11 December 2014, Lagos – Chairman of Heirs Holdings and founder of the Tony Elumelu Foundation, Mr. Tony Elumelu, has launched a $100 million program to support and promote entrepreneurship across Africa.Elumelu first hinted of the programme in August at the 2014 US-Africa Leaders Summit held in Washington.
He said that the initiative, which he described as “a $100 million endowment to encourage the maturation of African entrepreneurs”, is intended to help up to 10,000 budding African entrepreneurs to develop their ideas into sustainable businesses.
“We will be providing $100m to 10,000 entrepreneurs across Africa through the soon-to-be-launched Tony Elumelu Entrepreneurship Programme. By democratising access to opportunity, with an emphasis on tapping into the talent of Africa’s young people, this programme strives to “institutionalise luck”, which is a key factor in the success of any entrepreneur,” he stated.
Seed capital and mentoring
Specifically, the programme is to provide 1,000 entrepreneurs a year for the next 10 years with seed capital of $5,000 and additional returnable capital of up to $5,000. According to Elumelu, by making half of the money returnable, programme participants are encouraged to develop a sense of responsibility.
“I want to make sure there is some spirit of accountability,” he added.The application process will begin in January 2015 with the announcement of the first 1,000 participants expected by the end of March.
In order to be eligible for the initial $5,000 seed capital, successful applicants will have to go through a 12-week online mentoring and training program.
Parminder Vir, Director of the entrepreneurship program, explained: “The business skills training program will give them tools they need to go out and physically implement the lessons they learn.”
The online program will draw on content specifically designed to address the challenges African businesses will face.
“During that stage they will have mentors to help them, as well as access to a curated online library to enable them to find information that is relevant to their business,” Vir added.
At the end of the 12 weeks, the 1,000 start-ups will attend a three-day forum in Nigeria. “That event will sow the seed for intra-Africa trade, for pan-Africa trade,” she said.
Africa’s economic integration
Elumelu, promoting the long-term growth of intra-African trade is one of the key goals of the project. “Intra-African trade is quite low, partly because Africa was wired from colonial times to facilitate trade only with the rest of the world, and partly because of the nature of what we’re trading.
We have raw materials but we don’t have the processing capacity to transform them into products that will be useful in Africa.We hope that the successful entrepreneurs in this program will show interest in industrialisation of the continent.
That will help us produce more finished goods, which will encourage trade and also put pressure on political leaders to create economic zones, or to enable the movement of goods, people and payments that will facilitate intra-African trade,” he stated.
Elumelu acknowledged that the program is ambitious, both in its scale and complexity, and that it is unlikely all the entrepreneurs who join will emerge with successful businesses.
“If we achieve 30 percent to 50 percent success rate we would have helped significantly in helping the development of the continent,” he added.
Wiebe Boer, CEO of Tony Elumelu Foundation, said the businesses supported by the program are expected to create at least one million new jobs and generate $10 billion of new revenues.
Beyond the promise of receiving financing, mentoring and support, entrepreneurs have an additional incentive to apply – the chance of having their business noticed by Heirs Holding as a potential investment opportunity.
According to Elumelu: “Heirs Holdings is a pan-African private investment company. If we see very promising companies that need support, we can do that – through impact investing, through pure commercial investment, through financial support, or even through wider capital raising.”
Elumelu believes that the initiative will enable African entrepreneurs transform the continent. “In 2015 the African entrepreneur will emerge on to the global stage, as a new generation shows the world what those of us doing business in Africa have long known: that our continent is home to some of the most exciting and innovative entrepreneurial talent.
From advanced mobile-payment systems to new agricultural-insurance models, we are already seeing how entrepreneurship is transforming Africa. But in Africa, business growth alone is not the full story.
It is perhaps not even the most important part. Entrepreneurship matters especially for its potential to transform society.“For centuries, the continent was impoverished by the extraction of raw materials by colonial powers.
Africa was unable to generate or sustain its own wealth, as it was forced to buy finished goods created with African resources at premium prices.And it lacked basic infrastructure except for the roads and ports built to move exports.
If Africa is to transcend that chapter of its history and realise its economic potential, it must first become self-sufficient – and the private sector is vital to this process.
“Imagine the same continent filled with businesses that can process crude oil into petroleum, cocoa pods into chocolate and cotton lint into fabric, all while retaining the finished-goods premium instead of sending wealth overseas.
As homegrown businesses meet social and economic needs by creating goods and services with an innate understanding of the local environment, they can bring private capital to vital infrastructure like road transport and power generation. And they can create jobs for Africans, which will in turn create an African middle class – a new generation of African consumers,” he stated.