Editor’s note: This article was written by David Nicholson and was first published in Ventures Africa magazine’s #Richlist issue
As a new generation of wealthy businesspeople make different choices, turning their backs on the one-off donations of the past, so the face of African philanthropy is shifting.
VENTURES AFRICA – Rising from the depths of the global financial crisis, Africa’s richest are faring well. Among them is a breed of “billionaire philanthropist” – men and women who want to give back to their communities like never before. Philanthropy is alive and well on the continent, with those who made fortunes through their own business pursuits donating millions of dollars to disaster relief, education and young entrepreneurs. Africa’s new super-rich are going beyond just shelling out money for causes: their philanthropic pursuits are aiming to change the way Africans live.
Traditionally, the majority of the wealthy in Africa made their millions (and billions) through their connections to, or influence in, government. But with more self-starters now in the wealthy pack, according to the African Grantmakers Network there is more “credible potential” for philanthropy. People such as Ugandan tycoon, Ashish Thakkar, see the need and value in giving back. Thakkar’s entrepreneurial spirit emerged at age 15, when he began a small business selling computers. Now aged 32, he is CEO of the Mara Group, a conglomerate with some $100 million in revenue each year. Thakkar wishes to “pay it forward” by setting up mentorship programmes for young entrepreneurs to launch their careers. “This is why I am now so passionate about supporting and developing other entrepreneurs,” he says. “I feel like my development now lies in helping others to grow, be the best they can be, and avoid making the same mistakes I made.”
Supporting Good Governance
While philanthropy in Africa has a long and colourful history, goodwill and charity on the continent have often been marred by claims of corruption, and of donations being swallowed up by vague “administrative costs”.
Many countries in the region have few formal structures in place to monitor where donations go and how much aid actually reaches communities. Recently, wealthy donors themselves have moved to improve the environment for giving, change the negative stereotypes and hold organisations and governments accountable.
Sudanese telecommunications magnate, Mo Ibrahim, put the spotlight on national leadership across Africa by setting up the Ibrahim Index of African
Governance to create “a scientific, objective basis for discussion”of the strengths and weaknesses of different countries. The index ranks each country according to factors such as safety, economics and human rights. Rather than compile this information just for scholars or officials, Ibrahim seeks to “disseminate it to the widest possible audience so the citizens in every country know what the government is doing”.
Ibrahim further encourages good governance with his Prize for Achievement in African Leadership, which is awarded to former African leaders who have avoided corruption and managed their countries well. Winners include former Mozambique president, Joaquim Chissano, and former president of Botswana, Festus Mogae. Each recipient gets a prize of $5 million, plus $200,000 every subsequent year for the rest of his or her life.
Ibrahim’s projects may be the most ambitious in geographic scope, but across the continent, philanthropists are attempting to introduce higher standards of governance into their charitable and philanthropic giving. In Egypt, Marwa El-Daly has managed to revive the Islamic notion of waqfor endowment, the traditional form of giving, by encouraging and institutionalising philanthropy through her Maadi Community Foundation, which also helps to maintain public accountability for the funds. South African Allan Gray, who made billions through his namesake investment firm, keeps a close eye on the money he donates. He spent $130 million setting up the Allan Gray Orbis Foundation, which provides scholarships for South African high school students, including living expenses and tuition.
Cultivating the future of Business
A belief in home-grown solutions to the continent’s problems unites the likes of Thakkar, Gray and many other African philanthropists. “Be particularly wary of the idea that African philanthropy is only about giving grants,” Graça Machel, former South African statesman Nelson Mandela’s wife, recently told an African Grantmakers Network assembly. “Instead, consider ‘working and walking with Africans’ by cultivating humility that seeks to understand and prioritise the needs of the communities, so that [we] can adequately elevate these experiences to national and international levels,” Machel said.
In line with this sentiment, many of the continent’s superrich are helping young Africans follow in their entrepreneurial footsteps. Some have set up foundations and mentoring programmes to help bright youths from disadvantaged communities get a foot in the door of the modern business world. Take, for example, Aliko Dangote, the richest man in Africa and Nigeria’s first billionaire, worth an estimated $20.2 billion. Among his estimated $35 million in donations in 2012 alone, Dangote pledged $2 million to the Young Global Leaders programme, a World Economic Forum initiative that identifies nascent talent. “We should give while we are alive and also when we are young and capable,” Dangote said at a recent charity event. “We should all be problem solvers and ready to make people happy when the opportunity comes.” Also priming young African entrepreneurs is Nigerian banker, Tony Elumelu, whose eponymous foundation has disbursed $6.3 million for the cause. Among other programmes, the foundation runs monthly Twitter tutorials for aspiring entrepreneurs. Its goal is to “prove that the African private sector can itself be the primary generator of economic development.”
