The Founder of the Tony Elumelu Foundation spoke with journalists at the IMF/World Bank spring meetings in Washington DC, emphasising that what lots of young and intelligent entrepreneurs in Africa require to compete with their peers on other continents include access to electricity and favourable regulatory environments. Kunle Aderinokun and Obinna Chima present the excerpts:
What do you see as the barriers to the success of African entrepreneurs and how do you prepare these young people to create businesses in a digital economy?
The truth is that the population of Africa presents opportunities. We have 60 per cent of our population at the age of 30 and we have 65 per cent of our economy in the informal sector.
But these present quite interesting opportunities for digital economy. In my interactions with young Africans, I have seen people who are determined, energetic, hungry to succeed and make a difference and are extremely intelligent, but the environment times, makes it difficult for them to succeed. You can’t talk about digital economy in Africa without fixing critical infrastructure. Digital connectivity is a major issue in Africa and you can’t fix it if you don’t have reliable access to electricity. So, if we want to truly address the issue of digital economy in Africa, these challenges must be fixed.
Second is the issue of governance. Governments need to understand that if we prioritise the young ones and make the operating environment conducive, they would do well, and we would be able to solve some of the problems in the continent. So, regulation a major, intellectual property is very important, incentivising investors and even entrepreneurs, are all factors that will help us address the digital issues. For the entrepreneurs in Africa, I will say let’s not look at the challenges, but the opportunities. There are lots of opportunities in the continent and we need to look at these opportunities, despite the challenges that we face. Let’s fix policy issues, let’s fix regulatory issues and investors will come to Africa. And as these investors come to Africa, we would help address the issue of unemployment, poverty and help involve get more involved in economic activities. At the Tony Elumelu Foundation, this is the fourth year of the programme that we put in place. My experience is that many young Africans want to be in the digital technology space. In terms of representation of interest, the first is education, which is about 30 per cent, the next is ICT and these young entrepreneurs want to succeed. Also, we need to put in place tech hubs for them. If we have tech-ups, it would go a long way in helping us to galvanise the space. The TEF is happy to support these young Africans, but we need more collaboration by all – government; creating the right environment, development partners continuing to support and those who are endowed should also support them in a manner that creates the right results for our continent.
I have always argued that in the 21st century and with the advancement of technology, there is no fixed approach to development. But what is important is that firstly, there must be the purpose to develop, there must be a purpose to move people out of poverty and there must be a purpose to drive an inclusive development in the continent. And there must be a purpose to do all of these on the platform of transparency. When there is overall alignment along these areas, indeed, development will come. For Africa, we do have demographic dividend in our people. I speak authoritatively as someone who had supported most of these young Africans in the area of entrepreneurship and I see a determination to succeed. I see people who are disciplined because if you give them $5,000, they apply it for the purpose. So, why don’t we harness all of these? Mark Zuckerberg was in Nigeria not long ago and one of the places he visited was a small tech hub in the country. And if we didn’t have that in the country, probably the kind of investment he made wouldn’t have come. So, let’s begin to prioritise these young people who have great ideas.
For someone that wants to be an entrepreneur, what should such a person study in the university?
Let’s look at what we do at the TEF. Every year we try to support 1,000 African entrepreneurs, we say to them that the programme is sector agnostic and it is not important whether you are educated or not. We want you to follow your passion, because ideas that come from your passion to a large extent succeeds. And we have seen medical doctors express interest in fashion, we have seen computer scientists express interest in ICT. What we are seeing to some extent addresses the new way forward. It is more of skill development and what you instinctively can wake up at night and want to do and what you do without feeling that you are inconveniencing yourself or being stressed. Any and every area can lead to success. So, my advice to people and even my children is to follow your passion. If you are already in the university, finish whatever you are studying, but after that, follow your passion because passion is important.
People who have made great strides in life are people who followed their passion and anything you do, do it very well. Oprah Winfrey became a billionaire just by talking, organising people and having fun so to me, it doesn’t matter what you do because passion makes you keep improving at anything you do. If you are not passionate about a cause, you can’t make progress. If Oprah Winfrey regarded the talk show as something to get by and make a living, she wouldn’t have refined and made the kind of improvements she made. I’m sure my grandmother sang more than some artistes today that Beyonce would want to go on stage and the whole world would stand still. She’s passionate about what she does, and she keeps improving.
Tell us more about the TEF Entrepreneurship Programme?
