Engaging Africapitalism and Africa’s Economic Future -By Moses E. Ochonu

Filed under: Economic Issues |
Moses E. Ochonu

Moses E. Ochonu


I recently returned from the Africapitalism scholars’ retreat organized by the Africacapitalism Institute of the Tony Elumelu Foundation. Since then I have been reflecting on the implications of the concept of Africapitalism for Africa’s economic development and for the broader debate about how to create and democratize wealth on the continent.

The main ideological divide in the world used to be between those who believe in individualized wealth creation and those who believe in collectivism and the socialization of the means of production. That debate has now been largely settled, so much so that even Marxists and neo-Marxists today no longer believe in the socialist maxim of “from each according to his ability; to each according to his needs.” That ideology is simply out of tune with human nature and fails to reckon with the imperative of human progress, which requires innovation, individualized incentive systems, the pursuit of responsible and legitimate self-interest, and wealth creation through investment, risk taking, and profit. It is all well to talk about fair redistribution of wealth, but without a capitalist incentive culture, that which is being redistributed will run out, leaving nothing.

Moreover, the ethic of fair redistribution, when carried to its atomistic end-point, can become a disincentive to private initiative, enterprise, and innovations, all of which have the potential to bring about qualitative human progress. You cannot distribute the cake unless it is baked. Someone, or a group of people, has to bake the metaphorical cake consistently in order for wealth to be available for distribution and even redistribution. This is a rather longwinded way of saying that wealth creation is an important component of human wellbeing, and that entrepreneurs and investors operating on capitalist principles and propelled by the profit motive are important actors in the drama of human progress.

Most pragmatic people now believe that organizing production along capitalist logic can create life-improving value and technologies for solving novel human problems. If a consensus has emerged around the inevitability and necessity of wealth creation and value-creating enterprise, there is little consensus about how such wealth should be created and for whom. Old capitalist bromides celebrated unfettered self-interest and fanatical individualism that portrayed governments and other collectivities as enemies of enterprise. Such ideologies needlessly fetishized the bottom line as the ultimate justifier of entrepreneurial effort. This absolutist position bordered on the veneration of greed and elicited an equally extreme reaction in the form of socialist ideologies that demonized private enterprise, profit making, and reward for thoughtful investment.

Today, the question that drives the debate is no longer whether entrepreneurs should narrowly focus on the margins they obtain from their investments and efforts or whether individual gain should be outlawed or subsumed under a collectivist ethos. The challenge is rather how to craft a reasonable middle ground where capitalism is made to work for everyone, where everyone is a stakeholder, and where everyone partakes in the prosperity and value being created. Across the world, the debate about how to make capitalism more socially responsible and capitalist activity more inclusive, rages. In the Western world, income inequality and the growing wealth gap between the so-called 1 percent and the 99 percent have become the entry point and terrain of this debate. In Africa, the debate is broader, pivoting on a holistic effort to grapple with how to chart a pathway to prosperity for Africa, create jobs for its teeming youth population, and devise mechanisms for achieving these objectives in a manner that gives all social and demographic groups a stake in the process and the outcome.

This is where the work of the Tony Elumelu Foundation and its research arm, the Africapitalism Institute, is critical. Africapitalism is a set of operational values and ethics that, if adopted by businesses and governmental actors, have the potential to create a new paradigm of shared economic development.

It is significant that Mr. Tony Elumelu, a wealthy investor, is the one pushing the effort to create ground rules that would make businesspeople in Africa, African or foreign, more accountable and socially responsible to their host communities. It is rare to see capitalist investors championing principles and norms that may compel them to look beyond the bottom line, beyond their pockets. To be sure, the concept of the social entrepreneur or the socially conscious investor is not new in Africa. As an economic and business historian, I have researched and written on precolonial African businesspeople who perfected and were celebrated for their social entrepreneurship. What is new win Mr. Elumelu’s approach is that he is willing to stick his neck out and tap into his networks and corporate capital to propagate an idea that seems to go against the grain of orthodox and neoliberal capitalist consensuses, including the justifiably vilified Washington Consensus.

Mr. Elumelu is pushing an idea that is counterintuitive to most people in his world of business and investing, namely, that businesses stand to benefit when they subscribe to and abide by certain principles of social responsibility and the ethos of inclusive, sustainable development. Let’s get one thing clear: Mr Elumelu is not an altruistic do-gooder seeking to tame or constrain business in the interest of Africans, nor is he committing class suicide. Far from it; in fact his point, which all of us at the retreat agreed with, is that setting and abiding by certain ground rules would benefit business in the long term and boost the bottom line, even if there may be cost implications in the sort term. The organizing premise in the Africapitalist framework is that the process of getting to this boosted bottom line should not alienate the communities in which the businesses operate but should instead include them in the value chain and generate social benefits that lead to societal buy-in.

This nuanced premise is the reason some of us honored the Foundation’s invitation to the Calabar retreat to help refine and expand a set of principles that Mr. Elumelu had developed into a fairly coherent ideology he calls Africapitalism. Personally, I felt that, given Mr. Elumelu’s unorthodox capitalist sensibilities and his willingness to put his reputational and financial weight behind a concept that argues for businesses in Africa to hold themselves to certain norms that may be costly in the sort term, there was a field of play between him and some of us. I was convinced that there was room for productive dialogue between he, an ardent capitalist investor, and some of us who believe that capitalism should be done in a manner that is humane, sustainable, and beneficial to the entire society, not only to a few people.

