Africapitalism: An Idea with a Future

More than ever, the African countries need to develop their economies by growing the private sector. This could be the best answer to the migrant crisis. By Alexandre Kateb, Consultant

In mid-March, I attended the 2015 iteration of the Africa CEO Forum in Geneva, an event which every year brings the major representatives of African capitalism together: CEOs of multinational companies and family groups with great ambitions like Africa, business bankers and consultants of all kinds, visionaries and gurus. A Davos-type ambiance was in the air in Calvin’s city, but with a certain African conviviality and warmth. Missing were the straight-laced faces and contrite expressions seen at other international forums. Discussions revolved around the concept of African capitalism promoted by Nigerian billionaire Tony Elumelu.

Optimistic African Entrepreneurs

African entrepreneurs have never been so optimistic. But the international media paradoxically always emphasises the “seven wounds” of the continent (pandemics, civil war, terrorism, climate disasters, demographic explosion, failing infrastructure and corruption). Not to mention the humanitarian crisis going on in the Mediterranean brought about by these smugglers who – literally – throw thousands of poor hungry and exhausted souls into the sea. Are these two realities really that irreconcilable? Isn’t it actually a lack of economic opportunities that leads the majority of these migrants to set out onto the sea, for what often will be their last voyage? Why then is it obscene to talk about the emergence of the African continent? For the tenants of African capitalism, this is precisely why we must put more emphasis on the positive dynamics at work in Africa to facilitate individual initiatives and accelerate development.

 

Lack of Attention to the Private Sector

For David Rice, the Director of the Africapitalism Institute, Africa has too long suffered from hypertrophy in the public sector and a lack of attention in the private sector. However, it has been shown that for the long-term, the private sector is capable of creating wealth and offering the young people of Cairo, Nairobi or Kinshasa the jobs that they need. There is an urgent need for de-bureaucratisation, the opening-up and expansion of the markets by building energy and transportation infrastructure and improving regional and sub-regional integration.

The Africapitalism Institute gives 1,000 grants every year to business creators whose projects provide true potential for transforming the African continent.

But some stakeholders from the South did not expect these initiatives. Figures in attendance at the Africa CEO Forum included Khaled Al-Aboodi, who manages the ICD (International Corporation for the Development of the Private Sector). This organisation is to the Islamic Development Bank what the IFC (International Finance Corporation) is to the World Bank, its financial arm intended for the private sector.

 

The Matter of Funding

By providing advice and loans to African companies, the ICD’s activities are fully in line with the spirit of African capitalism with the goal of making the private sector the engine of job creation and growth in Africa. For Khaled Al-Aboodi, the private sector in Africa is still too weak. There is an urgent need to increase its weight and make more financing available. The ICD’s activities in Africa also reflect the interests demonstrated in the continent by investors in the Gulf, not to mention the private equity funds based in Dubai, Doha or Jeddah that invest in infrastructure projects in Khartoum, Mombasa or Lagos or that acquire stakes in the family groups in Africa. The ICD allows the governments (Senegal, Côte d’Ivoire, etc.) and African companies to issue sukuk, the Islamic bonds that have seduced even Chinese investors. The primary feature of this financing is that it is oriented toward the actual economy – the loans must be backed by tangible assets (machinery, inventories of goods, real estate, etc.).

 

Sustainable Investments

Furthermore, the investments made by the ICD ap