Last week was the first time, in my memory, that a U.S. president came to Africa with investment at the top of his agenda and prioritised meeting with the continent’s business leaders, who are the true drivers of development. President Obama should be congratulated for his vision, writes Tony O. Elumelu, Founder of The Tony Elumelu Foundation and Chairman of Heirs Holdings Limited.
The age of aid is ending. The type of aid that will help Africa most, and should receive the highest priority, is aid for business. I believe that the African private sector has the power to transform the continent through long-term capital investments, creating both economic prosperity and social wealth. I call this development approach “Africapitalism,” and without a doubt, it holds the most promise for the sustainable development of Africa.
So it was refreshing to see African businesses at the table, financing and investing as partners, and making sure that Africa asserts its proper role in this opportunity.
I can already feel the impact of Obama’s new dialogue with Africa. In interviews I had with international media covering his trip, aid and corruption were not the focus, thankfully. Journalists addressed topics like “capital,” “investment,” and “trade.”
The impact of this shift will be immense.
Power is the single biggest obstacle to Africa’s development, and as such, it is the most catalytic and strategic investment anyone can make in Africa. That is why President Obama’s focus is so timely—and so necessary. Doubling our generating capacity will double Africa’s GDP, and move us toward sustainable, domestically led growth. Given its economic importance, the power sector also presents an attractive investment opportunity for long-term investors: there is little competition, and so the return, when it comes, will be high. It will be similar to returns that early investors in African telecommunications realised before the sector became saturated and highly competitive.
As an investor I believe in doing well and doing good. Investing in the power sector meets both criteria. That is why Heirs Holdings has committed US$2.5 billion in investment for power projects across Africa.
As an entrepreneur, I know that attracting capital is not and has never been the problem. I have always believed that if the policies and environment are right, investment will flow into Africa. Investors need to know that the rule of law and the protection of property rights are assured—this is one of capital’s most important requirements. That is why I urge global leaders like President Obama to impress upon more African leaders that investment-led development requires more investor-friendly policies. I see a willingness in African leaders to seize these opportunities, but they need support and in some cases direction. The vision may be clear, but they may not know how to get there.
Obama’s visit was a milestone, one long hoped for, and one with lasting impact. It confirms that the age of aid is ending. It is now time for the private sector to lead.
* Tony O. Elumelu, C.O.N, is an entrepreneur, a philanthropist and the Chairman of Heirs Holdings Limited, a pan-African proprietary investment company with interests in strategic sectors of Africa’s economy. He is also the founder of The Tony Elumelu Foundation, an Africa-based and African-funded, philanthropic organization dedicated to the promotion of entrepreneurship in Africa.