Paris, France, October 31, 2019//-The Founder, Tony Elumelu Foundation, Tony O. Elumelu, CON, has called on French investors to take advantage of the huge opportunities in Africa to double their investments on the continent.
According to him, the time is now to invest in Africa and African SMEs to speed up the growth and development of Africa.
Mr Elumelu made this call when he delivered the Keynote address at the Invest for Growth in Africa Conference in Paris organized by the French Ministry of Finance and Economy on October 30, 2019.
He noted that private equity could “play a huge part in this. By providing the critical financing as well as the strategic support missing, we can improve the outcomes of entrepreneurs on the continent as well as profitably invest in Africa”.
Huge opportunities
In Africa, today, we have a large youth population, who are eager and innovative, they are looking at solutions to problems in their communities but are hampered by the access to capital and investment, and mentoring and training, according to Mr Elumelu.
In his Tony Elumelu Foundation’s Entrepreneurship Programme which supported about 300,000 young African entrepreneurs in five years, he said “we are acting forcefully to remedy this – but we can all do so much more”.
According to the International Finance Corporation (IFC), a member of the World Bank Group, private equity accounts for about $200 billion in investment worldwide each year.
But only 10 percent of it reaches emerging markets – in Africa, despite the good intentions of the development finance institutions, this figure is even less.
This Mr Elumelu who is Africa’s greatest philanthropist, said: “We need to do much better and be much smarter in channelling these funds to emerging markets, these markets present huge opportunities– as well as risk- for investors”.
We salute French companies, such as Total, Bouygues, Accor, Orange and Bolloré, who have accepted this challenge – but there is room for many more”.
When done right, this kind of investment can bring not just capital but can also strengthen job creation, corporate governance and help improve sustainable business practices, according to him.
“In many of our economies, capital markets are either nascent or non-existent, small and medium size enterprises lack access to debt finance and cannot secure critical financing through private equity”.
Mr Elumelu sees the potential of investing in African youth and businesses every day, through his Foundation, “as we empower young Africans with the tools required to grow their ideas and nascent businesses; non-refundable seed capital, mentoring and training, access to the largest online platform for African entrepreneurs-TEF Connect- which connects them to other entrepreneurs on the continent for collaboration as well as access to investors for second-stage funding”.
He echoed that; “Africans do not need aid – rather our young people need investment, and that is the message I bring to you all today”.
Explaining that 60% of our population is below the age of 25, we have the youngest workforce in the world – and most mobile. This mobility can sometimes create tragedy as our young are driven across the Mediterranean.
“If channeled successfully, our youth population has the potential to create businesses that will contribute to economic growth but also create jobs for millions of other African youth – anchoring families, sustaining communities, creating sustainable growth”, he told his audiences in Paris yesterday.
One sector stands out – power, today there is a significant power gap across the continent, this increases the cost of business and is often a reason why SMEs are unable to scale their enterprise.
But power is an opportunity for an entrepreneur, it is a call to anyone with innovative solutions to the problem to reap the benefits of investing in this underdeveloped sector – from small off grid networks, to hydroelectric, to green energy.
Mr Elumelu noted: “Through our Group’s power company, Transcorp Power, we have invested in power and are today the leading power generating company in Nigeria, with an installed capacity of 900 Mega Watts and are currently closing the acquisition of another 1000 Mega Watts to double our capacity – but we are scratching the surface – because frankly we could quadruple supply – the demand is huge”.
We are interested in innovation and disruption – to light up schools, power hospitals and drive industry”, he appealed.
“When I say that there are opportunities in Africa, I mean it and I live it.
I have a philosophy – Africapitalism – it champions a private sector led approach to the development of the continent through long term investments that create economic prosperity and social wealth– we need to create both economic and social wealth!”
Key phrase here being long term investment – no one should come to Africa for short term gain, he stated.
“We are all aware of the skill and knowledge gap, we need people like you to come to the continent and fill this gap, in doing so, you will undoubtedly reap the benefits of doing so.
I am fully aware of the challenges of doing business in Africa, we have long been plagued by bureaucracies – red tape- corruption and lack of infrastructure”.
Changing business regulatory environment
“But things are changing, the environment is getting better for business, my country, Nigeria has moved up many places in the World Bank ease of doing business report, in two consecutive years – a step in the right direction and I commend President Buhari’s administration for this success”.
Tax laws still need to be simplified, bureaucracy streamlined, and the rule of law firmly entrenched in our business practices across Africa to ensure that investors have confidence in the system and do not shy away from the continent.
“We must be prepared to take risks if we are to drive lasting benefits. The great industrialists of recent history- the Rockefellers, Vanderbilt’s the Rothschild’s the Peugeots and the Dassault’s recognised that risks must be taken for great rewards to be obtained”.
Thumps up to France Invest
It is important to salute the important work that France Invest does in ensuring the growth of start-ups, SMEs and mid-caps in France, illustrating that private equity can be a force for the positive development of companies and underlining the criticality of the SME sector in any economy, Mr Elumelu said.
“In Africa, we have to encourage the growth of SMEs – only they have the catalytic ability to create jobs and wealth in communities”.
Historically, our focus had been primarily on the creation of jobs and employment, through the public sector. This has to change.
“We know there is only so much that governments can achieve through direct job creation and it is the private sector’s responsibility and role to lead the way in the sustained creation of wealth – and the broader social benefits that flow from a vibrant private sector”.
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