X-raying Elumelu’s Take on Africa’s Development

Tony Elumelu

Tony Elumelu (2nd right) Donald Kaberuka, fmr African Development Bank President (left), Professors David Gergen (2nd left) and Thomas Patterson (right) both of Kennedy School of Government at Harvard University during the Harvard Development Conference Cambridge, Mass. USA

It’s fitting to call Tony Elumelu a goodwill ambassador for Africa. It is a perfect complement for his role in getting Africa the best bargain on policy interventions from different countries outside the continent, particularly the United States and the United Kingdom. The billionaire’s business model for Africa adds up too. Adeola Akinremi writes

Outside the main conference room, people curled around him like a ribbon. It was for the usual lobby conversations and networking that Harvard scholars are known for.

As expected, majority of those who gathered to hear him speak were having a first glimpse of the billionaire’s face.

So having quick hugs and handshakes was the very first job the founder of Tony Elumelu Foundation had to do on his arrival at Cambridge, Massachusetts on a recent Saturday. It was not his first time there, but Elumelu was billed to speak to an audience different from the past.

At the Kennedy School of Government inside Harvard University, hundreds of people packed inside the science building hall to listen to him.

On pathway to progress, the theme of the summit, where scholars and experts in international development focused their hearts and minds on Elumelu’s moving speech of the day, the shrewd entrepreneur and philanthropist said, “policy, knowledge and resource combination are the pathway to progress. The three are critical to development,”

His response to aid for Africa has been a focus on how private sector can play critical role that can crystallize economic opportunities for Africans without continued setback, stagnancy, sickness and failures common with the past foreign aid.

The gripping statistics of loss by the African continent to the low cost export of raw materials that is sadly followed by importation of related finished goods is one reason Elumelu thinks there’s need for a rethink.

So the conference at Harvard helped Elumelu to send a strong message of good partnership and value chain principle for engagement in Africa.

“The traditional approach to development has been for donors and governments to invest in basic health, education and access to food in developing countries, with the hope that the beneficiaries will eventually become self-sufficient. But I also believe that if we help people become self-sufficient, they will purchase those same basic goods and services, I’ve mentioned, that governments and donors are struggling to provide.

“Basically, humanitarian assistance and economic opportunity are two sides of the same development coin. Yet, we tend to focus on the former at the expense of the latter, with limited results,” he said with a sense of purpose.

And like a man on a mission, he pressed home his demands for better deals in Africa with a case study. He said: “Over the last decade, even development agencies have learned the value of leveraging and incorporating private sector capital for economic opportunity with impressive development outcomes. The U.S. Agency for International Development (USAID), for instance in 2008, only leveraged 8% of its programming budget with private capital to support its programs. By the end of 2013, it was leveraging 42% of its budget with private capital to achieve its objectives.

“The result has been that US taxpayer dollars that were spent on foreign assistance went further, allowing it to expand its focus from small interventions, like micro-enterprise and feeding programs, to large scale capital intensive infrastructure programs like power plants, regional highways and ports. This is aptly demonstrated by President Obama’s USAID-administered Power Africa Initiative to expand access-to-electricity in Africa for the 600 million people living without it.”

Elumelu’s co-traveller, a renowned economist from Rwanda and a former President of Africa Development Bank, Donald Kaberuka, equally followed in his footsteps to ask for better deals for Africa but with a call on African leaders to reform policies for entrepreneurship growth— a gospel that Elumelu has been preaching to African heads of states.

“A good policy is like a triangle. It must be technically sound. Development is about the choice a country makes. Development is not lack of knowledge. It is not something that can be imported. It has to be homegrown. It is an internal process,” said Kaberuka, a former Finance Minister from Rwanda.

The difference between a country making progress and others at the bottom according to Kaberuka is about choices they make in development. “Those choices are possible,” he added.

Kaberuka gave example of the successes India had in green revolution, the deregulation of the telecommunication sector in most parts of African countries and how they triggered economic progress.

“You have the business, you have the government, business invests, provides solution, government provides support, regulates and you have progress. So it can’t be lack of knowledge. It must be lack of something else, when a country is not moving forward. In the 1990s, when we asked the government to deregulate the telecoms sector, there was explosion and with the explosion, businesses have improved. We have tried to replicate this in the energy sector. It worked in some countries, but failed in others. It can’t be lack of knowledge and it can’t be lack of money,” he explained.

And besides, both Elumelu and Kaberuka asked for realignment of interest for progress in Africa, making case for collaboration among stakeholders.

The model of Africapitalism pioneered by Elumelu for Africa’s development piqued the interest of participants at the conference who asked varied questions on how innovative ideas can trigger development.

Over the course of the discussion, the billionaire businessman shared ideas on the promotion of entrepreneurship development and his economic philosophy of Africapitalism which encourages long term private sector investments in strategic sectors of the economy that create economic prosperity and social wealth.

For instance, his philanthropic arm, The Tony Elumelu Foundation Entrepreneurship Programme (TEEP), a 10-year $100m commitment to help identify and empower 10,000 African entrepreneurs with the aim of creating one million jobs and adding $10 billion to African economies is one of the ways Elumelu is working to turn African continent to a truly prosperous economy that will change the statistics.

As he paused the speech for a question and answer session, Elumelu’s digital diary sent him a reminder of his next schedule. The Columbia University in New York will be his next destination.

While at the Columbia University, Elumelu shared the story of STB which he founded from the ashes of Crystal Bank and how the bank grew, merged with UBA and how the UBA has moved from being a bank with operations in a single country to a global financial services behemoth, operating in several countries in Africa, France, the US and the United Kingdom.

