Who Wants to Be a Millionaire?
Nigeria’s Tony Elumelu is ready to make another deal
THE Nigerian billionaire pioneering his own brand of “Africapitalism” across the continent, Tony Elumelu, got his first break as a young entrepreneur 16 years ago, thanks to a bank that had fallen on hard times.
He led a takeover of the bank. Seven years and a name change later, the bank made it on the list of Nigeria’s top five banks and had 100 branches across the country.
A year after making the list, it merged with the United Bank for Africa (UBA), transforming it into a listed financial services behemoth with more than seven million customers and 25 000 employees in 19 African countries. UBA has a market capitalisation of about 263.5-billion naira (R16.5-billion) and a presence in the UK, France and the US.
Now Elumelu, 50, has left UBA to found a Lagos-based investment company, Heirs Holdings, which is UBA’s majority shareholder. Elumelu is chairman of Heirs.
The company recently made headlines by pledging $2.5-bil- lion (R25-billion) to US President Barack Obama’s Power Africa initiative, announced on the US leader’s African tour this year. The initiative aims to double access to electricity in subSaharan Africa, and US agencies have pledged more than $7billion to support the programme in the next five years.
Elumelu is one of those people whose presence is said to be felt when they enter a room. This week, dressed smartly in a black suit, crisp baby-blue shirt and red tie, Elumelu and his entourage enter one of the plush rooms overlooking the infinity pool at Johannesburg’s Saxon Hotel.
He is in town for the inaugural meeting of the Brics Business Council, which is chaired by businessman Patrice Motsepe.
After a round of introductions and a chat with the photographer about where he should sit, Elumelu takes a seat and immediately reaches for one of his two Blackberrys, perhaps unwilling to miss out on a deal somewhere in Africa.
That is what he is — a dealmaker. Heirs Holdings has a substantial portfolio of investments in strategic sectors across Africa, including power, oil and gas, financial services, healthcare and agribusiness.
But Elumelu does not simply inject capital, sit back and watch the return on investment roll in. He sends the Heirs executive team to help manage the companies, an approach he calls “active investing”. The executives are hands-on, some serving as chief executive officers of the companies in the portfolio.
The investment company is a vehicle for putting into action his vision of Africapitalism — whereby long-term investment by the private sector is used as a catalyst for solving some of Africa’s most difficult developmental problems while creating economic prosperity and social wealth.
He believes Africa can develop faster this way. But what about the risks? Even outside of well-publicised conflict zones, many African countries have been thought to pose high political and economic risks for investors, according to a paper by global consulting firm McKinsey & Company.
“Risk is everywhere,” says Elumelu. “You build risk [mitigation measures] into your business.”
Armed with two degrees in economics and a certification from the Harvard Business School’s advanced management programme, Elumelu has never incurred huge losses in his investments. His training makes planning around risk easy, he says.
And how does he balance the need for profitable investments by the private sector with developmental goals, which are not viewed with fondness by most multinationals that set up shop in African countries?
“The government must create an environment where the pri- vate sector can thrive,” he says. “The private sector, in turn, helps the government by making long-term investments in the country.”
We take a time-out from the interview when Mo Ibrahim, the Sudanese telecoms billionaire, philanthropist and creator of the Ibrahim Index of African Governance, comes over for a quick chat.
Later on, Motsepe drops by with Congolese businessman and politician Moïse Katumbi Chapwe, making another timeout necessary and perhaps lending credence to Elumelu’s inclusion on the Forbes business magazine’s list of the 20 most powerful people in African business last year.
In the same year, New African magazine placed him on its list of the 100 most influential Africans.
After sitting back down, Elumelu is asked what he thinks of South Africa’s black economic empowerment laws, which his fellow countryman, Aliko Dangote — Africa’s richest man — called a “forced marriage” earlier this year.
The success of these laws has also come into question with last week’s revelation in these pages that mining giant Rio Tinto’s seven-year-old empowerment deal has so far paid out only R1 200 in dividends to each employee, an average of R171 an employee for each year.
“I think the government needs to create a level playing field for people to compete,” he says, sharing an anecdote about how, in Nigeria, anyone could apply for a mining or prospecting licence and succeed.
“This is the result of the government creating the right environment [for business to thrive].”
Heirs Holdings does not have any investments in South Africa, but is “working on it”. Does he find the local environment welcoming?
“It can be better,” he says. “It can be better.”