Africapitalism FAQ’s

What is Africapitalism?

Africapitalism is an economic philosophy centered on the belief that the African private sector has the power to transform the continent through long-term investments in strategic sectors, creating both economic prosperity and social wealth.

What are the key goals of Africapitalism?

Africapitalism is about creating value within Africa for the long-term. It is about transforming the continent in a way that is both commercially profitable and broadly impactful. It is also a call-to-action for Africans to take primary responsibility for our own development and for non-Africans to evolve their thinking about how best to channel their efforts and investments in the region. Africapitalism argues that all economic activity should be value adding and have a social impact that creates wealth, especially for underserved populations. Through long-term investment and the creation of social wealth, the private sector can solve Africa’s development challenges more effectively than either through philanthropy, international development assistance or the public sector can alone.

Is Africapitalism only for Africa?

Africapitalism is a transformation in the way business and investing are done, and we believe that this approach can help drive impactful growth all over the world, not just in Africa. However, Africapitalism is currently focused on Africa because of specific challenges the continent faces, such as an economy that has traditionally been based on extraction and the export of raw materials and unfinished products; and misconceptions of risks that deter investors.

Why is Africapitalism important now?

For all Africa’s well-publicized growth over the last decade and the prevailing narrative about the “African Renaissance”, much of it has been fueled by extractive and export-led sectors, and it has had relatively little impact in terms of jobs and domestic wealth creation. Given current demographic trends – i.e., tens of millions of people will enter the workforce over the next decade – the private sector is creating jobs far off the needed pace. Therefore, we need an aggressive agenda to drive private sector job growth and wealth creation within Africa or we risk undermining Africa’s current economic trajectory. This is not a call for a socially responsible private sector with the sole aim to improve reputation and meet international requirements, but a transformational shift in the way businesses is conducted throughout the continent.

What problems can Africapitalism address?

By creating new economic wealth, Africapitalism can help address most social challenges facing Africa today; from healthcare, to education, to food security, and even national security and social stability. The more access to opportunity the private sector can provide, the more Africa will benefit from a stable and productive economic environment, as well as self-reliance in solving persistent socio-economic challenges.

What role does the private sector play in Africa’s development?

The private sector must see the importance of shared value – a balance of economic prosperity and social wealth towards maximum impact. The private sector has been identified as an engine of growth for Africa, providing lucrative investment opportunities and with robust and sustained returns, especially through her natural resources. However, the booming economic growth has had little effect on issues such as unemployment and food security, mainly due to the private sector;s primary focus son short-term profits rather than creating long-term value.

Africa’s growing population means an increasing demand for goods and services. The private sector can be a solution to this demand by providing employment to the fifteen million job seekers that enter the African labor market every year, delivering services such as telecommunications, power and transportation, which will help reduce poverty significantly and enhance innovation by developing skills and growing talent. The private sector already provides at least 90 percent of formal employment, and has the possibility to lift an even greater number out of poverty by maximizing not just profits but by more fully and strategically utilizing Africa’s natural and human capital..

For Africa to sustain its economic growth and improve social wealth, it will need to rely on the development of the private sector.

Does this exclude the role of the government?

No, the private sector’s role in Africa’s development does not exclude the role of government.

The private sector relies on the public sector to create an enabling business environment that strengthens the regulations that govern businesses. The high costs of doing business in Africa has been one of the limiting factors to the private sector’s development, including under developed infrastructure, limited access to critical services, restrictions on African exports, burdensome legal and regulatory frameworks, costly bureaucratic red tape, and a large informal sector. Through Africapitalism, the government is encouraged to create policies that develop private enterprises, improve the investment climate, develop infrastructure that allows the private sector access to social and economic services, and improves the overall business climate to further develop the economy. Also, the right incentives from government will make short-termism unattractive and push business activity toward long-term investment and local value addition.

Is there still a role for philanthropy in Africa?

Africapitalism is where philanthropy and business meet. Rather than rely on the good intentions and wealth concentration required of philanthropy, Africapitalism advocates for a business motive that ensures development of long-term plans designed to have broad impact on social and economic challenges. Nevertheless, there will always be a role for philanthropy. A more strategic approach to philanthropy allows for an element of risk that Africapitalism doesn’t; it also doesn’t require the same business accountability, which means it can play a very different role. For example, philanthropy can be used to provide grants and subsidies that reduce costs and risks for new business. It can provide ‘free money’ to businesses to support their growth as well as serve as a co-investor with financial intuitions to provide guarantees and incentives for commercial ventures. For some challenges, such as humanitarian emergencies and natural disaster response and relief, Africa will still need to rely on traditional philanthropy and international development aid because the private sector cannot solve 100 percent of our challenges.