Africapitalism: Path to socio-economic emancipation
CAPITALISM is defined as an economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state. It is “a way of organizing an economy so that the things that are used to make and transport products such as land, oil, factories, ships etcetera are owned by people and companies rather than by government.’’ The synonyms for capitalism are private enterprise, free enterprise, privatised industries, laissez faire, and private ownership.
Africapitalism would seem like the African version of capitalism, but not so, according to the proponent and Founder, Tony Elumelu Foundation and Chairman, Heirs Holdings, Tony Elumelu.
According to him, “Africapitalism is the middle ground between business and philanthropy. The key tenet of the concept is that it is both necessary and possible for entrepreneurs and society to prosper simultaneously and entrepreneurship should be the cornerstone of Africapitalism and a defining feature of market liberalization in Africa’’. He believes that despite laudable progress, the private sector is moving too slowly towards entrepreneurial value creation: “If Africa is to meet the demand for new jobs, and to create wealth sufficient to sustain domestic economic growth, we must sharpen our entrepreneurial focus and make fast progress.’’
Africapitalism has received rave reviews in international publications such as the Financial Times, Fortune and the Economist. It has also been a theme of discussion at several international conferences such as the Oxford African Conference organized by Oxford University, London, Africa CEO Forum in Germany in 2014 and US Africa Summit hosted by President Obama in Washington, also in 2014. In recognition of the power of entrepreneurship in driving economic growth, the Chartered Institute of Stockbrokers (CIS), adopted ‘’Entrepreneurship and the Capital Market: Fast Tracking a New Economy for Africa’’ as the theme of its 19th Annual Stockbrokers Conference last year in Lagos.
The sub-themes of the conference include Africapitalism, Social Capitalism and Impact Investing. The kernel of the conference was an advocacy for the development of a dominant capital market-based financing culture, as against the present predominant bank-based financing system which has severe shortcomings because of banks’ apathy to lend to the real sector.
Worldwide, the capital market is the bedrock of economic development. The slow economic growth and development in Africa has been correlated to the budding and slow growth of its capital markets. In highlighting the importance of the capital market in Africa, the International Finance Corporation(IFC), the private arm of the World Bank had noted that ‘’Africa cannot adequately address its enormous development financing and investment needs with existing funding sources.
The funding gap on infrastructure alone is estimated at US$310billion annually and the challenges associated with developing efficient capital markets in sub-Saharan Africa are huge and therefore require financial interventions and technical assistance in several areas.’’ The capital market optimally allocates capital, catalyzes industrial growth faster and helps economies to achieve inclusive growth, among other benefits.
African entrepreneurs need to look more to the capital market for more stable and flexible funding options, and aspire to quote their businesses on the stock exchange in order to also cultivate the culture of best practices, necessary for sustained business growth. Most of the best companies in the world are quoted on the stock exchange. Budding entrepreneurs on the bill of TEEP may conquer the world and blossom into giant multinationals if they adopt the philosophy to start local and think global. Africapitalism and a capital market mentality may be the leverage or “magical pollyana’’ Africa needs to achieve a quantum and faster economic development.
Nwobu, a Chartered Stockbroker and Financial Journalist, is an Assistant Director/Head, Research and Technical Chartered Institute of Stockbrokers.
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Africa urgently needs multinational enterprises and entrepreneurs with a high sense of corporate social responsibility
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