The African Nightmare – The Ill-fated Story of Adesemi Communications

In 1993, a Liberian-born and Harvard-educated professional in her early thirties named Monique Maddy landed in Dar es salaam. She had a dream: To build one of Africa’s largest integrated telecommunications services operators. ‘We are going to change people’s lives and build a world-wide brand’, she later boldly announced.

Six years later, after she had raised over 15m dollars in capital, had deployed a network in several regions in Tanzania, expanded into Ghana – and was working towards establishing operations in Zambia, Sri Lanka, and Ivory Coast – her dream came crashing down as Adesemi Communications – the company she founded – unravelled.

When Monique arrived in Tanzania the state of telecoms industry was awful. Under the state-owned monopoly, the country of 30m people only had 120,000 telephone lines. People were regularly queueing behind payphones for access. Having witnessed that, Monique and partner, Come Lague, thought that that was not an opportunity to be missed.

Their idea was simple: To build a network of public wireless phone system where customers would make calls and access other services such as voicemail and paging services. Within a couple of years Adesemi had installed 400 payphones in Dar es salaam and was processing 50,000 calls every day. Not a mean feat.

It is easy for us to scoff at the idea since we have lost our sense of amazement after being inundated by a tsunami after tsunami of digital innovations in the past 20 years. But in the mid-1990s that was a big deal. Such was the magnitude of Adesemi’s success that it made news in the likes of WSJ and HBR. There were calls from countries as far as Russia, Brazil, and India for Adesemi to expand its services into those regions.

Roots of Adesemi's Failures

However, Adesemi had an Achille’s heel: Its business plan was highly dependent on TTCL’s cooperation. A bad idea.

In 1995 Adesemi was granted an operating license from TTCL based on which they installed USD 3m worth of equipment. But just as they were about to go live they received a letter from TTCL informing them that the license they had received was void because it was signed by the wrong person! So, they had to stay put while spending USD 50,000 every month. Despite going back and forth between TTCL and the regulator, it was all to no avail. Only when Adesemi engaged a contact at Harvard University who used his contact in the World Bank to engage the government did Tanzanians see reason! Incredible.

Then there was a commission issue for traffic from TTCL to Adesemi. While it was a common practice then and now for operators to share revenues in such a situation, the regulatory framework was not formalised in Tanzania. And TTCL did not do Adesemi the courtesy of paying it commission for the advantage it gained, regardless of how much Adesemi begged. As a result, the high returns Adesemi had predicted did not materialise. Ultimately, its investors pulled the rug off its feet and the company had to be liquidated.

In 2000, Monique published a popular article in HBR called ‘Dream Deferred: The Story of a High-Tech Entrepreneur in a Low-Tech World’ highlighting her experience in Tanzania. She later published a memoir in 2004 expanding on that. Many articles and case studies have been published based on Adesemi. Probably no Tanzanian based start-up has ever attracted similar international attention ever.

No Tanzania's based start-up has ever attracted the kind of international attention as Adesemi did.

Lessons for Entrepreneurs, Regulators, and Operators Learn

This story is a poignant reminder of the shocking consequences of pointless bureaucracy, non-competitive behaviour, and failure to honour contracts to a nation. Hundreds of millions of dollars in potential investments missed. Dozens of people losing jobs. Thousands denied service. The economy missing the chance to be catalysed. And, finally, the story became a byword of the unsuitability of Tanzania’s market for foreign investments.

When you consistently ignore your customers and fail to innovate, sooner or later a capable competitor will emerge in the market to capitalise on those weaknesses.

Many organisations have a habit of hiding incompetence through non-competitive behaviours. Even when in pole positions, instead of focusing on dominating the market through continuous innovation and improved customer satisfaction, they use their influence to frustrate new entrants. Had TTCL focused on satisfying the market it served, Adesemi would have remained an insignificant player in the market. But, alas, it opted for a lose-lose strategy. Adesemi died, TTCL’s issues remained. 

When an organisation ignores its customers and fails to innovate, sooner or later a capable competitor will emerge in the market to capitalise on those weaknesses. You can review several quite dominant organisations in the past now languishing in mediocrity and wonder whether they thought that time would freeze to accommodate them.

By late 1990s, when Adesemi was exiting the market, the mobile phone revolution was starting in Tanzania. So, was Adesemi ahead of its times? Knowing the travails of establishing a new business, it’s difficult to be judgmental. But as an analyst I believe Adesemi was very na?ve. Theirs was a western mentality where companies must balloon in value rapidly to repay investors. So, they kept funnelling more money into Adesemi daily because they could. A good doze of pragmatism and experience in a telecom sector would have helped. But hindsight is 20-20.

What Monique discounted most was the A-factor (A for African). And that’s what turned her dream into a nightmare.

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This article first appeared on the Citizen of 30th July 2020. The author tried to get in touch with Monique to try to get some insights from her remarkable experience with Adesemi Communications without success. What was your experience with Adesemi Communications? What can you share? We would like to hear from you.