Tony Elumelu’s “Africapitalism” strategy is ensuring that the continent supports startups.
Talk to Tony O. Elumelu (AMP 166, 2004) for more than a few minutes and you are sure to hear about “Africapitalism.” The Nigerian businessman and philanthropist coined the term in 2010 to describe the investment strategy that has shaped his career and will, he believes, remake the greater African economy.
“For a long time, we’ve looked to the government to address almost all of the issues,” Elumelu says of the economic and social concerns in Nigeria and Africa. “The government cannot do everything alone. The private sector is in a position to play a role in the development of our continent in the 21st century. “Africapitalism calls on the private sector to make long-term investment in industries that can create economic prosperity and social wealth.”
The idea was inspired by Professor Michael Porter and his theories of economic development and social investment. “He talks of shared prosperity,” says Elumelu. “That is at the heart of Africapitalism.” The retired chief executive officer, now chairman of the United Bank of Africa (UBA) and the founder of Heirs Holdings, Elumelu has put the tenet of this community-focused philosophy into practice in his own career. Heirs Holdings, which he started in 2010, is now the largest energy investor in Nigeria, producing more than 18 percent of the country’s power through Transcorp Power, its investee company. “It is helping hospitals; it’s helping homes; it’s helping enterprise,” says Elumelu. “There’s still a long way to go”—the World Bank estimated that 40 percent of the country’s population lacked access to electricity in 2016—“but we hope it encourages and inspires other leaders,” he adds.
Entrepreneurs are key to Africapitalism, says Elumelu. That’s why the Tony Elumelu Foundation, established in 2010, launched the TEF Entrepreneurship Programme in 2014 with a $100 million endowment to empower 10,000 young African entrepreneurs over 10 years. In 2018, the foundation received more than 150,000 applications for 1,000 available spots.
The program is designed for entrepreneurs like Vital Sounouvou of Benin. When he enrolled in 2015, Sounouvou had recently launched Exportunity, a secure digital marketplace that connects African suppliers with buyers around the world. Through the company’s platform, farmers in Benin can sell their produce to a manufacturer in South Africa, managing the transaction entirely via cell phone. Through the entrepreneurship program, Sounouvou received training, mentorship, networking, and $5,000 in seed funding, among other benefits. “The training helped me greatly in improving our business plan and understanding the business and our industry better,” he says. “It was very intense and a great curriculum.” In 2015, the company employed five people; today it employs more than 30 and works with some 85,000 African companies.
The TEF Entrepreneurship Programme has already assisted more than 4,000 entrepreneurs like Sounouvou, in sectors ranging from agriculture (the most popular) to media. Most have been from West Africa, but this is changing. Elumelu hopes the program will reach across the continent. “Geographical bias should no longer constrain people,” he says. The foundation recently introduced TEFConnect, an online networking platform to connect entrepreneurs with each other and with investors from across Africa. He believes those connections could be the key to the program’s success. “Entrepreneurship is not just about capital; it is capital plus X. That ‘X’ is the mentoring and training, and it is the market building and networking. We are trying to create a huge ecosystem for African entrepreneurs.”
His work is not charity, Elumelu stresses. It is an investment. The Foundation believes that these entrepreneurs can create at least 1 million jobs in Africa and contribute at least $10 billion in revenue. “This should be a catalytic movement,” he says.
“The legacy I want to leave behind is to have more Tony Elumelus across Africa,” he says. “The way we’re going to create many Elumelus is not by just giving them food today so they can come back another day and ask for more food. It’s by investing in their creative ideas and encouraging them to realize their full potential. Entrepreneurship can alleviate poverty on the continent and create employment for our people.”