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AN AFRICAN ANSWER TO GROWTH
LOCAL DIFFERENCE – The Africapitalism philosophy goes beyond the old concept of capitalism. For the Nigerian banker Tony Elumelu, the African private sector can transform the continent through long term investments, simultaneously creating economic prosperity and social wealth. SARA ROSATI & NATASHA R. SILVA (TEXT), DANIEL KINDSTRAND (PHOTO)
Weak governments are good for business. For years, global firms strongly believed in this concept, and were attracted to Africa because of the opportunities presented by poor regulation, cheap labour, tax evasion and abundant raw materials. Multinational corporations were able to expand across the continent. Challenging the contemporary capitalism model is the goal of the so-called Africapitalism movement. This term, created by the multimillionaire Nigerian banker Tony Elumelu, is based on the idea that private investment can be transformed into social wealth. “The philosophy basically says that Africa’s private sector should lead in the continent’s development. Africa should not depend only on aid from outside,” says Parminder Vir, the Chief Executive Officer of the Tony Elumelu Foundation. They believe that foreign aid to Africa did not help develop the continent, and that it stimulated corruption instead. “If you look at the 100 most admired brands in Africa, 70 per cent of them are non-African,” says Thebe Ikalafeng, the Founder of the African brand and reputation advisory firm, Brand Leadership. “That means the 70 per cent of the agenda is
non-African.” He thinks that Africans need to fund business and brands in Africa to create jobs and invest it in their agenda. According to The Economist, one of the main goals for African governments over the next ten years is to keep improving roads, pushing out grasping officials and lowering the tariff barriers that still hobble trade between African countries. (Trade with neighboring countries makes up only 11 per cent of total African exports and imports.) “Have you tried to travel between two African countries? It is imposible!” Vir says. Africa’s future rests on the productivity of its people. By 2050, the UN predicts that there will be 2.5 billion Africans, a quarter of the world’s population. “I believe that in 50 years Africa will be the land of opportunity,” Vir says. “In the next 10 years, we will see an economic revolution guided by young entrepreneurs.” This rising generation of Africapitalists believe the private sector can solve Africa’s development challenges more effectively and with greater sustainability than either the philanthropic or public sector. “Some economies across Africa, Nigeria being the classic example, became too dependent on oil,” Vir says.
CHINESE INVASION? Africapitalists will have to prove if it is possible to do good and make money at the same time. They are under pressure: The rise of Chinese investments in Africa has increased significantly in the recent years, to the point that some call it Chinese neocolonialism. Some argue the exchange can be mutually beneficial. Vir says Africa simply needs Chinese capital to build infrastructure and China needs African resources. Others say Africa’s prices are set too low. “The African problem is that we are too desperate and we accept that kind of support at any cost,” says Ikalafeng. “We should be more aggressive, more determined, and more decisive in fighting for investment in our own terms. Those terms are what moves our agenda forwards. Our agenda is what makes Africa economically independent.”