Tony Elumelu believes business can solve Africa’s problems. But can you really make money and do good at the same time?
By Ruby Edwards*
It is popular notion these days that the cure for the developing world’s ills is as simple as private sector investment, albeit with a responsible twist.
“Impact investors” and private equity firms with specific focus on projects that will positively impact upon Africa are being dubbed the new heroes of sustainable development, in which we place our hopes.
Nigerian banker Tony Elumelu is emerging as the ringleader among African voices calling for private sector solutions to Africa’s challenges. As a keynote speaker at the recent African Development Bank annual conference, and as part of a delegation of high profile African business leaders who met Barack Obama during his Africa tour in June, Elumelu preaches: invest in Africa and Africans will sort out their own problems. And that social progress will arrive as a by-product of the pursuit of profit.
Elumelu has coined the term “Africapitalism” for his game plan for Africa. Despite the way it rolls off the tongue, Africapitalism is not quite as simple as good old-fashioned capitalist activity transposed to the African continent. It requires a blurring of the lines between doing well financially and doing good socially – two impulses that don’t usually associate.
Elumelu calls for philanthropic foundations to divert funds from aidinitiatives toward the African private sector, and invites the international community to step up long-term investment into key sectors, such as infrastructure and agribusiness. He says the role of African governments should be restricted to “capacitising the private sector” and “creating the right environment for a new crop of entrepreneurs to emerge. The primary aim is to make profit, with the idea that as you make profit you are also touching society.”
In line with the thesis of veteran business thinker and Harvard professor Michael Porter (a patron of the Tony Elumelu Foundation), Elumelu argues that doing well and doing good are in fact co-dependent. The notion, which reworks traditional theories of corporate social responsibility is that companies will reap long-term benefits from investing in the health of the communities in which they operate, as these are future customers.
In Nigeria, for example, investment in the energy sector will have great benefits for the country as a whole, while also offering “huge economic benefits for shareholders”, he says.
Steven Antwi-Asimeng of Jacana Partners, a private equity firm operating out of Accra, Nairobi and London, which invests in small and medium sized local businesses across Africa, agrees. “Only when companies are profitable can they make a sustainable impact on development.”
However this vein of thinking, known as “Shared Value” or the “Double Bottom Line”, is a novel one, deemed by some experts as a somewhat naïve assessment of the way people do business.
Joel Bakan, Law professor at the University of British Columbia and author of the film The Corporation argues that the Michael Porter approach is flawed. “It places profound limits on the ability to do good” while also “distorting the public’s relation with them (businesses), and how do deal with them politically.” Bakan suggests that in the US and beyond this sort of rhetoric is being used as a smokescreen for big business to push towards deregulation.
But Elumelu says that it is the deregulation efforts of the Nigerian government that enabled the United Bank for Africa, under his leadership, to transform into a pan-African institution providing financial services to millions of Africans. And that Sudanese Mo Ibrahim has, through his telecommunications firm Celtel, helped revolutionise Africa by supplying its people with mobile phones and internet.
“Up until university I didn’t think that Nigerians could own banks,” he says. “At the time all the banks were run by white people. The maximum level I saw a black man rise to was bank manager.”
Elumelu says that the narrative of “doing good” in Africa – among both Africans and non Africans – really boils down to how much money you’re donating to charity. “But some of these wealthy Africans have created companies with massive employment, who pay huge taxes, and who fight a lot of economic and social needs across Africa.”
He insists that Africa has its own path, and the potential to adopt a more sensible version of capitalism than elsewhere. “We are starting late and there are implicit benefits to this. People have made certain mistakes and you learn from these mistakes.”
In the quest to persuade the international business community to pursue Africapitalistic investments, instead of short-term rent-seeking, Elumelu and his peers will need to provide an example. Often wealthy Africans, once their money is made, burrow it away in Swiss accounts.
So Elumelu has been rallying fellow rich and influential Africans to the call: “No one can develop Africa but us. I was born in Africa, bred in Africa, schooled in Africa, walked in Africa,” he says. His peers will have to decide whether this is enough to find harmony between doing well and doing good in Africa.