www.IFC.org/ThoughtLeadership Note 16 | September 2016 CONGO CALL CENTER: BUSINESS AMID FRAGILITY In fragile settings the challenges of building a business are increased by a legacy of conflict, instability, and loss. Institutions struggle to provide basic services, let alone the complex reforms and public goods necessary for an enabling business environment. Despite these substantial obstacles, it is possible to create a sophisticated business in even the most challenging settings. The Congo Call Center is one such example—a formal services firm reliant on costly, imported technology that has grown and prospered in the Democratic Republic of Congo. Fragile and conflict-affected states, home to approximately half Finding Financing of the world’s extreme poor, are often emerging or frontier In 2009 Congo Call Center’s co-founders participated in IFC’s markets where development has been upended by past and present Business Edge business training program and, in quick trauma and instability. In these settings, development challenges succession, the firm opened its first bank account and secured its are magnified: Institutions are further weakened, struggling to first loan from Rawbank, a leading Congolese bank and IFC deliver services to citizens, many without schooling or healthcare, client. While both women were experienced, Business Edge while violence has destroyed infrastructure and wealth, choking helped hone their management skills, strengthen their accounting, job creation, entrepreneurship, and the private sector. and bolster their confidence to successfully pitch their business to Rawbank. In fragile settings, additional capacity building efforts The Democratic Republic of Congo (DRC) bears many of these are often essential to success and can benefit even the most hallmarks due to its history of conflict and civil war. For accomplished individuals. businesses this means a risky environment that constrains investment and financing. Building confidence and establishing networks was also imperative for the co-founders as they had to confront and At the same time, riskier situations can offer significant overcome social and cultural obstacles—for example, the legal opportunities. Congo Call Center—the country’s first customer code requires married women to seek their husband s’ permission call center—is an example of the potential that challenging to sign contracts, open a bank account, or take out a loan. settings can hold for entrepreneurs and businesses. Founded by two businesswomen, this technology-based, formal services firm Congo Call Center’s loan came from Rawbank’s “Lady’s First” today employs nearly 400 young Congolese, generates annual program, an IFC and donor-backed initiative to foster and expand revenue of $2.3 million, and provides client solutions, social lending to small and medium-size enterprises and female services, and data collection to domestic and multinational firms, entrepreneurs. In the DRC, small and medium enterprises have nongovernmental organizations, and development partners. Yet some of the lowest levels of access to bank loans on the continent, Congo Call Center’s path to these achievements has been neither while female entrepreneurs in particular are likely to receive linear nor easy. considerably less financing than their male peers. Local banks in the DRC tend to be conservative lenders that favor government Both co-founders attended university in Belgium where they and large enterprises. Even on rare occasions when they do lend gained sector expertise while working in call centers. Upon to small firms, their terms are often stringent, reflecting an returning home they saw an opportunity in a large market devoid aversion to risk due to high operating and liquidity costs as well of professional call center services needed to connect businesses as the challenging business environment. with their customers. That opportunity was also a challenge: Local businesses and banks did not understand the value or potential of Through “Lady’s First”, Congo Call Center not only accessed such services. This meant slow early growth and a reliance on financing but also developed a professional network and ties to personal financing for four years as they secured their first clients. the broader business community. Yet given its ambition and technology needs, the company was not a typical client and had and broadband infrastructure that raise costs and constrain financing needs beyond those of other small firms. To begin international expansion. Kinshasa was connected to the West operations, it had to import essential equipment over several Africa Cable System in 2013—requiring regulatory and legal months, which required more than double the available financing reform—but the full benefits of this upgrade have yet to transfer and, crucially, a grace period so that operations could commence down to the firm level. And as the company eyes regional and before loan payments came due. international expansion it will need to continue to boost competitiveness through measures such as quality infrastructure. Less systemic challenges weighed heavily on the firm as it struggled to establish itself. DRC’s lack of appropriate incentives and government regulation—the nation currently ranks 184 out of 189 in the 2016 Doing Business rankings—meant that small firms like Congo Call Center do not benefit from strong institutional support. Early on, the co-founders were challenged by a tax system that burdens smaller firms disproportionately, with up to of 30 different taxes. The company also had to address systemic corruption, which weighs heavily on female entrepreneurs, and chose a zero-tolerance policy despite the fact that it cost them much-needed business. Expansion created headaches over A worker at Congo Call Center securing enough office space to accommodate a workforce that grew from the initial twelve to nearly four hundred. Through the relationship manager at Rawbank, Congo Call Center met XSML, a local investment fund manager focused on frontier A vision to strategically expand marks an inflection point for markets in Central Africa, which was created by IFC’s SME Congo Call Center as it begins to consider longer horizons. Ventures program. XSML provided the company with the Domestically, the company serves several multinational firms and remaining financing as well as a one-year grace period. Sharing their subsidiaries. More recently it has grown its business with ownership with a fund manager was an adjustment at first, but the nongovernmental organizations and development agencies, firm quickly benefitted from the investor’s increased rigor and including Catholic Relief Services, the World Bank, and UN business expertise. Importantly, XSML engaged the co-founders agencies, by providing market research data, logistics, and social in a collaborative fashion and actively worked to expand their services such as sexual assault hotlines. This highlights the way client base by leveraging their contacts. Partnership with XSML private sector firms can address drivers of fragility beyond job marked a turning point for the co-founders as they began to creation while still pursuing profit. overcome their most direct challenges to establishing Congo Call Center and could now turn their focus to growing their business. Still, the company has yet to win over large domestic firms such as banks and insurance companies. Regionally, Congo Call Other Challenges Center is exploring expansion in the Republic of Congo and That is not to say that there haven’t been additional challenges for Cameroon, which may open up new opportunities and markets as the company to overcome, many of which were exacerbated by well as present challenges specific to those fragile regions. the DRC’s fragile context. Attracting qualified workers in a highly informal economy was an initial obstacle for the firm. It recruited Conclusion university students with the necessary linguistic skills but still had The success of Congo Call Center demonstrates that skilled and to institute a training program to acclimate young workers to the committed entrepreneurs can succeed in even the most difficult rigors and discipline of professional employment. The nature of environments. The challenge of these settings is in combining the the work created shorter tenures for employees, yet the company’s necessary qualities and support with an ingenuity to find tailored imperative of establishing a professional culture can be seen both solutions to local issues. In this way an unlikely story—a formal, in the firm’s success and in the fact that other firms in Kinshasa technology-oriented services firm in the DRC—can become a hire many of their experienced employees. reality.  The labor market is just one of many difficulties presented by the  DRC’s business environment. One legacy of the nation’s conflict Jordan Pace, Research Assistant, Office of the Chief Economist – is an infrastructure deficit that ranks among the continent’s worst. Thought Leadership (Jpace1@ifc.org) Congo Call Center is particularly affected by deficits in electricity This publication may be reused for noncommercial purposes if the source is cited as IFC, a member of the World Bank Group. 