Tony Elumelu, founder of Tony Elumelu Foundation, advises African billionaires to invest in developing Africa rather than allowing the continent to solely depend on foreign aids for its development needs
| By Maureen Chigbo, just back from Marrakech, Morocco | Jun. 17, 2013 @ 01:00 GMT
NO one in the large hall packed full with audience could say exactly what his brief was when the African Development Bank, AfDB, invited him to make a major speech at one of the high level seminars that characterised by the 2013 bank’s annual meeting. But judging from the topic slated for discussion: “Philanthropy and Development: Where are Africa’s Billionaires?” most of the people in the audience must have expected a speech heavily laced with the traditional idea of philanthropy as most people are used to. This is more so since the prime speaker is also the founder of Tony Elumelu Foundation.
But some of the people in the global audience, made up of eggheads in the investment and international financial banking institutions, seasoned professionals and entrepreneurs, African finance ministers, central bank governors, chief executives and executives of global development finance institutions, past presidents, development partners, and African and global philanthropic institutions and journalists, must have been shocked at the new paradigm shift expoused by Tony Elumelu as the mode of philanthropy African billionaires are now engaged in to lift Africa out of poverty.
For Elumelu, the concept of philanthropy has evolved over time in Africa. It has moved from a time when it was characterised by external aid to Africa to now when the discussion centres on African billionaires and their role in philanthropy. According to Elumelu, to a large extent, philanthropy as characterised by aid (which saw Africa receiving billions of dollars over the years) has not fundamentally shifted the cause of development in the continent.. “If this has not done what it should do, what should we be doing? What should African billionaires Do? In answer to his question, Elemelu proposed Africapitalism as the solution to Africa’s development need which should augment external aid. To him, external aid alone cannot lift Africa out of poverty judging by past experiences. Charity and aid have failed Africa and its leading entrepreneurs are now driving the continent’s development agenda, said Elumelu in a speech, which some deemed “powerful,” while others were askance.
The speech was delivered at the margins of the AfDB annual Board of Governors meeting held in Marrakech, Morocco, May 28. The speech was followed by a panel discussion moderated by Zeinab Badawi, the BBC presenter with Ronald Lauder, founder of the Ronald S. Lauder Foundation. Elumelu challenged the audience to consider a new approach to Africa’s development – one that involved the private sector and was capable of kick-starting the economic ecosystem that underpins all sustainable development.
Africapitalism, according to Elumelu, is an economic philosophy which asserts that the private sector can solve Africa’s most pressing challenges through long term investments that create economic prosperity and social wealth. Elumelu, who is also chairman of Heirs Holdings, a proprietary investment company, called on the private sector to take on the responsibility of development using his personal experience at the United Bank for Africa, UBA, where he left as the chief executive.
He made a compelling case for Africapitalism by telling the story of how a $5 million investment in UBA 17 years ago spawned a multinational, pan-African financial institution that has created 25,000 jobs, generated wealth in communities all across Africa, expanded finance for trade, created stronger financial infrastructure for investment and economic growth, paid taxes to national and local governments to support public services, and given millions of customers control over their financial lives.
Elumelu compared that investment to the annual flow of charitable aid into Africa – many times the $5 million investment that started the UBA – to show that private sector involvement was a far superior, more effective way of dealing with Africa’s development challenges. Elumelu’s investment company, Heirs Holdings’, recent $300 million investment in a power plant in Nigeria was another example of a long-term, profit driven investment that would bring development to Africa.
Elumelu mentioned other strategic visionaries who were also playing a significant role in driving the continent’s development through their business investments: Aliko Dangote and Mike Adenuga in Nigeria, Lucien Ebata in the DRC, Reginald Mengi in Tanzania, Patrice Motsepe in South Africa, and Kofi Amoabeng in Ghana. According to him, these are entrepreneurs who are creating tens of thousands of jobs, empowering individuals, families and entire communities.
In a call to action for the continent’s entrepreneurs and business leaders who have not yet embraced Africapitalism, he pleaded with them to ‘step up’ and deliberately start investing in strategic sectors that would drive development.“We need to do away with short-term thinking. We should be investing over time horizons measured in decades, rather than fiscal quarters. We must stop the practice of extracting wealth without reinvesting for growth. We should be strategically building domestic industries and manufacturing to support our national economies, and growing intra-African trade,” he said.
Elumelu called on the philanthropic and charitable communities of Africa, the development banks and the private investors to embrace the philosophy of Africapitalism and recognise that the private sector’s role in driving economic prosperity is the solution for development. “Economic prosperity is the most valuable and lasting gift we can give to a continent with our challenges. We need to support solutions that are catalytic and sustainable. That should be the ultimate goal of our “development” mission.
In contrast to Elumelu’s speech, Lauder painted a picture of the traditional meaning of philanthropy where the rich is encouraged to give to the poor, which was a source of relief to some people in the hall who disagree with Elumelu’s postulations. “Philantrophy was part of our life. We were encouraged to put money in a box for the poor when we were little. It became very much our culture.”
Lauder made a strong case for philanthropy that supported educational, health programmes, museum, and research in the different fields including medicine where he said his foundation has supported programmes to find cure for breast cancer. His organization is also supporting efforts to preserve clean water which, he said. will be better than gas in the next century because the resource is being depleted. He said that philanthropy should be included in the education curricula, adding that the “idea of philanthropy should be part of teaching.”