What we are doing is private sector-driven and our own contribution to the development of our country. We don’t carry government along by way of information but like I said in the session earlier, we can’t keep depending and relying on the government to do the quota that we can do. Since we started, the Tony Elumelu Foundation has supported young Nigerians. Every year, we have 50 percent of the 1000 we select from Nigeria. Not by design, but somehow due to the energy and entrepreneurial spirit of our people. This is the fourth year; this means that we have 2,000. TEFentrepreneurs cut across Nigeria in every state; people that I don’t know. I am happy that Nigeria is well represented in the programme and that they are doing well. It’s only a matter of time before we begin to feel the impact of what they are doing. The International Red Cross has come in; they have now committed to support 200 people – 100 from the Niger Delta and another 100 from the North-eastern part of Nigeria. So, that increases the participation of Nigeria from 500 to 700. The UNDP has also committed to support another 40. Collectively, we are making progress. This is how the private sector and development partners can play their own role.
You attended a session on de-risking the environment to encourage inflow of funds. The major issue is de-risking the SMEs and getting banks to release funds for seed capital, why are banks not providing the support?
Firstly, I used to be a bank CEO and today, I am an investor in a bank and I continue to have interest in that sector. Secondly, I don’t speak for the banking sector. But it is so easy to blame banks about lending to SMEs but if banks go under, the same public will say the banks were reckless, that’s the dilemma. Nobody will say this bank went under because it tried to support SMEs.
SME is a difficult sector to fund, but those who have managed to develop the skills to support that segment are doing so. I speak from personal conviction that we need to support the SMEs and that is why the Tony Elumelu Foundation has put aside $100 million to support entrepreneurs. And I just spoke about the fact that 2,000 of them are from Nigeria and if I didn’t say it today, you wouldn’t have known that I was with the International Finance Corporation (IFC) and not just the IFC but also the CEO of International Development Association (IDA) talking about how to support entrepreneurs in Nigeria and other African countries. We spent hours theorising about risk mitigation, risk guarantee so that they can come into the sector. I do hope that all these efforts will yield the desired results to make sure that money gets to the SMEs. The government has a role to support this initiative with incentives and policies that will make SMEs grow because if SMEs grow, they will attract more capital funding but if SMEs die, nobody will want to invest in SMEs. One thing about SMEs is that they don’t have enough collateral to provide banks and if they go under, what will banks hold on to? We need to see more successful SMEs. All of us need to work together to make them succeed.
Why do you think it’s hard for African countries to invest in human capital development?
I think it’s about alignment of interest, I think it’s about understanding. We need leaders who are focused on results who want to make a difference, who understand how the system works. Just like the question earlier about the challenges, some people will look at it from a different perspective but for me, internet connectivity is a major issue also, electricity; you can’t fix connectivity without electricity. Leaders who understand these things can connect the dots and then know what to tackle and do it in a transparent fashion. For me, poverty does not have any region or colour. It affects everybody. So, we need to fix issues so that our continent can make progress. Like you said, it’s something anyone should be able to understand.
You said Africa should stop going cap in hand that Africa must develop Africa, how is that playing out?
In my closing remarks, I said African private sector leaders should invest in Africa, mobilise resources that we have a lot of resources. I also called on development partners, I said please don’t relent, keep engaging in areas of advocacy and channel more resources to Africa. It is more about Africa, we should play a role in Africa, we won’t say no to people that want to help us. Just sitting down with mentality that you owe it to us to help us should go. The countries that are helping us did not have the kind of resources we have when they started. That mentality is one of the reasons we are where we are.
One time I travelled to the UK and visited the town where Shakespeare was born. What you see there, you’ll see it in Africa like benches and kitchens with old steel pots, they still dry meat and I was surprised. But that environment is a cold environment, so I am not surprised that they made progress faster than we did. If we don’t help ourselves, nobody will help us. So, it’s not that we don’t need help, we just have to do away with that mentality thinking someone will come and change our situation for us. Otherwise, why are some leaders succeeding and some are not.
How do we get funds to build infrastructure in the face of rising debt risk?
The key thing is that are we getting funds for consumption purpose or are the funds for investment purposes? Can we use the returns on investment to offset the debt? People who take loan for consumption purposes almost go bankrupt in life and it applies to countries too. If Nigeria as a country wants to borrow, debt to GDP is okay but there are other indices people look at not only debt to GDP. If those indices are okay, no problem. Then they look at your revenue and the sources of revenue.
Is the revenue in local currency or foreign currency and enough to be able to offset your liabilities? Leaders must borrow for sectors that are productive and you must honour your obligation to attract more borrowing because you need capital and you must be credit worthy to attract it and have the discipline to meet obligations and the purposes for which you are borrowing is fulfilled and not that the funds are diverted.