Lagos and Manila: A Tale of Two Cities
Nigeria and Philippines have a lot in common. Both are middle-income countries with a GDP per capita around $3000. They have a relatively young population and have experienced strong growth in the last few years. Lagos, like Manila, is a perpetually gridlocked, densely populated city that has grown organically with limited urban planning. Unlike Lagos, however, Manila has regular electricity. That’s not the only thing the Philippines has over Nigeria.
Manila at night from a few thousand feet
This post will discuss 2 (of many) things that stood out during a 2-week trip to the Philippines: tourism and the thriving business process outsourcing (BPO) industry.
Tourism and Boracay beach — “What exactly is the fuss about?”
Philippines is an archipelago made up of over 7,000 islands so it’s not surprising that they have great beaches. Of all the beaches, few are more popular than Boracay, a 45-minute plane ride from Manila.
Sand and palm trees of Boracay
Boracay is beautiful. Sold as a dream tourist destination, it has the right combination of local and western culture that forex-spending foreigners love. It is inexpensive to travel there — $50 for a plane ticket from Manila and another 50 cents for a ferry ride to the busy island with its narrow streets. Meals are cheap, costing as little as $3 at the best restaurants. Still, I was unimpressed. I couldn’t help think about how Nigeria has beaches at least as beautiful as Boracay, but not as popular. What would it take for us to develop holiday destinations in Nigeria?
Boracay’s evolution has been supported by Government. They built roads and airports to support the constant stream of tourists. They advertised heavily and developed a brand for tourism in the country — “It’s more fun in the Philippines”. Philippines is visa-free to most OECD countries and is therefore a tempting holiday destination. The locals are welcoming and have a solid understanding that the constant stream of visitors is what drives their livelihood.
Beyond ‘exciting’ locations, tourism requires supporting infrastructure. It’s the perceived safety of lives and property. It’s internet access and regular electricity. It’s accessible, inexpensive transportation options. To understand why it’s Boracay and not Bar Beach, well, those are some clues to start.
Business Process Outsourcing — “Man, I’m sure Nigeria has more unemployed graduates who speak English”
Among other things, BPO describes companies moving parts of their business to lower cost countries, with call centers being the easiest and most common.
Philippines has the largest BPO industry in the world — yes, even bigger than India. The largest of these companies take calls on behalf of American clients from AT&T to Wells Fargo.
The industry has grown from barely anything in early 2000s to becoming the largest private sector employer of labour. International BPO companies all exist in the Philippines and they compete fiercely for talent — some employ fresh high school graduates. Many have kiosks in malls to encouraging passers-by to apply. After application, successful candidates receive a job offer after a few hours of interviews and tests. This has worked for the Philippines — unemployment has dropped over the last 5 years.
If you hear them tell it, the Philippines has natural advantages over most countries to set this up. Many Filipinos speak English and the country boasts a literacy rate of over 90%. Since WWII, they have maintained good relations with the US giving big American brands like AT&T or Verizon comfort in setting up call centers abroad. They have the supporting infrastructure required — their American clients will not tolerate any downtime for any reason. Again, Government actively supported the BPO industry as a vehicle of growth providing low cost funding, tax holidays and other incentives. In fact, they have been the darling of Filipino governments for the past decade because they create so many jobs .
None of these advantages are impossible to replicate in Nigeria, no?
This is not to put the Philippines on a pedestal — that country has many issues. Income inequality, insurgency and terrorism in the south, slowing economic growth to name a few. However, they appear to have got tourism and BPO going.
Overall, SE Asia has left Sub-saharan Africa in the dust. In 1970, Sub-saharan Africa generated 3 times the electricity per capita of SE Asia on . Today, SE Asia generates twice as much electricity per capita as Sub-saharan Africa.
Nigeria can and should be in a better place right now. Good times soon?