By Ifesinachi Okpagu & Somachi Chris-Asoluka, Tony Elumelu Foundation
As of May 19, over 88,000 people in Africa have reportedly been infected by Covid-19. Beyond these numbers, it is hard to tell how many more have been indirectly affected, through poverty, hunger, job loss and security-related incidents. Data in Africa is relatively hard to come by, still little pockets of information here and there suggest that beyond Coronavirus, hunger may be a deadlier virus on the continent, if not tackled now. At a recent virtual roundtable hosted by the New York Forum Institute, Tony Elumelu, Chairman of the pan-African bank, United Bank for Africa Plc (UBA), highlighted what might not have been obvious. According to him: “The pandemic presents an opportunity to reset Africa, create employment and eliminate poverty”.
His statement is backed by his experience as an economist, a philanthropist, and more importantly, an investor through his investment vehicle, Heirs Holdings, in Africa’s key sectors – power, financial services, oil & gas, hospitality, real estate, and healthcare. While he has been an avid investor, his hard work, and bet on the continent’s potential to generate a worthy return on investments, do not come without its own challenges. For decades, the private sector has worked with the hope that business necessities, including electricity, infrastructure and security would be fixed by African governments; sadly, the hope is yet to become a reality.
Yet the private sector holds firm in its belief. In 2015, Tony Elumelu committed $100 million through his Foundation’s Entrepreneurship Programme to empower 10,000 young African entrepreneurs to validate his conviction in the potential of the private sector to catalyse transformation. In 2019, Tony Elumelu’s Transcorp Power invested an undisclosed amount into acquiring Afam Power station in the hope that, combined with its existing assets, it would raise the standard of living in Nigeria, by contributing 25% of the total power generation capacity in the country. He replicated this same conviction across several of his businesses including Transcorp Hotels Plc with an upgrade worth billions of naira, and a recent commitment in a yet to be disclosed energy deal. Many more private investors like Tony Elumelu have exhibited the same faith in the future of the continent.
The Importance of a Private-Public Sector Partnership
The private sector continues to play its part, backing words with action. However, it recognises that a mutually beneficial partnership with the public sector is needed at this time. As stated by Tony Elumelu at the recently concluded virtual roundtable involving African business leaders, there was a consensus that the pandemic is indeed the reset that Africa needs to catalyse the much-needed transformation on the continent. This stance was corroborated by Mrs. Ngozi Okonjo-Iweala, Nigeria’s former finance minister, Tidjane Thiam, African Union Special Envoy on Covid-19, and moderator Vera Songwe, Under-Secretary-General for the United Nations, as they jointly discussed the topic “Resilient World: An African Call for a New World Order,” at the New York Forum Institute Virtual Roundtable.Okonjo-Iweala emphasised the need to diversify the economy through strengthening the manufacturing sector, Thiam harped on the need to create more jobs on the continent, and Songwe stated that the African Continental Free Trade Zone may just be the policy needed to kickstart the transformation – this is the best time to achieve it. For Elumelu, prioritising the youth, ensuring access to electricity and stabilising the macroeconomic environment are additional focus areas needed at this time.
A Task to Reset Africa Calls for a Marshall Plan
In the near future, African currencies will depreciate significantly, and servicing our external debts will become even more of a challenge. Today, many African countries already spend more annually on debt servicing than on education, healthcare and social welfare combined. Therefore, mobilising the level of finance that will give Africa room to begin this hard task of resetting, will require a Marshall plan, akin to America’s Marshall Plan for Europe after World War II. This Marshall Plan for Africa will be in collaboration with the World Bank, IMF, G20 countries and all other relevant agencies but must be led by African multilateral financial institutions as in the case of AFREXIM under the leadership of Prof. Okey Oramah, whose efficient and immediate deployment of US$3 billion to finance and support trade and SME business through African banks, is commendable and deserves emulation. The Covid-19 pandemic presents a bittersweet moment of clarity and reflection which we must seize to reset our continent. It provides the opportunity to finally place Africa on the right path of sustainability built on the bedrock of competitiveness.
Sustained Investment in Infrastructure
We can engender African competitiveness by sustained investment in basic infrastructure, electricity, internet access and digital connectivity, and most importantly by enabling and encouraging entrepreneurship. This combination will provide economic hope and opportunity that will productively engage our young Africans who account for over 60% of our 1.3b population. This is the only way we can reset the economy, create employment, eliminate poverty, generate revenue and attract capital to the continent.
Be Ready for Disruption
Africa must embrace the new normal. The disruptions we have seen across sectors (healthcare, logistics, supply chain, digital economy, IT) are here to stay. This presents a unique opportunity for a united Africa, a strong regional bloc acting in a coordinated fashion in response to this new era. As globalisation, trade and foreign policy adjusts in response to these times, Africa will only enjoy more traction, increased leverage and more influence by forging a united front. This is the time for the continent to fully leverage its competitive advantage in agriculture, through focused investments in mechanisation, storage facilities, logistics, pest control, quality assurance, and processing, while strengthening our expertise in textile, manufacturing, supply chain etc. In truth, disruption is here. It may not be ideal, but disruption, in the many facets it presents itself, has heralded new eras, and economic powers. If Africa treats this pandemic as a warning and begins to put in place the systems to ensure economic stability, this could be the beginning of the next global economic power, all business leaders agreed.
* Ifesinachi Okpagu & Somachi Chris-Asoluka are with Tony Elumelu Foundation