By Steven Barboza
Africa, the second largest continent, is in a fix. It is rich in natural resources. It has a relatively young population, but fifty years after it shook off the last colonialist, it is up to its neck in aid. It still has big problems stemming from a failure of governance, and it has the world’s poorest people.
African philanthropists are working to clean up the mess, using hundreds of millions of dollars of their own money to transform Africa both socially and economically. Some want to develop Africa’s fledgling markets. Others want to strengthen the private sector and work with government agencies to develop business-friendly policies. One wants to use African businesses as a world-class entrepreneurial training ground. If African government leaders play along, economic transformation could ensue.
One African business leader, Tony O. Elumelu, is fond of saying, “Nobody is going to develop Africa except us.” It is his way of saying Africans must control Africa’s financial future — and thus reap Africa’s financial rewards.
“Africa is brimming with talent and innovation, and the continent’s growth and development can best be achieved through private sector investing that creates economic prosperity and social wealth. Africa’s political leaders must urgently focus on creating the enabling environment for business to flourish.”
Elumelu has put his money where his mouth is. The former bank CEO, who is credited for having modernized West African banking, established a foundation (named for him) that seeks to drive Africa’s economic growth from within. The foundation, based in Nigeria, makes what he calls “impact investments” with an aim to turn a profit while focusing on social and environmental problems. Elumelu believes impact investing is a much more sustainable means of capitalization than direct grants because of the entrepreneurial rigor needed to produce a financial return.
The foundation’s inaugural impact investment went to a farm-livestock business in southern Tanzania, Mtanga Farms. The 2,200 hectare operation that will use the grant to launch a seed potato industry, which will produce new varieties of potatoes in the region, benefiting 125,000 farmers. The deal is the first cross-border impact investment in Africa.