Elumelu: Reliable Power Comes First for African Industry

Tony Elumelu put electricity first when he listed what stands between Africa and industrial development, telling a Lagos audience that factories simply cannot run without reliable power. The Nigerian billionaire, who chairs Heirs Holdings, spoke at the 25th annual conference of Women in Management, Business and Public Service, known as WIMBIZ, held under the theme “The Geography of Opportunity: Why the World Needs What Africa Has.”

“We cannot talk about industrialisation without fixing electricity. Factories cannot run without it,” he said. Dependable power and connectivity, he added, are also prerequisites if the continent is to build an artificial intelligence industry, framing infrastructure as the base on which any technological ambition must stand.

His second barrier concerns what Africa actually ships out. Elumelu questioned why countries on the continent continue exporting so much of what they produce in unprocessed form, asking “why ship raw lithium, raw cocoa, raw crude out of this continent” instead of processing it at home. Weak intra-African trade was his third obstacle: less than a fifth of Africa’s trade takes place between African countries, he said, even with the African Continental Free Trade Area in place. “It is easier today to ship goods from Lagos to Liverpool than from Lagos to Luanda.”

The fourth barrier, and the one on which he leaned hardest, is capital. He turned to his own foundation’s numbers to make the case. The Tony Elumelu Foundation received 265,529 applications from young Africans this year but could fund only 3,200 of them, leaving more than 262,000 without support. “This, therefore, is not a shortage of entrepreneurial talent in Africa. It is a shortage of capital,” he said.

The delivery record behind that argument is substantial. Elumelu and his wife, Awele, a physician, established the foundation in 2010, and its main programme, launched in 2015, gives each selected entrepreneur 5,000 dollars in non-repayable seed capital. Since then the foundation says it has paid out more than 100 million dollars to 24,633 entrepreneurs across all 54 African countries. Businesses it has backed have generated about 4.2 billion dollars in revenue and created roughly 1.5 million jobs, and the foundation reports that 77.5% of them are still operating after five years.

The money comes packaged with practical support. Entrepreneurs complete a business management course on TEFConnect, the foundation’s online platform, and are paired with mentors and coaches. Alumni who keep growing can seek further financing through the foundation’s partners, with awards of up to 50,000 euros, about 56,000 dollars, for the strongest performers. The foundation also convenes the TEF Forum, an annual gathering of its entrepreneurs, investors and African leaders first held in 2015.

This year’s cohort of 3,200 entrepreneurs will share about 16 million dollars. Just over half are women, and 30% come from rural communities. Companies in Elumelu’s Heirs Holdings group, among them Heirs Energies, Transcorp Power, Transcorp Hotels and United Capital, are funding 1,751 of them. The remainder are backed by partners including the European Commission, Germany’s development ministry and its agency GIZ, the IKEA Foundation, UNICEF’s Generation Unlimited, the Dutch government and the United Nations Development Programme.

Addressing the audience of women executives and entrepreneurs, Elumelu said “women’s economic leadership is not a concession to fairness; it is a requirement for competitiveness.”

His broader argument was that the continent’s future lies in building its own financing capacity. “The future is investment and trade, not aid,” he said. “The most important thing Africa needs to build in the next decade is African capital that invests in Africa.”

Elumelu built his fortune in banking. In the late 1990s he led a group of investors that took over the small Crystal Bank and grew it into Standard Trust Bank, which merged with United Bank for Africa in 2005. UBA now operates in 20 African countries as well as in the U.S., the U.K. and France. Through Heirs Holdings, his family investment company, he also controls Transcorp Plc, which owns power plants and hotels, and Heirs Energies, an oil and gas producer. That portfolio spans precisely the sectors he named as bottlenecks, from power generation to energy production, giving his diagnosis a personal dimension.

Aliko Dangote, Africa’s richest person, also addressed the conference this week, telling delegates that Nigeria needs more factories and fewer traders. Whether that call translates into new capacity on the ground remains the open question his diagnosis leaves behind.

Figures were converted at 1 euro equal to 1.12 dollars.