Heirs Holdings TheAFRICAPITALIST QUARTER 4 • VOLUME 1 ISSUE 1 www.heirsholdings.com “Nobody is going to develop Africa except us.” Tony O. Elumelu, MFR, commits to Africapitalism™ AFRICA HAS EMERGED as capital- that those value-added processes ism’s final frontier, a region brimming happen in Africa, not through na- with resources, talent, untapped tionalisation or government policies, potential and truly emerging mar- but because there is a generation kets. Indeed, investors have come of private sector entrepreneurs who to regard Africa as a land of limitless have the vision, the tools and the op- opportunity: a billion consumers in portunity to shape the destiny of the need of everything from sophisti- continent. cated banking products and mobile Africapitalism™ is not capitalism phones to such basics as canned food with an African twist; it is a rallying and drinking water. cry for empowering the private sector Too often, African development to drive Africa’s economic and social is seen through the lens of aid, re- growth. source deals or geopolitics. However, Africa’s time has come. Africa true growth and economic develop- has as much economic potential as ment in Africa will only be achieved the BRIC countries which have seen with private sector commitment to their fortunes rise dramatically in the economic transformation—one that last 10 years. Our markets are open seeds new businesses, puts eco- and billions of dollars in investments nomic wellbeing within the reach of are flowing into Africa, which today millions, and helps solve our most yields the world’s highest returns on pressing social problems. We call this investment. Private consumption is Africapitalism™. booming, accounting for two-thirds Africapitalism™ is an economic of the continent’s GDP growth. Our philosophy that embodies the private consumer market ranks among the sector’s commitment to the econom- world’s largest, filled with people ic transformation of Africa through who, like the rest of humanity, want investments that generate both eco- to use ATMs and join Facebook. nomic prosperity and social wealth. African banks have been pivotal We see Africans taking charge of the in this renaissance. The continent’s value-adding sectors and ensuring leading banks began as single-nation Africapitalism™, continued from page 1 The AFRICAPITALIST institutions that now infuse capital TEF bridges investing and philanthro- QUARTER 4 • VOLUME 1 ISSUE 1 into neighbouring economies, com- py in a unique way, producing a new pete for customers by introducing development model for the continent. CHAIRMAN: Tony O. Elumelu, MFR new products and services, and facili- My approach might be called “philan- EDITOR-IN-CHIEF: JeNika P. Mukoro tate trade and remittance payments thropy with a kick.” PROJECT DIRECTOR: Diane H. Fusilli between countries. This financial in- As a 21st century catalytic enter- MANAGING EDITOR: Lola Okusami frastructure is necessary for integrat- prise, we are oriented towards long- ing Africa and facilitating intra-Africa term investments rather than grants, THE AFRICAPITALIST trade, an essential ingredient for eco- which we consider only as a last resort. This newsletter is published quarterly by nomic development. The Foundation, although indepen- HEIRS HOLDINGS LIMITED I know this from experience. United dent, works closely with Heirs Hold- 1, MacGregor Road, Ikoyi, Lagos, Nigeria. Bank for Africa (UBA), from which I re- ings, the proprietary investment firm tired as Chief Executive last year, has I also founded, to harness the power SUBSCRIPTIONS: played a prominent role in enhancing of private enterprise to create sustain- To subscribe to THE AFRICAPITALIST Newsletter, Africa’s business prospects and ex- able, measurable and profitable solu- please email your request to panding investments. UBA has grown tions. In April 2011, Heirs Holdings and [email protected] or call +234-1-277-4641. into a Pan-African financial services TEF set a new precedent for impact company operating in 20 countries investing in Africa when they made an Copyright © 2011 Heirs Holdings Ltd., as to across Africa as well as the Middle East, impact investment in Mtanga Farms, a material published in THE AFRICAPITALIST. Europe and the United States. farming operation at the heart of Tan- All rights reserved. While successes like these contrib- zania’s national initiative to combat ute to an increasing sense of confi- food insecurity. Mtanga Farms Lim- dence in the private sector, Africapi- ited is a mixed arable farming business talism™ cannot take root unless more operating in the Southern Tanzanian is done to foster business growth. Highlands. The deal marked the first Captains of industry and government time an African-funded philanthropic leaders must work together, learn organisation and investment firm en- from each other and build strong re- gaged together in impact investing, lationships. an approach that, unlike traditional Our business leaders must build grant-making, uses for-profit methods companies that capitalise on their to solve intractable social and environ- knowledge