[Column] Tony Elumelu: Demystifying African Business Myths
I was delighted to speak on the VIP panel alongside my big brother, Mo Ibrahim, at the ‘Promoting Business Growth in Africa Forum’ in London organised by Société Générale in partnership with The Telegraph.
Though the story line on Africa has progressed – it is no longer about “saving” Africa, but how best to promote investments in Africa – there is still work to be done to tackle inaccurate information about Africa that persists in mainstream media. We all agree that investment is central to development. Can you then imagine the extent of disservice these untruths about Africa have caused us? Billions if not trillions of lost investment.
Gatherings like this are important because they provide useful platform for those of us with decades of experience of investing in the continent to share our stories and present facts to counter these widespread myths.
Myth 1: Risks are too high in Africa.
Risks on the continent are no different from risks we see elsewhere. Instead of running away from risks, I counsel investors to dimension and quantify risks and incorporate into their business model. Returns in Africa remain incredibly exciting, ask any serious investor in Africa – the returns here can be found nowhere else. The hung parliament in the UK is a political risk in itself: we saw the damage it caused the Pound. But this news would have been reported very differently if it had happened in Africa. We must stop viewing African markets via biased lenses.
Myth 2: Unfriendly governments; difficult business environment.
Contrary to popular opinion, African governments are increasingLY embracing the private sector: they are pursuing privatization of former state-owned enterprises, welcoming competition and encouraging new entrants into previously closed markets. Our political leaders are increasingly acknowledging that investment is key to our economic renaissance and the private sector must play a key role. Rwanda, Ghana, Senegal, are just some of the countries that have prioritized creating an enabling environment to allow the private sector flourish. Our Tony Elumelu entrepreneurs across the continent often report on the ongoing reforms in their respective countries in support of SMEs. We must commend and encourage these efforts so that we can see more.
Myth 3: There are no opportunities in Africa.
We must change the narrative about Africa. Africa’s youth demographic dividend is a ripe opportunity for businesses in the FMCG sector. As our middle class expands, as disposable income increases, and as tastes and trends become more sophisticated, these create wider consumer markets and open up exciting prospects for global investors to tap into. There is a demand surge across the continent and only the best-positioned and most discerning investors will win. The current infrastructure deficit – power, ports, road, – should also be viewed as potential waiting to be tapped, instead of constraints.
Myth 4: Corruption everywhere
There is a new Africa emerging and the world needs to hear more about our success stories. Things are no longer the same. Where in the past, the business terrain was littered with rent-seeking associates , the new crop of African business men and women are co-investing with partners and have skin in the game. They have capacity are savvy, knowledgeable, experienced and networked. The result is that their interests are better aligned. As an investor, one of the first things I do is to identify the right local partners. My team and I at Heirs Holdings – with investments across 20 African countries, and interests in all key sectors – energy, oil&gas, power, healthcare, hospitality, real estate, financial services – continue to partner with many well-meaning investors committed to propagating our Africapitalism philosophy of doing good and doing well.
I applaud the organizers of the forum, and I am happy that our panel provided guests with a better understanding of market conditions in Africa, and the accurate expectations that all businesses seeking to trade and invest on the continent should have.