“While Entrepreneurship is key to development, Africapitalism an economic philosophy that encourages long term investment in key sectors that create economic prosperity and social wealth is also critical to sustainable development.

“In 1997 some of us came together and acquired a distressed financial institution and turned it around. We set out with three strategic intents. The first was to turn the bank around. The second was to become a leader in the continent and the third was to expand globally.

“Today we have achieved all. UBA is operating in 19 countries in Africa and we are in three global centres: London, Paris and here in New York. In fact, we are the only African bank operating in the US. What started as a not so huge investment in 1997 has grown exponentially, creating wealth for us and other stakeholders.

“The lesson here is that there was an overriding drive and the need to invest long term in a key sector-financial services- and helped to democratise banking by creating access to financial services for all.

“No one but us would develop Africa’. It is this belief that is driving a lot of the things that we do. We have to move away from the concentration of resources in the extraction. Value creation has been lacking in the exploitation of our resources. Consequently GDP growth figures for African countries are not really felt by our people.

“Africapitalism and entrepreneurship including the entire ecosystem of it in my view will lead to development in Africa,” he said.

On Tuesday, April 26, after travelling in Africa to help support education in Senegal and getting recognition in Cote d’ivoire for the changes he’s bringing to Africa, Elumelu returned to Washington DC to make case for investment in Africa’s agrarian communities where there’s a basket of opportunity in a world where food security is becoming a challenge.

In Senegal, the United Bank of Africa—where Elumelu serves as the Chairman—is helping to construct 18,000 rooms for the students of University of Dakar. It holds true for what he believes and has been canvassing in his voyage to get Africa the best deals.

“Africa needs to be transformed and Africa’s transformation must begin with the education of our youth. Africa’s youth is its future. And I am delighted that the Government of Senegal is doing this for our youth, because no one but us will develop Africa and that development must begin with our youth. This realisation that our youth must be educated and in a conducive manner, is why United Bank for Africa is pleased to finance this noble goal of H.E. President Macky Sall’s Government to provide 18,000 rooms for the students of University of Dakar. Occasions such as this demonstrate that indeed Africa has come of age and that solutions to Africa’s challenges can be found in Africa by Africans when our public sector and private sectors work together for the benefit of our people. That is what I call Africapitalism,” he said.

For his goodwill, Elumelu’s image looms large in Africa. Last week, the Ivorian National Council of Employers, General Confederation of Enterprises of Côte d’Ivoire (CGECI) presented with its 2016 CGECI Lifetime Achievement Award at an event attended by the Prime Minister of the French country in its capital, Abidjan, Côte d’Ivoire. It was a direct message for Elumelu to lengthen the cords and strengthen his stakes in helping Africa to overcome its challenges.

And with that message in mind, he arrived at the Ronald Reagan Building on Pennsylvania Avenue in Washington DC to speak passionately to a large number of people populated by experts and scholars in agriculture and urbanization with layers of policymakers and think tank.

With the rapid growth of cities putting pressure on food systems globally, mechanism for growing food for growing cities has become a preoccupation for think tank like the Chicago Council on Global Affairs.

So Elumelu was called by the Chicago Council on Global Affairs to deliver the keynote speech of the symposium to a large audience with interest in Africa and he carefully chose his words.

To break the ice, he talked about the paradox of global food security, describing it as a “very sad one.” While many go to sleep on empty stomach, Elumelu says “there are surpluses in mountains of grain, pyramids of meat and rivers of milk in some world region.”

But the difficulties faced by farmers means low output and while cities continue to explode the world faces the need to increase the output in order to feed a global population of 9 billion people by 2050.

For Africa, the intervention from the outside must be favourable and increase economic opportunities for the people.

“Basically, I believe that if we transform the agriculture sector, we will transform the African continent. While the high rate of rural urban migration in Africa has become a socio-economic, security and environmental concern, it is important to understand that these young people are not fleeing from farming as an occupation. They are fleeing from poverty,” Elumelu said.

Mr. Elumelu said the gap between infrastructure and farming in Africa will need to be sorted out for necessary progress.

True, the infrastructure challenge has limited African farmers over the years and has made the continent a net importer of agricultural products, making farming unattractive.

“But we cannot achieve this transformation without addressing the critical nexus between strategic sectors of agriculture, transportation and power. Economic sectors do not operate in isolation.

“They are interdependent on each other. In order to boost agriculture sector, we need investments in roads to facilitate the transportation of produce and finished goods from rural areas to urban market.

“We also need investments in energy for processing and preservation, particularly to support the cold chains required to meet the new dietary demands of urban consumers,” he added.

The founder of Tony Elumelu Foundation also canvassed for financing to support the change needed in agriculture sector in Africa, saying, “we know that African governments do not have enough capital to deliver on these infrastructural needs alone. The private sector however has and can access the capital, expertise and discipline to help meet these needs. Africapitalism provides a bridge to the solution.”

And for its past support for Africa, Elumelu thanked the United States, especially President Barack Obama, for his Africa power initiative and those in the Congress and the Senate who have shown support, but not without a task for the incoming president to change the rhythm of its foreign policy towards a “courageous decision” to pass bills that “fight famine with flexibility.”

“The approach needs to change from viewing farming as merely an aid program, to capitalizing on agriculture as a lucrative business capable of harnessing functions in energy, technology, processing, manufacturing, and distribution for increased efficiency.

“I believe that agriculture is an inherently profitable sector because people must eat. Prioritizing and transforming this sector in Africa is not just a moral imperative, it is a smart business strategy that will save lives, unlock jobs, grow economies and stabilize regions,” he enthused.