Mainstreaming Entrepreneurship and Africapitalism:

Mainstreaming Entrepreneurship and Africapitalism:
A New Approach to
Commercially Engaging Africa and Overcoming its Economic and Development


§  It
is an absolute honour for me to be invited to speak to this distinguished group
of business leaders this evening.
§  I
want to thank the Business Council on Africa for your kind invitation and,
especially, Clive Carpenter for your efforts to bring tonight’s event together.
§  I
also want to thank Rothschilds of London for hosting us in this wonderful venue
and all of you for taking the time to come this evening.
§  Last
week, in Paris, I had the opportunity to speak at the Bureau for Public
Investment’s BIG Summit of Entrepreneurs about how I am changing the
world.  I told them simply that I want to
change the world by changing the narrative about Africa.  Too many people associate darkness, poverty,
disease, hopelessness and, of course, safari animals with the word
“Africa.”  More sophisticated people
would add “dependence” to the list.  My
dream is for people to associate the word “Opportunity” with Africa, for that
is also the truth and the potential of Africa.
And here is why.
§  These
are interesting times in Africa.  The
continent has gone from a majority of dictatorships, usually by the military from
the 1970s – the 1990s to the democratic, and somewhat democratic, regimes we
see today.  Many of Africa’s economies have
opened up and liberalized to encourage investment and, to a substantial degree,
the call has been answered.
§  You’ve
all heard for the last decade that 7 of the Top 10 fastest growing economies in
the world are in Africa and the World Bank has said that Africa provides the
best return on investment.
§  But
let me take you further back, to illustrate some of the key economic changes
that have taken place on the continent.
§  In
the 1990s, with the end of the Cold War and the loss of interest by the two Superpowers
in securing the loyalties of African countries, aid flows began to dry up.
Along with tighter budgets, a new attitude emerged in the political class to
find “African solutions to African problems.” An attitude which, along with key
policy reforms relating to commerce, permeated the private sector and created
an unprecedented level of growth in multiple economies on the continent.
§  And
the results are measurable.
§  In
1990, the amount of Overseas Development Assistance (ODA) received by Africa,
including through the generosity of the British taxpayer, was $26 billion and
Foreign Direct investment (FDI) was only about $1 billion. Intra-African
investment was almost negligible. Fast forward to 2013 and we find that ODA
received by Africa was $56 billion and FDI was $57 billion.  So while ODA
has been growing and almost doubled since 1990, FDI which was less than 5% of
ODA in 1990, has grown so quickly it has actually overtaken ODA.
§  Additionally,
in 2013, experts estimated that there was $200 billion in private capital on
the continent. When ODA and FDI were subtracted, the remaining nearly $100 billion
came from remittances for Africans in the diaspora and intra-African
§  This
is very significant.
§  Africa
now has two new massive sources of financing, that barely existed in 1990, to
contribute to its economic growth and overall development- and both come from
African sources.
§  Remittances,
which have mostly entered these economies informally, mostly went towards food,
education, healthcare and SME growth.  However,
the intra-African investments were largely driven by a new class of home-grown
corporates, that have seen tremendous and exponential growth in several non-extractives
§  Some
of these companies may be familiar to you:

MTN, the South African
telecoms giant, which is in 17 African countries

Dangote Cement, formerly an
importer of this product now manufactures and distributes it in a dozen African

Shoprite, the giant retail
chain operates in southern and West Africa;

And the United Bank for
Africa, which I Chair, serves 11 million people in 19 African countries.
§  These
companies, among others, collectively represent billions of dollars in annual
revenues, millions of direct and tangential jobs, and increasing regional
§  More
importantly, they represent a growing understanding that there is wealth to be
made in Africa outside of the extractives sectors and that we Africans
represent a market for our own products.
§  So,
there has definitely been opportunity for both foreign and African investors alike
on the continent.
§  However,
over the last two years, the African continent has experienced increasingly
tough economic challenges, particularly the large economies of Nigeria, South
Africa, Kenya and Angola.  This is
because African economies still rely heavily on natural resources and
§  The
slowdown of the Chinese manufacturing sector and with it, China’s appetite for purchasing
Africa’s natural resources has had an immense impact on the continent.
Simultaneously, the exploitation of domestic sources of energy in the U.S. and
the re-entry of the U.S. and Iran into the oil market has sent the price of oil
plummeting from $114 per barrel to the range of $40 per barrel.
§  These
events have significantly impacted government revenues in many nations.  In some economies, like Nigeria, GDP growth
has slowed down to as low as 2.2% per annum.
§  It
has surely been a difficult time for Africa, and we still have challenges ahead
of us, but we will weather this period.
§  I
am a realist, so I must tell you that Africa remains a good bet for your
investment. Even in these times, the economies of Senegal, Tanzania, Cote
D’Ivoire and Cameroon are booming, so Africa’s economy does not lend itself to
a single narrative.
§  The
assertion of the World Bank that the highest returns of investment are to be
found in Africa remains true because the fundamental elements of our economies
are still strong. These include:
a.   Demographics:
In comparative and absolute terms, Africa has a youthful population.  That
means that we are a large market and our productivity potential is high.
 In fact, with the right policies and
investment, Africa is poised to become the engine of global economic growth.
Africa also needs to create 200 million new jobs by 2030 to occupy this young
population. So, our supply of young people can meet the demand for productivity.
b.   Increasing
urbanization: While this process does come with its concerns, 40% of Africa’s
population lives in urban areas and it is happening at a faster rate than other
regions.  Increasing urbanization means
increasing commercial activity in the city and easier markets to reach
c.   Technology
penetration.  The ubiquity of mobile telephony
and broadband means makes it easier to reach more of the population, given the
spread and infrastructural challenges of the region.  The introduction of mobile banking and other
smart phone-based services has also brought millions of more people into the
formal economy.
d.   Increased
consumerism: Africa’s middle class and its young population have proven to have
the purchasing power and a large appetite for goods and services.
§  These
factors along with the rising demand for jobs mean that the smart investor
should look to invest in businesses that create jobs and consumer goods and
services for less for the purposes of export and more for domestic consumption.
I call this Local Value Creation.
§  Local
Value Creation is a key characteristic of Africapitalism, an economic
philosophy I developed to enjoin and deploy private sector participation in the
development of the continent.
Africapitalism asserts that the private sector has a role and
responsibility to help develop the African continent through long-term
investments in strategic sectors that create economic dividends for investors
and social dividends for society.
§  So
I encourage you, as smart investors, to continue to recognize Africa as an
attractive destination but ensure that you do the following two things:
1.   Find
the right partner to help you navigate the environment.  It will make things easier and protect your
investment; and

