeria and Kenya where educated youths are without jobs over 30%. The beauty of BPO is that it provides a market for this talent pool by outsourcing jobs from more affluent countries. These roles are often typified by data entry, customer relations and IT support roles – work that demands relatively skilled labor but can be geographically easily relocated due to developments in telecommunications and globalization.

Exploitation is another area of this system that has its projection towards a dark side. BPO workers from African states are normally paid lower wages than their counterparts from developed countries or the Global North. For example, the call center agents in Nairobi are paid $2 per hour but those in the United States are paid $50 for the same. This partly shows that Africa is still on the periphery of the current globalization where it is just a factory and market for cheap labor.

This problem is not incidental; this problem arises from the world economic systems that support such inequalities. Africa’s participation in Business Process Outsourcing (BPO) only confirms the ability to strip Africa of its resources cheaply for gain in other regions. As this article shows, BPO is not the answer to Africa’s economic problems and that Africa needs to process and manufacture to empower its citizens.

 

Why BPO is Failing Africa

1. Wage Exploitation and the Global Value Chain

The main idea of BPO is to reduce expenditure. Organizations in developed countries hire workers from areas such as Africa to minimise expenses. Though this would mean creating job posts, the remuneration associated with these products is sometimes appalling. For instance, an outsourced tech support position in Nigeria could receive $2-$4/hour, and this is far lower than the minimum wages earned in the US at $7.25/hour and more in states that include California at $15/hour.

This wage differential cannot be explained by variation in the cost of living alone. The work done is the same and Africans can contribute equally or even better than the competition. The underpayment reflects a deeper issue: a world economy system where Africa is systematically positioned as a service provider of cheap labor regardless of the goods or services being provided merit.

 

2. Lack of Economic Spillover

Unlike industries such as manufacturing that can generate wider economic gains through local infrastructure, development of technology and training of human resources, BPO hardly has anything to leave behind. It is a low capital-intensive industry with high turnover rates and it is usually characterized by the orientation towards the realization of short-term objectives excluding development objectives.

For instance, hundreds of employees may be engaged in a call centre in Lagos; however, due to weak infrastructural investments or high-level skills, the outcome is limited to meagre wages. Of the profits made, the majority go back to the Global North countries — rather than enhancing the recipients’ capability for independent production.

 

3. Undermining Africa’s Potential for Value Addition

Any map that outlines the distribution of mineral endowment across the globe depicts Africa as a ‘highly endowed ‘entity. This has however persisted to see the continent in the middle of a vicious cycle of exporting raw unprocessed products at low prices and importing processed products at very high costs. This focus on BPO diverts attention from redressing this basic imbalance.

For African nations to turn around their economic growth potential, it is advised that they should concentrate on more local processing and manufacturing to be derived from industries such as agriculture, mining and technology among others. For example:

- Cocoa processing: Even as Africa generates more than 70 per cent of global cocoa, it contributes only about 4 per cent to chocolate production. When cocoa is processed locally this will produce employment opportunities, retain value within the continent and allow African brands to compete globally.

- Mineral beneficiation: Something to note is that Africa holds a conducive variety of resources that are fundamental to EVs and renewable markets, such as cobalt and lithium. The processing of these minerals within the continent would help its shifts up the value addition chain and therefore bargain from a vantage point.

 

4. The Global North’s Reluctance to See Africa Prosper

Historical and present realisations of the global economy seem to show that the powers of the Global North have been keen to prevent structural transformations which could afford Africa a level playing field. Holding a supply chain dynamic that preserves cheap labor in Africa, and thereby makes the African economies remain vulnerable these nations entrench their economic supremacy.

Within BPO there isn’t much motivation for firms to offer reasonable wages or undertake worthy development. It is not a question of philanthropy but business and African welfare are not important here.

 

The Path Forward: Prioritizing Local Industries

The only way for these African states to free themselves from this exploitative relationship is to develop their ers processing and manufacturing industries. Here’s how:

1. Invest in Infrastructure and Technology: Politicians and private investors should always consider infrastructure projects that stimulate production to be undertaken. These investments are from power generation to transport networks necessary for manufacturing sector buoyancy.

2. Policy and Regulation for Economic Leverage: Governments of African countries should encourage local industries rather than encourage outsourcing in other countries. For example, giving a tax credit to enterprises that engage in local processing facilities or levying payable on raw materials that are exported encourages value addition.

3. Regional Collaboration for Scale: Africa’s broken down economy has to mutually cooperate through such structures as the African Continental Free Trade Area (AfCFTA). It means the creation of a single market allows African countries to bring their funds as well as a set of common rules, encouraging large-scale investments in processing and manufacturing industries.

4. Education and Skills Development: Though BPO services may imbibe new skills, setting up a manufacturing industry needs fresh technical know-how. The governments of Africa need to link up with educational facilities so that the populations within these nations can be empowered with knowledge in engineering, technology, and entrepreneurship.

 

Conclusion

The hope that BPO holds for Africa as an economic panacea is simply an illusion – a veneer of over-exploitation instead of providing genuine solutions for jobless economies and third-world countries. As essential and crucial as the BPO might be, it suffices to indicate that the entire sector prolongs the African continent’s role of providing cheap labor, consequently keeping Africa helpless and powerless politically.

Africa does not need to continue being part of the global economy as a mere benefactor but has to reinvent itself. Through local processing of commodities, manufacturing, and value addition, African countries will not only graduate from supplying only raw materials and cheap labor but they will become economic giants in the world.

This change will not be overnight and will call for an integrated effort, innovative and charismatic leadership, and an entrepreneurial mindset. But the objective—an economically developed and independently functioning African region, an interaction with the rest of the world on equal terms – is worth it. We should not accept the little we are seeing in life when the fullness of life is achievable.