Representing the African business community upon invitation from His Royal Highness Mohammad bin Salman Al-Saud, Crown Prince, Deputy Prime Minister, of the kingdom of Saudi Arabia, I spoke to leading business decision-makers, innovators and CEOs to debate the topic “Dynamic Economies: What Are the New Ways To Solve Diversification?”. This is a central question critical for all developing nations and centres around what economists label the Paradox of Plenty, also referred to as the resource curse. Why is that countries with rich natural mineral and fossil fuel wealth record slower economic growth, less diversification and achieve poor economic outcomes? The cause is tied directly tied to their record high exposure to commodity price volatility. Very few countries have solved this paradox, thus our discussion today in Riyadh was both timely and relevant.
The reality is that economic diversification starts with people. We have seen from history that those countries and economies that have prioritised their people in their planning have always been very successful. A major competitive advantage for developing countries is the abundance of people and a very youthful demography that we’re now witnessing. If we harness this youth bulge strategically, we will certainly drive the desired economic diversification. Related to this also is the ease of doing business – if we create the right economic and business conditions, businesses will survive, and any sectors you’re diversifying into, your chances of success are a lot more assured.
Entrepreneurship is a bottom-up approach to economic diversification. Essentially it is about trying to encourage our young ones to become entrepreneurs, ultimately realising that they will drive the diversification process. I come from Africa where we have huge unemployment challenges and we rely extensively on commodities. To diversify the economy in a sustainable way, we must realise the way of achieving this is by supporting entrepreneurs to create the millions of jobs needed by applying their creativity, talent and innovation to solve local problems. Entrepreneurship improves lives of families, communities and countries.
Through the Tony Elumelu Foundation, we are empowering African entrepreneurs by supporting them with US$10,000 in seed capital, training, mentoring from global professionals, seed capital, and active networking. The real-time impact is that we are seeing young people contributing to the diversification of their economies, going into different sectors, and as the ease of doing business improves, they’ll no doubt get to the top. Some of our entrepreneurs now have $1.6m dollar turnover from $10,000 we gave in seed capital. From starting with a staff of 2, some of our entrepreneurs now employ up to 20, 30, and even over 100! Imagine the diversification we will see when we have supported thousands of such people.
Let us prioritise our people: male and female – no discrimination. When a woman succeeds, the family, the community succeeds. We must break diversification down to people and gender equality/support. We believe that in the 21st century, any economy serious about diversification must prioritise entrepreneurship. Entrepreneurship is about opportunity, quality of life, and giving hope. SMEs are the cornerstone of all economies. In the US alone, SMEs create over 80 million jobs.
In summary, it’s all about inclusive growth. I personally have a new paradigm contextualising this called “Africapitalism”. Africapitalism is the intersection of business prosperity and social wealth: Do good and do well simultaneously. In my over 30 years of doing business, I have recognised that what is good for big business is good for small business. We must engage government to play its own role – not just in making sure the economic environment is alright, but by ensuring it is consistently prioritised. This is what we emphasize in Africapitalism – the private sector has a role to play in the social and economic development of the people and it is best achieved through long-term investment in key sectors that help to catalyse growth. Ultimately this is where we need to be in our quest to move the world forward.