Tony Elumelu, founder of the Tony Elumelu Foundation has said the pervasive negative narrative around Africa is the continent’s greatest challenge as it scares off potential investors.
Tony Elumelu was speaking recently at a gathering of senior policymakers and development experts hosted by UK’s leading foreign policy institute, Chatham House.
Speaking on a panel alongside Rory Stewart OBE, UK Minister of State, Department for International Development (DFID), Tony Elumelu condemned the pervasive stereotypes in the media around Africa.
“I believe that the greatest challenge Africa has as a continent when it comes to attracting investment is in the way it is portrayed. Information presented about Africa is neither holistic nor properly contextualized, and has led to the kind of narrative that we have had for so long on Africa. As an investor, when all you have heard about Africa is corruption, how would you pass a positive investment decision to go and invest in the continent? The result is that the vicious cycle of neglect continues and is even reinforced,” he said.
Elumelu called for an urgent “reset of mindset” to attract the level of global private capital that will drive job creation and reduce poverty on the continent. “We must reset the way we see and discuss Africa. People do business with people they are comfortable with. Investors who repeatedly hear horrible things about our people and the continent will never invest here. We will continue to host national gatherings and seminars to discuss unemployment, poverty and income inequality if we do not fix the existing information asymmetry, the poor quality of information that is put out (in order to fix the existing information asymmetry, the poor quality of information that is put out).”
The Tony Elumelu Foundation boss also exhorted public and private sector stakeholders and the development world to increase support to African SMEs, describing them as “the lifeblood of our economy”. Elumelu, who has committed $100m to African entrepreneurs emphasized the critical importance of mentoring and funding for the survival of small businesses. In a continent where only 700 companies generate over $500m in annual revenue, half the number in other regions, Elumelu called for targeted support to grow these small businesses into scalable companies capable of becoming big corporates in the future. According to Elumelu, SMEs are known to be the largest job creators and should be prioritized because of the inverse relationship between security and prosperity – “when there is prosperity, security is not an issue, but when there are fewer jobs, insecurity heightens.”
Elumelu whose Transcorp Power Plc has invested $2.5b in President Obama’s Power Africa Initiative and is also currently the largest thermal generator of electricity in the country (in Nigeria), called on local and foreign investors to invest in electricity, stating that this more than any other investment “will encourage the creation and growth of businesses of scale in Africa.” According to him, “long term private investment in electricity infrastructure willcreate an enabling environment for business growth.”
Also at the event, a new Chatham House report, “Developing Businesses of Scale in Sub-Saharan Africa” which referenced Elumelu’s economic philosophy of ‘Africapitalism’ was launched. Africapitalism calls on the private sector to invest in strategic sectors for the long term to transform the continent. The report outlined the policy issues Africa must address to support the private sector to enhance job creation, encourage innovation and drive industrialization.
In the end, Elumelu charged multilateral institutions and developed nations in the West to rethink the effectiveness of sanctions and other policies meant to serve as a deterrent to certain leaders but instead harm innocent lives. “Developed nations must look at the efficacy of sanctions and who truly bears the brunt of these policies. You will find that the masses are the ones who suffer most.”