Other philanthropists provide vital venture capital to young entrepreneurs who have bright ideas but lack the means to see them to commercial fruition. Grocery wholesaler Nathan Kirsh, a self-made billionaire from Swaziland worth $3.1 billion, has provided start-up capital for more than 10,000 people opening small businesses across Africa and the Middle East. Thakkar’s Mara Launch Fund offers venture capital for start-up and early-stage businesses. Unveiled in Uganda last year, the fund has since extended its reach to Tanzania, with plans to open in Nigeria and South Africa. At present, up to $12,000 in capital is on offer to African businesses. “Funding has been the missing link but with Mara Launch Uganda Fund we have completed the ecosystem for supporting young entrepreneurs,” says Thakkar.
While start-up capital is critical for businesses on the continent, advances in technology can play just as big a role in fuelling growth. Nigerian banker, Jim Ovia, had the latter in mind when he founded the Youth Empowerment and ICT Foundation. Information and communication technology (ICT) now generates 7 percent of Africa’s GDP, with the market predicted to be worth upwards of $150 billion by 2016. Keen to involve young Nigerians in this growth, Ovia’s foundation awarded $320,000 in grants to 10 “techpreneurs”, to develop their own technology businesses.
Investing in Education
Nelson Mandela once said: “Education is the most powerful weapon you can use to change the world.” While some of the generous well-to-do are helping young Africans get their businesses off the ground, others are targeting them even earlier, working to make education more accessible.
In South Africa, only 13 percent of young people attend university, and almost half of them never graduate. Hoping to tackle the problem, billionaire Donald Gordon spent $17 million building the Donald Gordon Medical Centre at Witwatersrand University in Johannesburg. A private academic hospital, it was established to create a facility for the training of specialists and sub-specialists, with all training programmes fully integrated and complementary to the existing training programmes within the university’s faculty of health Sciences.
In Zimbabwe, Strive Masiyiwa, the founder of telecommunications giant, Econet Wireless, spent a reported $6.4 million setting up a trust for African students at Morehouse College, a historically black institution in the United States. Aliko Dangote has also been spending on education in Nigeria, giving $6.3 million to six Nigerian universities, including $3.1 million to develop Bayero State University Business School in the state where he was born. Congolese fashion model, Noella Coursaris, has focused on girls’ education, launching the Georges Malaika Foundation, which runs a school for 180 young women.
The approach Coursaris has taken in establishing her own school has proven popular with other philanthropists across the continent. Banking billionaire Jim Ovia established James Hope College, a high school situated on the same site where Ovia was educated as a young man. The new facility will accommodate over 400 students, tuition-free. Ovia hopes that “the future alumni of James Hope College will have the integrity, wisdom and strength to be future leaders in whatever endeavours they pursue. The education I undertook set the foundation for a belief in lifelong learning which has been the keystone to some of my achievements as a businessman, a family man and now an educationalist.”
Donors Saving Lives
The continent of Africa continues to grapple with several public health crises. Some 60 percent of the world’s population with HIV/AIDS lives in Africa, with cases increasing eight-fold in recent years. Nine out of every 10 cases of malaria worldwide are contracted in Africa, which also has 19 of the top 20 countries with the highest maternal and newborn mortality rate, according to the latest WHO regional report. When done right, philanthropy has the potential to eradicate infectious diseases and lower mortality rates.
Former NBA star Dikembe Mutombo’s charitable work exemplifies the holistic approach to public health that some African donors take. Mutombo put $20 million into the new Biamba Marie Mutombo Hospital in Kinshasa, DRC, named after his mother, who died of a stroke in 1997 because she was unable to get to hospital in time. Mutombo also set up a charity to provide healthcare through the hospital as well as promote disease prevention, medical research and access to healthcare education in the country. The foundation gave 10,000 doses of de-worming medication after it was revealed that hookworm was a serious health problem in the country.
When Giving Becomes More Important than Earning
Some billionaire philanthropists have even sold major stakes in their companies to give back to their communities. South African founder of the Mertech Group, Francois van Niekerk, famously endowed 70 percent of his company equity (worth $170 million) to his charity, Mergon Foundation, which funds community projects such as HIV/AIDS care and education for young schoolchildren. Nigeria’s Theophilus Danjuma invested $100 million of his oil money into his personal charity, the TY Danjuma Foundation, while investor Jay Naidoo sold a third of his business and gave the proceeds to two undisclosed charities.
