Tony Elumelu's advice: Work hard - African Business Magazine
Tony Elumelu’s advice: Work hard

Tony Elumelu’s advice: Work hard

Discipline, sacrifice and creativity are what makes a start-up become a giant, according to the Nigerian billionaire. 

Asked what makes a successful entrepreneur, Tony Elumelu runs off a list that may be discouraging for anyone hoping to make a quick buck with a start-up.

“Discipline, hard work, sacrifice. Success does not come on a platter,” he says in an interview from his hotel suite in London. “You have to work hard to be successful. You have to be disciplined and you have to make sacrifices. In addition to being creative, these are things you must have.”

Apple founder Steve Jobs is famous for his creativity, but it was organisation and discipline that took the company from a garage business to the largest technology company in the world, Elumelu says.

“We talk about discipline and structure and creativity, it seems like they’re completely contradictory. But even if you’re creative, you have to think about vision and organisation.”

Elumelu is one of Nigeria’s – and Africa’s – most recognisable and successful businessmen, who rose to prominence as CEO of United Bank for Africa (UBA). Leading a group of investors in taking over the distressed Standard Trust Bank in the 1990s, Elumelu turned the bank around, eventually orchestrating its merger with UBA in 2005, at the time the largest tie-up in
Nigerian corporate history. UBA is now in 19 African countries with branches in London, Paris and New York – one of a small number of elite pan-African financial institutions.

In 2010, new regulations that limited bank CEOs’ terms meant that Elumelu had to step down at UBA. That year, he founded Heirs Holdings, which makes direct investments across a range of sectors in Africa. Its portfolio companies in infrastructure, financial services, agribusiness, oil and gas and healthcare employ more than 30,000 people. In August 2014, Elumelu returned to UBA as chairman.

Elumelu says that successful Africans have an obligation to give back to the next generation of potential business leaders, and to contribute to society at large. His view – that entrepreneurship and business will be the drivers of Africa’s social and economic development – has been refined into a philosophy of ‘Africapitalism’, which prioritises patient capital, mentorship and investing with clear social, economic and governance filters.

“That is what Africapitalism is about: the intersection of economic prosperity and social wealth,” he says. “The intersection of making profit and doing good, and not waiting to finish one before you do the other.”

It is this philosophy that has driven Elumelu to focus on entrepreneurs. Through his eponymous foundation, he has committed to identifying and supporting 10,000 African start-ups that will form the next generation of corporate trailblazers. The first 1,000 were identified and accepted onto the inaugural annual programme. Each entrepreneur receives $5,000 in seed capital and a place on a ‘boot camp’, where they will learn business and management skills.

This year’s programme had more than 20,000 applicants, Elumelu says, and the Foundation hired Accenture to sift through and identify the finalists. The large number of ICT companies, particularly coming out of Nairobi, was no surprise, he says, but education, agriculture and fashion were heavily represented.

“What I’m thinking about these entrepreneurs is a cradle-to-grave concept. We catch them young, we provide capital, we provide training, we provide mentoring, then we provide a platform that showcases them to the world,” he says.

African entrepreneurs face a number of well-known challenges, not least access to capital. In many countries, the banking environment has been set up to lend to the sovereign and is not geared towards offering small business loans. Interest rates are typically in double figures, and many banks still require
significant collateral before they will lend to a start-up, putting debt out of the reach of many new businesses.

Equity is also often hard to come by. Angel investing networks and venture capital industries are developing, but lag far behind the demand.

Combined with these financing challenges, small enterprises struggle with the same issues of infrastructure and staffing as large businesses, but without scale the costs can be far more acutely felt. On aggregate, starting a business in sub-Saharan Africa costs 56.2% of income per capita, compared with 14.6% in South Asia and 27.7% in East Asia and the Pacific, according to the World Bank’s 2014 Doing Business ranking.

Part of Elumelu’s mission will be to work with – and lobby – governments to try to improve the environment for start-ups, he says.

“We’re also thinking of engaging with the African Union to create cluster cities where we can have an ICT cluster. We could have a farm and agri cluster,” he says. “People with great ideas could go to these clusters where everything is provided.”

There have, however, been several major changes that give African entrepreneurs starting businesses now an opportunity to get to scale.

“I think if you look at my case – we started in
Nigeria, today we’re operating in 19 African countries. The African market is not as fragmented as it was before,” Elumelu says. “The economic zones and unions are becoming more active and more supportive of business. African leaders and governments are beginning to open up their brains.

It took several years for UBA to obtain a licence to operate in Ghana, Elumelu recalls. Now, integration across the Economic Community of West African States (Ecowas), means that businesses are able to move and scale cross-border with a degree of ease.

“There is a kind of liberalism growing on the continent now, and a genuine willingness to support African businesses to do well. Before, people looked at businesses with suspicion. But that is changing. As you go, people begin to see that you are adding value to their countries, and they will help you, so scale is achieved,” he says.

“So for the upcoming entrepreneurs, I think they will not have a problem… they will just follow the terrain, the path, and adapt.”

Applications to the entrepreneurship programme, which came from 52 countries, have given the foundation an unprecedented view of what is driving – and slowing – entrepreneurs on the continent. Understanding the environment and determinants for success in African contexts is an important aspect of his strategy for building a sustainable cohort of businesses, Elumelu says.

The power of American and European business schools in setting the terms of debate on how to succeed as an entrepreneur – and how private and public institutions can support them – has often skewed the priorities that start-ups set themselves. Building a wealth of information and training specific to the environments that African entrepreneurs will face will be critical to moving beyond time- and capital-limited programmes, like his own, and building self-sustaining momentum.

“We have the raw talent. But doing business in Africa is different from doing business in China, doing business in America. The kind of literature they read… we should have literature about African businesses. We should have case studies about African businesses,” says Elumelu, who is also in the process of establishing his own business school. “What did they do that makes them successful? What did they do that makes them fail?”

For his part, Elumelu reiterates that patience, discipline and organisation are the key to that success.

“What is important, my advice for small-scale entrepreneurs is: run your business well,” he says. “If you run your business well, you grow. If you want to become Steve Jobs… take it one step at a time.”


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Written by Peter Guest

Peter is a journalist, specialising in reportage and investigative feature writing. Having reported from more than 30 countries around the world, mainly in Africa, the Middle East and East Asia, for publications including the Wall Street Journal, the Financial Times, WIRED, the Guardian and African Business Magazine. In 2008, he was the editor for the Financial Times Ltd’s This is Africa magazine. He works as a political and economic analyst for professional services firms—including the Economist Intelligence Unit—and a number of private, public and non-profit bodies.

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