"Too Many Non-Africans Speaking for Africa"

Mark Dearn of Think Africa Press reports:

The Tony Elumelu Foundation was set up “to promote excellence in business leadership and entrepreneurship across Africa”. The Foundation wants African countries to be at the forefront of their own economic growth, a growth it wants to be driven by government and the private sector working together through a new generation of African-born and African-educated business leaders. Part of its philosophy involves promoting “impact investing” – investments that promote a social or environmental good alongside providing a financial return. Founder Tony Elumelu, from Nigeria, is one of the most recognisable faces in African business. He is a former chief executive of United Bank for Africa, chair of pan-African investment company Heirs Holdings Ltd and is on the board of Transcorp – the Transnational Corporation of Nigeria.

This month the Foundation consolidated its links with another new Africa-focused foundation led by another Tony: Tony Blair’s Africa Governance Initiative (AGI). The organisations will be joining their philosophies of boosting private sector investment to help the growth of African economies and enhancing governance. AGI currently focuses on Liberia, Sierra Leone and Rwanda, where both organisations will now work.

Tony Elumelu Foundation chief executive Wiebe Boer holds a PhD in African History from Yale University. He was born and raised in Jos, Nigeria, and has worked as a consultant with McKinsey & Company and an Associate Director at the Rockefeller Foundation. He told Think Africa Press about the Tony Elumelu Foundation’s vision for African growth and 21st century philanthropy.

What was the inspiration behind the Tony Elumelu Foundation?

After retiring from UBA Mr Elumelu wanted to give back something to the next generation of entrepreneurs and business leaders in Africa. Tony’s story is the kind you don’t often hear. He was born and raised here in Nigeria, where he did all his education and has spent all his career, and he has still been able to be very successful and build a pan-African business that’s worth several billion. His vision is that if you can remove the obstacles that are preventing other African businesses from emerging, then a lot more companies like UBA can be built in Africa, become pan-African and help transform the continent.

The Foundation is quite unique in that although there are a growing number of foundations in Africa founded by Africans, we are African-founded, African-funded, in Africa and pan-African focused. I don’t actually know of any other like that. And part of what we want to do is set the policy so that if people set up foundations like this they get some kind of tax benefit.

Could you explain impact investment?

Impact investment is addressing development issues with for-profit approaches to solving social and environmental problems. In the old model of philanthropy, the idea is that you just give grants, and there a lot of things that need grants and are public goods and cannot have a return. But there are also a lot of things that are done in development through grant making that actually undermine private sector innovation. For example, if you pump a lot of money into agriculture value chains you crowd out the private sector, or if you put grant money in clinics that people are willing to pay for then you undermine the ability of private entrepreneurs to set up clinics that make profit and provide the volume of services required. Across Africa you see so many of those services delivered through charity, and in most of the world that isn’t the case. There is a stigma that you shouldn’t make money for doing those kind of things, but at the end of the day, with the scale that these things need to be, you need private capital as donor funding and grant money is not enough.

Every year US foundations give away about $200 billion for US programmes internationally, but just the bill for upgrading low income-driven housing facilities in the developing world is $3 trillion. So all that grant money isn’t really going to go anywhere, but if you make the case that investing in that low income real estate can have a healthy profit alongside the social impact, that’s when you get JP Morgan, Rockefeller and other companies investing in development. From the philanthropy side we want social impact, but for sustainability you need some kind of financial return.

How important is it for you that African economic growth is steered by Africans?

We do want to see African growth led by African businesses. Part of that is that if African growth is driven by non-African companies, decision-making is outside Africa, profits are outside Africa, so the benefits of that growth will not be felt as much. You could have 7% growth levels but the same level of poverty. And something could happen whereby these companies pull out. There is an interesting story to be told of Africans investing in Africa, but you just don’t hear about that. Most people invest in their own markets, but there are a growing number of Nigerians investing across the continent and South Africans of course have been doing that for quite some time. But there are still cultural issues with that, for example Ghanaians being more wary of a Nigerian bank in Ghana.