of local and regional mar- mental problems—in this case, agri- kets while competing in the global culture development. arena. Kenya’s Silicon Savanna, for ex- TEF is working to cultivate the en- ample, holds lessons for Nigeria’s ICT tire business cycle—from supporting industry, and financial services inno- business interns and future entrepre- vations can be introduced to banked neurs to founding startups, backing and unbanked populations across the small firms, and promoting national continent. and continental companies. The aim is Our political leaders must create an to encourage firms at the pinnacle of enabling environment for these busi- the business cycle to contribute to the nesses to thrive. Government policies growth of those that are struggling must provide incentives for invest- to gain a foothold. More than almost ments and protection for pioneer in- anything, Africa needs a new genera- dustries. In addition, we must attempt tion of entrepreneurs who can drive to solve a host of challenges imping- economic growth. ing on growth and competitiveness Our success—and Africa’s enrich- —commodity price volatility, climate ment—lies in our own hands. Nobody change, corruption, intra-regional is going to develop Africa except us. trade barriers, poor infrastructure, and We must build the capacity of a new security. Africa’s renaissance lies in the generation of Africapitalists to deliver confluence of the right business and goods and services to a continent of political action. consumers, expand operations be- In 2010, I established The Tony Elu- yond our borders, and open avenues melu Foundation (TEF) primarily to of opportunity for millions. Africa de- enable the African private sector to be mands this if we are to own our future. a catalyst for economic development. THE AFRICAPITALIST • www.heirsholdings.com Impact Investing in Africa: The Case of Mtanga Farms MtanGA FARMS, a mixed farming opera- could result in substantially higher sales government. tion in the highlands of southern Tanzania, and make a significant impact in a region The deal could benefit more than will soon begin producing several varieties suffering from food insecurity. 200,000 smallholder farmers. Improved of seed potatoes, a product with strong lo- “This investment represents a paradigm seed potatoes have proven capable of in- cal demand among smallholder farmers in shift for philanthropy and investing in Af- creasing yields threefold. a country that has not seen varieties free of rica,” says Tony O. Elumelu, Founder of TEF. “This inaugural impact investment is one viruses and pests for more than 30 years, “We seek to use impact investing to drive we really wanted to get right to properly thanks to an impact investment by The African economic growth from within by signal to other African investors how they Tony Elumelu Foundation (TEF) with Heirs investing in businesses that generate so- can deploy capital to achieve direct eco- Holdings Limited, both based in Nigeria. cial and financial returns.” The investment nomic and social value,” says Dr. Wiebe Boer, This investment, which is Africa’s first marked the first time an African philan- the Foundation’s chief executive. such cross-border deal, will allow Mtanga thropic organisation and an African invest- “We chose agriculture because of the to pioneer a seed potato industry, bringing ment firm jointly undertook an impact in- importance of the sector as a means to cre- agricultural development benefits to area vestment, an approach that uses for-profit ate jobs and enhance rural incomes — but farmers—and an opportunity for Pan-Afri- methods to solve pressing social and envi- also because of the reality that African in- can innovation transfer for future agricul- ronmental problems. vestors are not yet fully on board with the ture investments on the continent. “So far, the investment is going in ac- scale of investing required to responsibly TEF’s inaugural impact investment has cordance with our plans,” says Sam Nwanze, commercialise Africa’s agriculture sector. brought both financial and operational sta- chief investment officer at Heirs Holdings. Agriculture is not a development sector, it’s bility, which has allowed for the diversity of “We have finalised the strategy for the next a sector with significant commercial oppor- regional crops and the pursuit of partner- planting season, procured new equipment, tunities, and we want to make that clear.” ships with governmental and development acquired more land to expand farming op- He adds: “Our choice of Tanzania was agencies in an effort to dismantle bureau- erations, and set up a cold room for storage.” partly because East African agriculture is cratic barriers to efficient farm production. He adds: “We’re also making progress in more advanced than that of West Africa, Mtanga also plans to join in regional efforts renegotiating terms for debt financing.” providing an opportunity for Pan-African to overhaul marketing and retail operations During the next planting season, Mtan- innovation transfer when we take lessons in the food economy.