The new philosophy of banker-philanthropist Tony Elumelu promises wealth by combining profit and social enterprise.
A black suit, white shirt and a flashy red tie that stands out in all his official photographs are standard attire for Tony Elumelu. At 52, this Nigerian businessman is promising development and investments in Africa. One of the richest men on the continent, he has fathered a new business philosophy called Africapitalism, an African version of capitalism in which profit and social wealth are – or at least should be – on the same track, thanks to long-term investments.
The idea is to “put the private sector at the forefront of African development”, as stated in bold red lettering on the website of Heirs Holding, a pan-African investment company chaired by Elumelu. The website also provides a definition of the concept: “Africapitalism is an economic philosophy: that the African private sector has the power to transform the continent through long-term investments, creating both economic prosperity and social wealth”. An ambitious aim, to say the least: the creation of long-term wealth. It’s a “call to action for Africans to take primary responsibility for [the] development of the continent”.
On 1 December 2014 in Lagos, Elumelu announced that his Tony Elumelu Foundation, the non-profit organisation he established four years ago, was launching a $100 million (€86.5m) programme to fund 10,000 start-ups throughout the continent’s 54 countries and provide support for a new generation of African entrepreneurs. He has promised that these ventures will ultimately create one million jobs and add $10 billion (€8.65bn) in annual revenues to Africa’s economy.
“Africa made me the man I am. I’ve been very lucky”, Elumelu told the Jeune Afrique daily, implying that his recipe combining social enterprise and investment is a way of repaying his homeland and offering others the kinds of opportunities he himself was fortunate to have.
The ‘African self-made man’ refrain he favours in his public addresses has remained pretty much the same for several years now. At the annual conference of the African Development Bank in 2013, the man that many in the business world hail as the banker-philanthropist, said, “No one can develop Africa but us. I was born in Africa, bred in Africa, schooled in Africa”.
He later reiterated this statement in the World in 2015 print edition of the British weekly The Economist, adding, “If Africa is to […] realise its economic potential, it must first become self-sufficient – and the private sector is vital to this process. Imagine the same continent filled with businesses that can process crude oil into petroleum, cocoa pods into chocolate and cotton lint into fabric, all while retaining the finished-goods premium instead of sending wealth overseas”.
Elumelu certainly has a knack for public speaking, and when he held top positions at the United Bank for Africa, he showed great skill in his business dealings. The Nigerian banker promises to solve the continent’s problems — something which he has only achieved in word not deed thus far — and seems intent on securing his place among the heroes of new sustainable development.
So does Africapitalism truly offer an alternative economic model that can create widespread wealth and constant growth in the African continent?
Equating Africapitalism as capitalism in the hands of African businessmen is a bit too simplistic. Elumelu intends to go beyond this and actually tackle the failings of capitalism itself. The challenge he faces is finding a way to combine profit with social welfare within economies that traditionally rely on the extraction of raw materials and on exports. The aim is to make money and then redistribute it within Africa, “institutionalising luck”, as he triumphantly proclaimed in his Economist interview.
Yet the ten-year path devised by the businessman and banker is a long one. As Emily Darko, a researcher with the Overseas Development Institute, pointed out during a panel on Africapitalism organised last year by the British daily The Guardian, “Neo-liberal capitalism has failed to deliver sufficient benefit to much of the global population”. And even where a new African model is concerned, Darko added, “My suspicion is that without change to incentives, most entrepreneurs will carry on with profitseeking business as usual and socio-economic approaches of community and family support will decline as they have been in the West”.
The real turning point would be social enterprise. For example, as the researcher also noted, “In Kenya, social enterprises are providing goods and services that the state never provided. This opens up big questions” about the future.
There is a risk of promoting social enterprise from the ground up without genuinely involving the local population. If this were to happen, the goal of bringing real wealth to the poorest sections of society would be thwarted.
That’s why Elumelu’s call to action is addressed to African businessmen, the fundamental link in the chain. This is spelt out quite clearly in the Africapitalism manifesto: “Africa’s business elite have the primary responsibility for implementing” this economic philosophy, because “Africapitalism is on their shoulders”.
But as things stand it’s hard to imagine major developments without a clear role for governments and the actual involvement of local communities. Only the numbers, both in the foreseeable and in the long-term future, will show whether this new model actually works.
The new philosophy of banker-philanthropist Tony Elumelu promises wealth by combining profit and social enterprise.
