Elumelu is chairman, Heirs Holdings, chairman, United Bank for Africa (UBA), and founder, Tony Elumelu Foundation.

The overall theme of this year’s International Development Conference, “Pathways to Progress”, is very appropriate because whilst we all agree that development is desirable, there is much we can debate on what constitutes an effective development programme or paradigm, or what policy priority is the right fit for which region. The emphasis on “Success in Private Sector Development and Job Creation” is particularly relevant as it relates to the African continent.
Only last year, global governments launched the 17 Sustainable Development Goals which some have cost at over $70 trillion over the next 15 years. I think we can agree that no one has that kind of money, least of all governments.
So, the private sector which has the capacity to mobilise the most resources, is best at innovation and is renowned for expertise must be involved in development. In fact, we must pursue private sector growth in a way that promotes and results in development outcomes and I will talk more about this a little later.
Challenging the dominant development paradigm
First, let me talk about the prevailing development paradigm. There isn’t one sole path to development – particularly if poverty reduction or alleviation is to be a key objective of what we call “development”.
However, the traditional approach to development has been for donors and governments to invest in basic health, education and access to food in developing countries, with the hope that the beneficiaries will eventually become self-sufficient. But I also believe that if we help people become self-sufficient, they will purchase those same basic goods and services I’ve mentioned, that governments and donors are struggling to provide.
Basically, humanitarian assistance and economic opportunity are two sides of the same development coin. Yet, we tend to focus on the former at the expense of the latter, with limited results.
However, over the last decade, even development agencies have learned the value of leveraging and incorporating private sector capital for economic opportunity with impressive development outcomes. The US Agency for International Development (USAID), for instance in 2008, only leveraged 8 percent of its programming budget with private capital to support its programmes. By the end of 2013, it was leveraging 42 percent of its budget with private capital to achieve its objectives.
The result has been that US taxpayer dollars that were spent on foreign assistance went further, allowing it to expand its focus from small interventions, like micro-enterprise and feeding programmes, to large-scale capital-intensive infrastructure programmes like power plants, regional highways and ports. This is aptly demonstrated by President Obama’s USAID-administered Power Africa Initiative to expand access-to-electricity in Africa for the 600 million people living without it.
By working with the public and private sector, Power Africa has been able to marshal $43 billion to create 60 million new power connections, using a mix of power solutions. My company, Heirs Holdings, through its power sector vehicle, Transcorp Power, committed $2.5 billion of investment capital to the sector as a result of this initiative.
So you see how the importance of this type of pivot cannot be overstated because to maximize and sustain development, the macro-economic conditions of the countries we seek to help matter almost as much as the lifesaving interventions we make in the short term. There is need for an alignment of a variety of interests and private sector operators are key in that equation.
Africapitalism
I am so convinced of the immense value of the economic opportunity side of the development coin in creating a catalytic impact on people’s lives and driving development on the African continent that this belief drives both my commercial and philanthropic investments. I call it Africapitalism.
Africapitalism asserts that the private sector has a role to play in development, and that the private sector must itself recognize, embrace and deliver development outcomes through long-term investments in strategic sectors that deliver economic dividends for shareholders and social dividends for society.
I will borrow the great Professor Michael Porter of the Harvard Faculty’s description of strategic sectors as those sectors where a country has a natural competitive advantage or those it must invest in to unlock potential in areas where it has natural advantages like power!
This is what leads to jobs and job creation is pivotal! Jobs matter, otherwise you can achieve both significant growth in GDP and growth in poverty. So, strategic sectors must achieve both growth and what Dr. Jim Kim, another sterling product of the Harvard Faculty and the current World Bank president, calls “Shared Prosperity”.
Unlocking jobs is also key in Africa because Africa has a very young population. With the right investments in education and industry, given the ageing of populations in other regions, Africa should become the engine of global growth in the near future.
However, if we do not create 10 million jobs a year between now and 2030 to occupy and feed the millions of Africans entering the job market every year, we could face severe stability problems and go from “Demographic Boom” to “Demographic Doom”.
I believe that success in the African private sector and its development outcomes can be demonstrably observed by looking at three areas: (i) intra-Africa investment and the expansion of home-grown businesses; (ii) local value addition; and (iii) entrepreneurship.
Intra-African investments
Until the recent crash in the price of commodities, seven of the top 10 fastest growing economies in the world were from Africa. What is more interesting to note is the flow of financing for investment, because sustained private sector growth requires investment.
In 1990, Africa received $26 billion in Overseas Development Assistance (ODA) and $1 billion in Foreign Direct Investment (FDI). In 2013, ODA received by Africa was $56 billion and FDI was $57 billion. So in 20 years, FDI has managed to overtake ODA. However, even more significant is the growth of intra-African investments which was negligible in 1990 and had grown to over $70 billion in 2013.
Let us examine the effect in two businesses operating in two strategic sectors. In the telecoms sector, prior to 2000, only a few million Africans had access to telephone lines for communication. Today, over 720 million GSM lines exist, effectively democratizing communication on the continent. MTN, the South African telecoms giant, expanded to Nigeria in the early millennium years and, with well over 100 million users, the Nigerian market generated enough profit and capital to enable MTN expand to over a dozen more countries. It now operates in 17 African countries. This is hugely significant! MTN dramatically contributed to economic growth through direct and tangential employment and enabling communications with customers and markets.