It was clear to me upon reading the outlines of the philosophy of Africapitalism that a capitalist investor who recognizes the need to develop a set of values to guide the conduct of businesses on the continent deserves to be supported in his effort. Mr. Elumelu and the foundation named for him simultaneously speak the language of free enterprise and that of responsible, inclusive economic development. They talk about economic development being driven by strategic private investments but advocate that this be done in a way that benefits all of society. This societal benefit in turn makes it easier for businesspeople to build communities of shared prosperity, which undergirds sustainable business growth. This openness to the need to humanize capitalist economic development is the first thing that drew me to Africapitalism. It also, in my opinion, stands Elumelu out among his colleagues in the world of high finance and investment. One expects people in the broad coalition of the egalitarianism and social justice movement to push the kind of values embedded in Africapitalism, not a man who made and continues to make money investing in high yielding capitalist ventures.

Even market fanatics today realize that a more humane capitalist order that is sensibly regulated for the common good is more durable than an unfettered reign of the market that is driven by greed, rigged rules, and unrestrained transfer of wealth from the many to the few. Similarly, it is passé to exclude the state and state actors from the affairs of the private sector. This is especially so in Africa where the state, for good or ill, remains a critical player in the economy and where acute infrastructure deficit calls for a productive engagement and partnership between business and government. As was repeatedly stressed at the retreat, a disciplined, adequately constrained state can be a catalyst in development and a partner to business. This is why the audience of the Africapitalism message includes government and intergovernmental agencies.

What impressed me more than anything else at the retreat is that our discussions reinforced the point that the field of economics, whose principles one is often accused of violating when one poses the question of business values and ethics, is not an exact science nor is it driven by universal, monolithic principles. On full display at the retreat were the various schools of thought and theories in economics — classical, neoclassical, neoliberal, Austrian, Keynesian, supply side, demand side, and even neo-Marxian economic perspectives. These contrasting perspectives underscore the diversity of economic thought and the hegemonic nature of the current tyranny of market fundamentalism. There was consensus at the retreat on the need for guiding values and principles for business in Africa and Mr. Elumelu deserves credit for starting the process that led to it. The predictable point of divergence was how to craft the principles in a manner that does not kill the proverbial goose that lays the golden egg, in a manner that does not undermine wealth creation and the health of businesses.

Personally, I am glad that the organizers invited people from the intellectual, political, and ideological Left. It indicates to me that they are not afraid of scrutiny, of having their ideas and assumptions challenged, and of having their premises questioned. It shows self-reflexivity and a willingness to interrogate one’s own assumptions and truisms. Academics are socialized into a life of critical and rigorous engagement with things that appear on the surface to be true and commonsensical, and the invitation extended to many academics, including yours truly, indicates that Mr. Elumelu desired critical engagements with the axioms and principles he articulated under the rubric of Africapitalism. In fact, some of the academics who were invited to the retreat come from a radical tradition of skepticism and criticism regarding the fundamental tenets of capitalism, making their invitation all the more commendable.

Because some participants were ardent, uncompromising believers in the capacity of unfettered capitalism to solve all of man’s problems, the discussions were at times heated, as clear ideological camps emerged. In the end though, the set of principles that we produced approximated, however roughly, the tough questions asked and the critiques posed to the taken-for-granted assumptions of those who fetishize the profit motive and see business as an independent, sacrosanct engine of development. The creative tension between the two main camps resulted in a better set of principles, in my opinion, and represented a vast improvement on the points of reference with which we began.

The second thing that drew me to Africapitalism is its celebration of entrepreneurship as a crucial component of Africa’s economic recovery. Africa is bulging with a youthful population of unemployed or underemployed citizens. Clearly, the government cannot provide enough jobs for these youths and does not have the capacity to empower them to achieve their economic potentials. Mr. Elumelu’s accent on the primacy of entrepreneurial and business agency in Africa’s development and job creation is thus timely and pragmatic. Elumelu has, for good measure, put his money where his proverbial mouth is, donating $100 million to train, mentor, and fund 10,000 entrepreneurs over ten years.

One legitimate critique of this entrepreneurship approach is that we risk valorizing business and entrepreneurship to the exclusion of other critical factors in Africa’s development. We cannot all become entrepreneurs and Africa cannot simply stake its economic future on the risky investments of entrepreneurs. Moreover, excessive emphasis on raising entrepreneurs to lead Africa’s economic renaissance misses the need for structural reforms and the need for raising responsible civic citizens who demand accountability and responsible policymaking in government.

However, what the Elumelu Foundation is promoting is not an uncritical veneration of the redemptive capacity or potential of entrepreneurship. The foundation appears to be championing a two-pronged approach that complements rather than replace the government and its traditional role as catalyst and provider of policy frameworks conducive to citizens’ self-fulfillment. The first part of this approach, in my understanding, focuses on private sector moral and social accountability, which can help fill some of the gaps in governance and also help raise the consciousness of Africans about responsible governance. The second part of this approach, which stresses the catalytic role of entrepreneurship, is one that has a great symbolic import of encouraging self-help, innovation, value-creation, and creative problem solving. These are all things that Africa needs and which African governments, given their familiar challenges and deficits, cannot provide or model.

The retreat is just the beginning of a long, complex conversation on Africa’s economic future, but the terms of the debate have been outlined, and I am glad that I was part of this agenda-setting stage.

Dr. Moses E. Ochonu is a Professor of African History at Vanderbilt University in the United States.