The rise of Africapitalism

In 2015 the African entrepreneur will emerge on to the global stage, as a new generation shows the world what those of us doing business in Africa have long known: that our continent is home to some of the most exciting and innovative entrepreneurial talent.

From advanced mobile-payment systems to new agricultural-insurance models, we are already seeing how entrepreneurship is transforming Africa. But in Africa, business growth alone is not the full story. It is perhaps not even the most important part. Entrepreneurship matters especially for its potential to transform society.

For centuries, the continent was impoverished by the extraction of raw materials by colonial powers. Africa was unable to generate or sustain its own wealth, as it was forced to buy finished goods created with African resources at premium prices. And it lacked basic infrastructure except for the roads and ports built to move exports. If Africa is to transcend that chapter of its history and realise its economic potential, it must first become self-sufficient—and the private sector is vital to this process.

Imagine the same continent filled with businesses that can process crude oil into petroleum, cocoa pods into chocolate and cotton lint into fabric, all while retaining the finished-goods premium instead of sending wealth overseas. The term “Africapitalism” describes the process of transforming private investment into social wealth. As homegrown businesses meet social and economic needs by creating goods and services with an innate understanding of the local environment, they can bring private capital to vital infrastructure like road transport and power generation. And they can create jobs for Africans, which will in turn create an African middle class—a new generation of African consumers.

Entrepreneurial energy and inventiveness also have the potential to tackle pressing social problems in new ways. In recognition of the far-reaching impact such new methods can have, we will be providing $100m to 10,000 entrepreneurs across Africa through the soon-to-be-launched Tony Elumelu Entre-preneurship Programme. By democratising access to opportunity, with an emphasis on tapping into the talent of Africa’s young people, this programme strives to “institutionalise luck”, which is a key factor in the success of any -entrepreneur.

Young entrepreneurs and those they inspire are the lifeblood of Africa’s rise. Simdul Shagaya, a serial entrepreneur from Nigeria, built his first business monetising advertising space on toll roads in Lagos before selling that company to set up Konga, a leading Nigerian online retailer. Mr Shagaya has introduced innovations that surmount Nigeria’s limited capacity for online payments and door-to-door postal delivery service.

Mike Macharia, a Kenyan tech entrepreneur, has built Seven Seas Technology into a pan-African company with operations in east, west and southern Africa. He outcompetes vendors from more traditional global IT markets, and last year bought a Portuguese technology company to gain access to their software and services.

And then there’s Funke Okpeke, who left a lucrative telecoms career in New York to assist the construction of 7,000km (4,350 miles) of fibre-optic submarine cables from Portugal to the coast of West Africa through her company, MainOne. The resulting increase in bandwidth has had a multiplying economic impact across the region.

Way beyond business

The promise of entrepreneurs like these reaches much wider than the business arena. They have the potential to transform leadership at home. Already, they are engaged in discussions with Africa’s political leaders -on policy issues, pushing in particular for the streamlining of processes that will allow quicker business startups.

And their influence can reach beyond Africa. At the US-Africa Summit held in Washington, DC, in August, Takunda Chingonzo, a 21-year-old tech entrepreneur from Zimbabwe, elicited the promise of a review from President Barack Obama by challenging him about the negative impact of American sanctions on Zimbabwean entrepreneurs. Mr Chin-gonzo proved the game-changing potential in the young African entrepreneur that day.

African entrepreneurs will play a central role in bringing together private wealth and public need. They will prove a key tenet of Africapitalism: that it is both necessary and possible for entrepreneurs and society to prosper simultaneously. The transformative impact of economic growth unleashed by a fully -empowered, socially conscious entrepreneurial class will dwarf the results achieved by the previous aid-driven approach to -Africa’s development.

Originally published in The Economist. Source: The Tony Elumelu Foundation website.