Africapitalism: A Way to Unleash Africa’s Potential

Doing well in business whilst doing good for Africa. That is the challenge set by Nigerian banker-turned-philanthropist Tony Elumelu who earlier this week announced a five-fold increase in the number of grants his foundation provides to business start-ups.

The Tony Elumelu Foundation aims to identify new businesses that can contribute to Africa’s development through both innovation and social engagement. Mr Elumelu wants to see the private sector take a leading role in moving Africa forward and commit to the continent’s future through long-term investments that create economic prosperity and, by extension, social wealth.

The Nigerian banker, a disciple of Harvard Business School professor Michael Porter, calls his development strategy Africapitalism which seeks to equip the continent with a clear competitive advantage. For Mr Elumelu there is little room for doubt that Africa will shortly find, and claim, its niche in the world economy: “With the level of talent we currently see, there should be no reason why Africa cannot deliver the world’s next Bill Gates or Steve Jobs.”

Tony Elumelu is the architect of Sub-Saharan Africa’s largest bank merger when he acquired, in 2005, the United Bank for Africa and fused it with his own Standard Trust Bank. Barely five years later, the bank resulting from this merger had expanded into 19 African countries and was serving well over seven million customers. Mr Elumelu retired from banking in 2010 to found Heirs Holdings, an investment vehicle with interests across a broad range of economic sectors.

“With the level of talent we currently see, there should be no reason why Africa cannot deliver the world’s next Bill Gates or Steve Jobs.”

Through his foundation Mr Elumelu now tries to encourage young entrepreneurs to follow in his footsteps: “My objective is to prove that the African private sector can indeed be the primary generator of development. This can be accomplished by enhancing the competitiveness and management capacities of private business.”

Mr Elumelu strongly objects to Africapitalism being branded “capitalism with an African twist”. His economic philosophy encompasses rather more: “I see Africapitalism as a rallying cry for empowering the erstwhile much-maligned private sector to drive the continent’s economic and social growth.”

The timing is right. At the second annual Forbes Afrique Economic summit in Brazzaville, Congo, regional leaders emphasized the need to move away from development models that rely too heavily on government guidance and state participation.

The summit’s host, President Denis Sossou N’Guesso of Congo, delivered a remarkable speech in which he called upon governments to allow for more liberal policies that foment the emergence of a strong and entrepreneurial middle class that will create “a better future for Africa.”

This appeal was echoed by the four other heads of state attending the summit in Brazzaville. President Blaise Compaoré of Burkina Faso appealed to African businesses to invest in the future by replacing the short-term, “quick-profit” mentality prevalent up to now with a more sustained commitment. Mr Elumelu added that short-term investments generally fail to make an impact: “It took the United Bank for Africa all of twenty years to become a major player. Now the bank has both the size and scope to make a difference.”

Former UN Secretary General Kofi Annan, also attending the Brazzaville summit, drew attention to the need for good governance. Mr Annan said that Africa’s future success rests on three pillars: Peace and security, the rule of law and economic development.

The rule of law in particular is essential if private enterprise is to flourish and prosper across Africa: “Without it business stands no chance of contributing in any meaningful way to lasting development.”

Mr Annan concluded that Africa is going through “momentous times” and said the continent is well poised to benefit from the untold billions of dollars now side-lined and holed up in tax havens around the world. Once Africa can convince investors that these monies can be better spent in supporting a nascent and vibrant local business class, the continent’s development will take flight.