Power of Africapitalism: Power Africa and building Africa from within

via OPINION – The Power of Africapitalism: Power Africa and building Africa from within | The Source  April 1, 2014 By Tony O. Elumelu C.O.N.

When Barack Obama visited Tanzania in 2013, one of his priorities was to launch the Power Africa initiative, a programme to help kick-start power generation across 6 African countries. With this flagship programme, the U.S. Government underlined the importance of massive infrastructure development in catalysing growth on our continent.

Last week, it was the turn of African business to visit Washington and U.S.-Africa relations took a further step forward when the African private sector demonstrated how policy was being translated into action. We know that closing Africa’s power gap is the single most effective way to create and sustain jobs on the massive scale we need, in order to ensure our billion-strong population is productively engaged and demographics play to our advantage. With only 54 million jobs expected for over 122 million job seekers by 2020, the alternative – to risk a slide into unrest and insecurity if large numbers are locked out of economic opportunity – is unthinkable.

Power Africa, therefore, is an important step forward in facilitating Africa’s economic growth; its success will be judged on how quickly and effectively the projects envisaged can be delivered. When the U.S. Senate Foreign Relations Sub-Committee convened a session last week to examine the Power Africa initiative, the US Congress provided a platform to hear from the initiative’s primary participants about the progress made and to explore what more could be done to advance the investment and operational goals. It was my honour to testify as the Chairman of Heirs Holdings, the leading African private investor in Power Africa.

Heirs Holdings has made remarkable progress towards fulfilling our commitment to Power Africa. In less than six months, we have more than doubled the capacity of the Ughelli power plant in Delta State, Nigeria, from less than 160MW when we took over in November last year, to 382MW today. With an initial capital injection of $300 million and ongoing investment of an additional $200 million to refurbish turbines, we anticipate that Ughelli will be generating 725MW by the end of this year. However, refurbishment is not enough, so we are partnering with GE on a 1000MW, $1 billion expansion of the plant.

I presented these early achievements, not just to the members of the Senate hearing, convened by Subcommittee Chairman Chris Coons and Ranking Member Jeff Flake, but also on a panel on power in Africa, at the inaugural summit of the African Finance Corporation in Lagos, Nigeria, where we discussed privatization as the key to unlocking investment. We also highlighted the need to structure the power sector effectively to ensure increased output, for example by ensuring uninterrupted gas supply to the plants.

Heirs Holdings’ commitments are translating directly into operational gains, which will directly benefit the lives of ordinary Nigerians. It means our entrepreneurs will be freed from the burden of spending over 55 percent of their operating costs on electricity and will instead be able to use that valuable capital to build inventory, retain quality suppliers and invest in their people.

It also shows that the African private sector is coming to the table not with requests for assistance, but with a track record of delivery and a clear road map setting out the next milestones in our mission to advance our continent’s development goals. This is evidence of Africapitalism in action – the belief that Africans must take the lead in shaping our continent’s development and that the development of the African private sector ultimately secures our future. We will no longer be vulnerable to shocks from resource cycles, decided by events beyond our shores, rather our GDP growth will be created and sustained by Africans and the added value will be retained and multiplied locally.

Subsequent to the Senate hearing in Washington DC, I had consultations with Administration officials from a cross-section of departments and agencies to provide them with an African private sector perspective on U.S.- Africa policy priorities for both this year and the long-term. It was extremely encouraging to see the different agencies engaging in concert to ensure a cohesive approach to addressing key issues from all angles, building in expertise and experience from each relevant body. This marks a significant transition where foreign governments are now looking to the African private sector as a key partner in solution-building, just as African governments themselves are now doing. Indeed, only by involving the African private sector at the core of decision-making can international partners craft development policy that will maximize social and economic value in Africa.

If the private sector is empowered by progressive policy making and effective regulation, we have no excuses. We can and must use this unprecedented window of opportunity to step up and participate actively in power delivery and in oil and gas licensing rounds to ensure that African businesses use these platforms to grow their experience in such strategic sectors – and crucially ensure that these assets provide value to our continent, rather than creating opportunities for rent seeking. Only then – by efficient and effective ownership of our infrastructure assets and natural resources – will we take charge of our destiny, working in collaboration with our international and local partners to boost African competitiveness and unlock opportunities for all.

In line with the Africapitalism philosophy, Heirs Holdings takes the long term view – investing in hard power infrastructure today so that Africa’s heirs tomorrow, the future entrepreneurs who are today in primary school, will have an enabling environment to realize their full potential and flourish, putting Africa on the map globally as a leader in innovation, entrepreneurial creativity and business excellence. We are also learning how to use soft power to advance Africa’s goals – and we are ensuring that the conversation is backed up with action to generate evidence that our continent is capable of domestic led change. In this way, Africa will be more regularly sought out as a source of counsel on global issues and we will shape how our beloved continent takes its rightful place in the world.

###

Mr. Tony O Elumelu, C.O.N, is the Chairman of Heirs Holdings and Founder of the Tony Elumelu Foundation. Heirs Holdings is a pan-African investment company which operates in strategic sectors of industry including banking, power, oil and gas, agribusiness, real estate and hospitality.

This column followed his testimony before the U.S. Senate Foreign Relations Sub-Committee, on Thursday, March 27, 2014.