So how will the Tony Elumelu Foundation go about its work and where will you focus?

We are trying to be targeted in the way we do our interventions: you can’t just say you’re going to impact the entire African private sector in one go. We’ve divided into six segments how businesses grow. The first segment is business students. With Africa’s growth trajectory right now, one of the problems is that there isn’t a management pipeline that’s being trained fast enough to keep up with current growth, let alone longer-term or faster growth. There’s some really good business schools in Africa - three in South Africa, Strathmore in Kenya, Lagos Business School here in Nigeria - but after that the level goes down quite quickly. So one of the things we want to look at is how do you build the profile of business education in Africa and then how, in an economical way, do you expand the opportunities? If you really want to train thousands of young Africans to be business leaders it’s not logistically possible to send them all to Harvard, where they could get a great degree but study nothing that’s relevant to African business. Also, if someone goes oversees to study, whose capacity are you going to build? How many of them are going to come back?

The second segment is start-ups: people who have innovative ideas, in some cases young people who don’t have a lot of experience. Other start-ups come from people who have been in big corporates, have some management experience and want to go out on their own. They face obstacles, including simple policy obstacles that means it may take eight months and 150 steps to register a business, which can make a lot of people give up.

The third segment is small and growing businesses. If there is any activity focused on how to build entrepreneurship in Africa then there’s a lot of focus on that space. It’s a really crowded area and may not be somewhere we try to intervene.

The fourth segment is what we call national companies. These are companies that are beyond small and medium-sized enterprises, and that are well-established and known companies in their sectors in their countries. Nigeria is very big, so a national company here is a big company, but in most African countries it’s not that big. If you’re the biggest telecoms player in Burkina Faso, it’s probably not more than a $200 million company at the most. It’s very nice to be a big fish in your own pond, but to benefit from and drive the economic growth that is coming across Africa, companies need to be across the continent. That step from one to two and then more countries also faces cultural barriers. Even in just West Africa it’s very different, with Anglophone and Francophone countries, and different labour laws and work ethics. They are quite big obstacles, but I think we can have a big impact in unlocking policy obstacles and creating a sense of the Africa opportunity. There really is a strong sense that exports means outside the continent or that the best kind of business is one that trades outside of Africa rather than within, and it’s unfortunate that trade within Africa is a tiny proportion of all Africa’s trade. And that’s a cultural barrier that has to be broken. I think that’s also where you’re going to get growth from.

The final segment is African multinationals, very exclusive African business leaders of which there are ten to 15 across the continent, who have taken their companies internationally or who are becoming household names within Africa. These are Tony’s peers, the new generation of African business leaders who have really done well, been part of and benefited from Africa’s growth in the past ten years. We need to find a way to build a platform for that group so that they are the ones who speak for Africa when it comes to economic issues, because there are still too many non-Africans speaking for Africa. It shouldn’t be Bono and Jeff Sachs, it should be Tony, Aliku Dangote and these guys.

How much of your work will involve interacting with government?

One of the things that surrounds all the segments is policy and advocacy. If it takes that many steps to start a business it can often be rooted in colonial laws and post-colonial laws which layered on top of each other. Then other government agencies came in and added another layer. I don’t think anyone was trying to make it difficult, but it became difficult and no one rationalised it. Ultimately, the effort we make in policy may end up being the most important, but it also takes the longest. Places like Rwanda and Liberia have done well in the sense that it’s now easy to start a business, so we want to look at how they do that, how it can be taken to other countries. And in many cases there are African countries or similar countries which have solved issues, and we want to look at how they did that.

Part of the problem is cultural. I’ve spent two decades in Nigeria, and have also lived in Mauritania and Kenya for three years. In each of these places it’s a totally different culture and they don’t know about each other. So there’s so much innovation in Kenya, say in IT and agriculture, that people here in Nigeria are reinventing. And it’s because people in Africa don’t connect, they connect through Europe. So it would be a great legacy for us to have to be a connector. We’re in Lagos and we could link people doing things in Kenya that could help the private sector in Senegal and across the Francophone and Lusophone countries, which nobody is doing right now.