Nigerian businessman Tony Elumelu, who has built the Nigerian bank United Bank for Africa into one of the continent’s leading banks, is an advocate of Africapitalism, an economic philosophy that he puts into practice through his financial holding company, Heirs Holdings. As a philanthropist, his foundation, the Tony Elumelu Foundation (TEF), launched a $100 million programme in 2015 to help 10,000 young African entrepreneurs to emerge.
Is Africapitalism the economic ideology that can bring about Africa’s industrial revolution? That’s the question I asked myself after my first interview with Tony Elumelu, the Nigerian banker and philanthropist. I met the Nigerian billionaire during the Forbes Africa Forum in Brazzaville, where he was one of the keynote speakers.
Africapitalism is not the latest fashionable idea developed by a Keynesian economist or an emulator of the Chicago School in the 1980s, those ideologues of Reaganomics (related to President Ronald Reagan), who advocated hard-line liberalism. Nor is it a classical or neo-classical theory of the economy. It is a concept that was formulated and launched for the first time in 2012 by the businessman, banker, industrialist and philanthropist.
When I met him for the first time, the term had not yet penetrated African intellectual circles, let alone French-speaking ones, even though Tony Elumelu had not hesitated to introduce it at the forums to which he had been invited throughout Africa and the world. The debate around Africapitalism – which has become a trademark was clearly launched in the columns of the influential British daily The Guardian, which, in a headline in its edition of 12 July 2013, asked the following question: “Can Africapitalism save the continent?”
This concept already had a definition that could be described as official, and which can be found in all the Tony Elumelu Foundation’s documents, on its website, in press releases and in the positions taken by the businessman. According to this definition, Africapitalism is “an economic philosophy that advocates private sector involvement in the economic transformation of the continent through long-term investments that create economic prosperity and social well-being.”
Tony Elumelu believes that:
“African businessmen must take charge of value-added sectors and ensure that this value-added process takes place in Africa, not through nationalisation or government policies, but because there is a generation of private sector entrepreneurs who have the vision, the tools and the opportunity to shape the continent’s destiny.”
For him:
“It is a call to strengthen the private sector so that it can be the driving force behind the African economy and social progress.”
For the Nigerian billionaire:
“The era of aid is disappearing. The type of external aid that will support Africa the most, and which must be given priority, is support for business. I believe that the private sector has the capacity to transform the continent through capital for long-term investments that create both economic prosperity and social well-being. I call this approach to development ‘Africapitalism’. For me, it is without doubt the promise of sustainable development for Africa.”
This is undoubtedly the first time in the history of economics that a theory – if we may use that term – has been launched by a player in the economy who is anything but an intellectual, who is not in any way an ideologue, a thinker or an economist from Harvard, the London School of Economics or the World Bank.
Tony Elumelu defines himself first and foremost as a businessman and philanthropist. He has a bachelor’s degree in economics from Ambrose Alli University and a master’s degree in economics from the University of Lagos. He has also completed an advanced management programme at Harvard Business School. But he is far from being an economic theorist, although he has published a few articles in or contributed to collective works, such as the Nigeria Leadership Initiative White Papers, in which he authored a paper explaining how the private sector can contribute to the effectiveness of government action. Yet our man carefully and methodically prepared his speech. He even surrounded himself with experts, such as the economist Michael Porter, who at the time was CEO of the Tony Elumelu Foundation. He launched a newsletter which, appropriately enough, is called The Africapitalist. Since then, he has been writing articles to advance his Africapitalist theories, such as the contribution he sent to the press agencies following Barack Obama’s visit to Africa, entitled “Obama the Africapitalist: Creating a Private Sector Development Model for the World to Follow”. It’s an intellectual and media activism that he has embraced and continues to pursue to this day, and which has helped to make him one of the most talked – about and best-known African businessmen on the world stage. In September 2020, he was included in Time magazine’s list of the 100 most influential people on the planet. “His iron fist underlines his charming and tenacious personality: a man who never shies away from a challenge”, writes billionaire Aliko Dangote in the columns of this edition of Time, an eloquent tribute to his compatriot and fellow Nigerian. And he adds: “The same engaging qualities propelled him from humble beginnings in Nigeria to become chairman of the United Bank of Africa, and one of the most innovative and ambitious business leaders of his generation.”
Some see Africapitalism as a marketing formula skilfully promoted by a businessman who has understood the importance of communication and who has indeed become a media figure. Others see it as naive. For The Guardian, for example, “Despite the way it rolls off the tongue, Africapitalism is not 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.”
Tony Elumelu maintains that, as an investor, he believes in the idea of doing well and doing good”. “Doing well” means being financially efficient, guaranteeing that your investment pays off. “Doing good” means succeeding in having a positive impact, i.e. bringing well-being to the environment in which you invest. So, in his words, “investing in the energy sector means taking these two priorities into account11 ”.
To explain and back up his arguments with concrete facts, he uses the example of Nigeria:
“The private sector has come a long way, the Nigerian economy has been renewed, and we have gradually been able to see the positive impact that the private sector can have on the country’s development. And it’s not just Nigeria; the private sector has developed across the continent. I can see that it is really emerging. Once again, based on the doctrine of Africapitalism, we believe that economic and social problems can be solved through the intervention of the private sector. Take my group Heirs Holding for example. We invested in a power plant in Nigeria. This power station is a business, but at the same time it has enormous social benefits. When we bought the plant, it had an output of 150 MW. Today, it produces more than 600 MW of electricity. Just imagine the benefits of electrification in Africa, for schools, for hospitals, in terms of safety, lower electricity costs for businesses. It’s a significant contribution to the continent’s prosperity and development on a macroeconomic scale, and at the same time it’s a response to social needs. So we’re already starting to see this interplay through which businesses are helping to achieve not only economic objectives, but also, ultimately, to resolve social issues.”
Tony Elumelu, who forged his legend in the banking sector created his first major success story by transforming UBA (United Bank for Africa) from a Nigerian bank like any other into one of the leading pan-African banking networks, now present in twenty countries across Africa, as well as in London, Paris and New York. He recounts this adventure, which he experienced at a relatively young age, with great humility.
“It was the privatisation of the banking sector in the 1980s under President Babangida that opened up the industry to national players. I would never have imagined in my wildest dreams that a Nigerian could one day own a bank. This deregulation led to a real boom in the sector, which saw the entry of many Nigerians.”
However, a few years later, this dynamic led to a crash as a result of the excesses and abuses of the system. Tony Elumelu made his name in this environment. In 1997, a group of investors bought a bank in difficulty, Crystal Bank Limited, and renamed it Standard Trust Bank. Elumelu, aged just 33, was poached from Continental Trust Bank Limited, where he was an executive director, and appointed CEO of Standard Trust Bank. Within a few years, he had turned the bank around, making it the fifth-largest in the sector.
*Extract from “Being a billionaire in Africa today”, by Michel Lobé Ewané (Editions Présence Africaine, Paris)