2.   Commit
to being in Africa the long haul, because Africa rewards the patient investor.
§  I
know Africapitalism works because I was born, raised and spent my entire career
in Africa and I have been very successful adhering to this philosophy.  I am invested in the financial services, real
estate and hospitality, power, agriculture and health sectors because I
consider them to be strategic in that they can help unlock jobs and growth in
other sectors of the economy, thereby delivering benefits to the wider society,
whilst making profit.
§  So,
companies that are involved in these sectors should definitely come into our
markets and partner with local businesses to provide goods and services to our
population.  Other strategic sectors in Africa
include telecommunications, ICT, entertainment, transportation and retail,
which will continue to do well even
in the current climate.
§  I
believe that Africa’s greatest challenge today is not poverty but the untapped
potential of its human capital.  I also
strongly believe in the transformative abilities of Africapitalism.
§  I
started my remarks saying that I wanted to change the narrative about Africa from
“Dependence” to “Opportunity”.
§  Therefore,
I have a responsibility to help create opportunity on the continent, even
beyond those inherent in my commercial activities.  I believe this can be best achieved by
promoting Entrepreneurship.
§  Promoting
entrepreneurship is essential because governments and large corporates do not
have the capacity to provide employment for the millions of young Africans
entering the job market every year.
Therefore, we MUST empower the youth on the continent to create their
own jobs and take charge of their futures by starting their own
businesses.  Many of them are so talented
and merely need a chance to take off. They are designing apparel and apps, and
educational models and agricultural supply chains, etc.  But they are shut out of the formal economy by
bureaucratic and regulatory obstacles, policy gaps and lack of access to
capital, markets and training.
§  And
after all, what am I but an entrepreneur?
§  Therefore,
I have decided put my money where my mouth is and provided capital, directly
and measurably, to nurture the next generation of African business leaders as
Africapitalists, through the Tony Elumelu Foundation’s Entrepreneurship
§  The
programme represents a $100 million commitment to identify, train, mentor and
seed 10,000 African businesses over the next 10 years, towards creating 1
million jobs and $10 billion in additional revenues across the continent.  The tagline of the program is “Your idea CAN transform Africa.”  The documentary you have just watched is the genesis
and the gathering of the first class of 1,000 entrepreneurs in the program
representing 51 African countries. They also represent the best 1,000
transformative business ideas of 20,000 submissions in 2015.  For the Class of 2016, we chose the best
1,000 of a whopping 65,000 submissions.  (In fact, I think some of them and their
wonderful mentors are here today- please stand up and so we can see you).
§  We
took this route in designing the programme because, as a young African, in
addition to having a lot of drive and determination, I was lucky enough to
benefit from the guidance of a mentor who tapped into my potential and prepared
me for the business world.  And when the
time and opportunity came for I, and a group of other young bankers, to take
over a shuttered bank and turn it around, we found some investors who believed
in us.  With their support, we not only
succeeded in turning it around, we grew it into the United Bank for Africa, a truly
pan-African bank with the largest footprint of any home-grown financial
institution on the continent, serving 11 million people in 19 countries.
§  I
believe that Africa has the potential to produce 1,000 more UBAs more MTNs, and
even our own Steve Jobs through private sector investment.  So we made the decision to Institutionalize and
Democratize the same ‘luck’ that I had as a young African. The same luck that
led me to this moment, by creating a merit-based sustainable empowerment programme
that is open to Africans of all nationalities, ages, gender and sectors, all of
whom have NO personal connection to me, beyond our common identities as
Africans and entrepreneurs. Additionally, we are identifying and advocating for
policy reforms in individual countries to enable not just the Elumelu
entrepreneurs but all African
entrepreneurs to succeed.
§  So,
while I may be the more obvious entrepreneur of choice for a business
partnership today, I’m also investing in developing your future partners and it
will be a dream come true for me to witness Tony Elumelu Entrepreneurs doing business
with British and European investors.
§  In
closing, I want to thank you all again for gathering here today, and for your
enthusiasm, as members of the private sector, about the commercial
opportunities in Africa. The fact that you have formed a Business Council on
Africa is a clear indication that you already believe in Africa.  The difference now is that you are dealing
with an Africa that believes in itself and is confident about its future.
This is a speech delivered by  Tony
O. Elumelu,
CON, Chairman, UBA Plc, Heirs Holdings & Founder of the Tony Elumelu Foundation in London to the Business Council on Africa on June 8, 2016. 

You can Tony Elumelu on the following social media handles; 
@TonyOElumelu and Instagram @TonyOElumelu
Twitter: @Heirs_Holdings
and Instagram: @HeirsHoldings


@TonyElumeluFDN and Instagram: @TonyElumeluFoundation


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