Similarly, in the financial services sector, in the 1990s, a group of young bankers and myself bought a distressed bank in Nigeria, and using modern technological tools of the internet to serve our customers, we attracted younger customers, turned the bank around and became a fast-growing enterprise in the country. You might describe us as the “Market Disrupters” of the Nigerian banking industry. Having become a leading bank, we later orchestrated a merger with the well-established United Bank for Africa (UBA), which I chair today, and expanded from a domestic bank in 2005. UBA now employs over [20,000] people, serving close to 12 million customers and businesses in 19 African countries. UBA enables more Africans to save, provides capital for businesses to grow, and drives large-scale intra-African trade and investment. And very importantly, UBA is the top homegrown lender in the African energy sector, itself a strategic sector that will unlock more economic growth and the jobs we need. THAT is private sector growth and THAT is development.
Local value addition
The second area where private sector growth is vital to development is local value addition, a key characteristic of Africapitalism. It is hard to estimate how much capital the continent of Africa has lost over decades to the low-cost export of raw materials that is sadly followed by importation of related finished goods. The loss is huge and is in billions of dollars. For example, we export crude and import petroleum products, my country Nigeria being the worst culprit; export timber and import furniture; export cocoa only to re-import it as chocolate, and so on.
This is costing us millions of jobs and billions of dollars in revenue that we could otherwise be applying to the SDGs. It has also created African dependency on compassionate capital, when we are more than capable of generating much of that capital ourselves.
However, there are observable changes afoot in reclaiming the value chain of some of our consumer products but we need to do more. Such efforts will save billions in capital flight from the continent and pioneer the mass industrialization of Africa, a necessity for the continent to compete with other regions in the 21st century. We are witnessing the daily manifestation of key economic desirables, including import substitution, higher regional supply chains and self-reliance. THAT is private sector growth and THAT is development.
Entrepreneurship
This is not a very well-developed area, so I will discuss it in the context of advocating for more deliberate action and investment on the part of both the public and private sector actors. To ensure shared prosperity in African economic development and opportunity, we cannot simply focus on the growth of large corporates, such as those I’ve just described.
Governments alone and large corporates do not have the capacity to provide employment for the millions of young Africans entering the job market every year. Therefore, we MUST empower our youths on the continent to create their own jobs and take charge of their future by starting their own businesses. Many of them are so talented and merely need a chance to take off. They are designing apparel and apps, educational models and agriculture supply chains, etc. But they are shut out of the formal economy by bureaucratic and regulatory obstacles, policy gaps and lack of access to capital, markets and training.
I believe that Africa has the potential to produce 1,000 more UBAs more MTNs, and even our own Steve Jobs through private sector investment. That is why the Tony Elumelu Foundation launched the Tony Elumelu Foundation Entrepreneurship Programme, which has committed $100 million over the next 10 years to train, mentor and seed 10,000 African businesses. We aim to create 1 million new jobs and $10 billion in additional revenue for the continent by democratizing and institutionalizing the same ‘luck’ that I had as a young African. The same luck that led me to this moment.
Additionally, we are identifying and advocating for policy reforms to enable not just the Elumelu entrepreneurs but all African entrepreneurs with the will to succeed. This will eliminate a lot of the corruption or dependency of political largesse to successfully start and operate a business. And they are hungry for it!
In its inaugural year, we received 20,000 applications for the 1,000 available slots and this year, in our second cycle, more than 45,000 aspiring and budding entrepreneurs applied for the 1,000 slots. I’m especially proud to report that because we maximized the flexibility of the programme – by opening it up to all countries, levels of education and remaining agnostic about the sectors and work experience, for the last two years, women have made up over 30 percent of the applications and top 1,000 selectees in the programme and are also able to be full participants in the economic transformation of the continent.
I must add that this entrepreneurial zeal is not unique to Africa. President Obama’s administration has made a lot of effort to promote entrepreneurship, in partnership with the private sector, through Spark! – the U.S. Global Entrepreneurship programme.
We have the shared belief that we must step up our investments in supporting small businesses, because they will generate the greatest growth in any region, because they employ the most people. Even better, with the insight they have into gaps in the local markets, and their constant innovation, many of these start-ups and small businesses will be addressing key development challenges, which constitutes a bottom-up approach to implementing the SDGs using private sector capital and expertise. We have actually built the SDGs into our entrepreneurship programme by requiring all applicants to tell us which of the SDGs their business will address. So, development has become a strategic consideration in their business plans.
And very importantly, by channelling the ideas and energies of our populations into virtuous and productive pursuits, they will help to strengthen global security.
Conclusion
In conclusion, not all roads and good intentions lead to development. We’ve seen this with many of the disastrous aid policies of the 1960s and 70s, which cultivated decades of debt and dictatorships in developing countries. And even as I have endorsed today’s theme, that there are many pathways to development, I would like to submit that development is not so much a destination as an unfolding journey, and the destination is not as important as who we carry along with us. For too long, governments have tried to go it alone.
We are all travellers on the development journey, and we need to bring along governments, the private sector, academia, civil society, women and, most especially, the poorest and most vulnerable among us along this path to success and progress. I will finish by saying that I am honored to travel with you.

Being excerpts of a keynote address at the 2016 edition of the annual Harvard International Development Conference.

Life is a ladder. Every new person we meet is a rung, upper or lower, a step upward or downward…