ELUMELU: Strides made at US-Africa meet, but more needs to be done

Friday August 22 2014

By Tony O. Elumelu

The US-Africa Summit reflected the progress we have made toward establishing Africa as an attractive destination for investment on the world stage and that was certainly encouraging. But it also illustrated how much remains to be done.

The summit, convened by President Obama, was a major undertaking.  It brought together the leaders of nearly African nation and the continent’s business leaders, and enabled them to engage in meaningful dialogue with US policymakers and business leaders.  What emerged is that US investors are beginning to understand, in ways they have not in the past, that involvement in Africa should mean partnership rather than charity, and that investment in Africa’s long-term development will reward not only Africans, but also US businesses, investors and by extension, the global economy.

We are clearly moving closer to the economic solution that I call Africapitalism.

Africapitalism is based on the idea that long-term investment in Africa, aimed at generating both economic prosperity and social wealth, provides the most effective path to African development, and that an economically self-sufficient and sustainable Africa can become a major economic player, with benefits for its trading partners as well.

With that in mind, I was encouraged to see how the global understanding of Africa is evolving.During the Summit business portion of the Summit, facilitated by Michael Bloomberg, President Obama announced private investment in Africa totaling $14 billion.  That is remarkable.  A package that large, announced by a sitting President, would in the past have been provided as aid.  Now it is coming as catalytic capital to drive job creation and economic growth.  It includes investments by General Electric (GE), Coca-Cola, Marriott and Blackstone – companies that are committed to Africa for the long term.  This continues a trend.  As I wrote in a pre-Summit op-ed in the Wall Street Journal, GE is investing in infrastructure development inCalabar, Nigeria, Wal-Mart is establishing itself in South Africa through Massmart, and IBM is aggressively expanding in Africa, starting in Nairobi.

And on the continent, a new wave of 21st Century African business leaders are themselves contributing to the economic development of the continent in ways their predecessors never dreamed.  My company Heirs Holdings’ $2.5 billion commitment to President Obama’s Power Africa Initiative, the largest single private commitment to the initial announcement, is our own contribution to the true and sustainable economic development of Africa. The Dangote Group is planning to construct a $9 billion refinery to cater to domestic gasoline consumption and will create massive jobs.  These projects are taking the path that creates economic and social wealth. Along with these multi-billion dollar macro-development investments, we are also investing in the future of Africa through smaller businesses and our younger citizens. The Tony Elumelu Foundation is committing USD100m to fund 10,000 start-up entrepreneurs across Africa.  In addition, we are establishing the Nigeria Opportunities and Empowerment Fund, a $9 million resource for entrepreneurial approaches to supporting and improving troubled communities around Nigeria.

What will make these investments succeed? 

The US government, driven by Commerce Secretary Penny Pritzker, and private investors must above all else, recognize that Africa is transforming positively. For much of the last 500 years of African history, foreign economic involvement was about the extraction of resources and exportation of wealth.  Today we are acquiring the capacity to generate wealth within – to refine peanuts into cooking oil in Africa, crude oil into gasoline in Africa, cotton lint into garments in Africa, and cocoa into chocolate in Africa.  Developing this processing and manufacturing capacity must be a major focus of investment.

Fundamental infrastructure also needs to improve. Power generation remains a major challenge, and the lack of reliable power hinders economic development.  An additional $12 billion in private funding for the Power Africa initiative – announced by President Obama during the summit – brings the total funding for this project to $26 billion, an investment that promises to provide 30,000 megawatts in new capacity to 60 million households and businesses across Africa. Governments must do their part in improving the investment environment in Africa as has been happening in the agriculture and power sectors in Rwanda and Nigeria, to encourage both domestic and foreign investment- all within the context of national development plans and clearly outlined targets.  The US government should also do its part by passing the Energize Africa Act to expand opportunities to partner with African countries in the power sector, and reauthorize and extend AGOA for 15 years.

We should all keep in mind, as Secretary of State John Kerry said, “Business is not just business for the sake of business,” he said. “It is for providing the foundation for people to be able to live their lives with opportunity, dignity, and respect.”

The writer is a Nigerian economist, banker, investor and philanthropist.