Mining magnate Patrice Motsepe has gone so far as to pledge half of all profits made from his family’s assets to help the poor in South Africa, becoming the first African to join The Giving Pledge. Launched by American billionaires, Bill Gates and Warren Buffet, the initiative challenges the world’s wealthiest to give at least half of their earnings to charity. When he announced his pledge in January this year, Motsepe (with a net worth of $2.65 billion) said: “Precious [his wife] and I will contribute at least half of the funds generated by our family assets to the Motsepe Foundation to be used during our lifetime and beyond to improve the lifestyles and living conditions of the poor, disabled, unemployed, women, youth, workers and marginalised South Africans, Africans and people around the world.” Motsepe hopes that his intrepid promise will encourage other Africans to join him among the ranks of the pledge.
Gabrielle Ritchie, the programme director from Inyathelo: the South African Institute for Advancement, also hopes the billionaire’s move will see more given back to African communities in a strategic way. “Motsepe’s very public gesture will encourage others to commit their personal resources towards broader social development,” she says. “More than half of the continent’s dollar millionaires live in South Africa and yet we remain the most unequal society in the world.”
Increasingly, wealthy Africans are aligning their philanthropy with their own businesses, using their company’s resources and skills for the common good. In the past, philanthropy and business were considered to be two completely separate entities. Christo Wiese, worth $3.1 billion with his controlling stake in South Africa’s most successful retailer, Shoprite, believes he can do the most good by growing his business to open up job opportunities and career progression for Africans. In a recent interview with Daily Maverick, Wiese said: “The most important thing we can do is to create role models to show people that ordinary people can start one little shop and grow it into 6,000 shops like we have done.”
While many successful African sportspeople have taken up well-paid sports contracts at teams all over the world, they have also used their talents to support their home countries. Samuel Eto’o from Cameroon, a striker for Russian football team, Anzhi Makhachkala, has hosted gala dinners to raise money to build a paediatric wing in a Cameroonian hospital. Didier Drogba, the Ivorian who plays for Turkish football team, Galatasaray, directs all his endorsement earnings – including a $5-million Pepsi deal – into his own charity, which has launched several humanitarian projects in his homeland. Nigeria Nwankwo Kanu, a former Arsenal football player, established a foundation to help children born with heart defects. Opened in 2000, the charity has performed around 450 open-heart operations. Kanu hopes to raise a further $35 million to build a special cardiac hospital in Nigeria.
While the gifts from well-heeled humanitarians in Africa are often celebrated, there are many high net worth individuals (HNWIs) who fly under the radar. The African Grantmakers Network argues that while the richest Africans do feel the pressure to give something back, there are many who do not feel quite so compelled. The lack of formalised policies on tax or other incentives for official donations and philanthropy is thought to dissuade some. Others are sensitive about conducting such public displays of philanthropy and are wary of the limelight that follows when foundations are set up, and draw attention to how wealth is accrued and reported on. Others still choose to donate anonymously in a more informal, ad hoc way to minimise scrutiny. Amanda Bloch from Inyathelo argues that philanthropy must be institutionalised with tax legislation to encourage charitable giving. “By creating an enabling environment that would encourage wealthy philanthropists to set up trusts and foundations, they would have greater potential to support sustainable social and economic development,” she said earlier this year.
One group of Africans, including Elumelu, James Mwangi, CEO of Equity Bank, and singer Angelique Kidjo, is working to start a discussion around philanthropy. The African Philanthropy Forum (APF) is bringing together eminent figures from around the continent to share ideas and strategies on how philanthropy can best work in Africa. The APF, launched in connection with the Global Philanthropy Forum (GPF), hopes to advance the social good by taking advantage of Africa’s largest economies which are currently booming. “That growth, while robust, is not always broad-based and development, while rapid, is not always inclusive and so poverty persists,” says Jane Wales, CEO of the GPF. “These generous African men and women, many at the height of their careers, are determined to change this reality and ensure that the benefits of economic opportunity are more evenly shared.”
While there are examples of philanthropists working together, the vast majority tend to work alone on their gift giving. This apparent disconnect is a major issue in Africa and a cause for concern, according to the African Grantmakers Network, which notes a distinct trend of philanthropists operating “in distinct silos that are isolated from both fellow philanthropists and the global philanthropic dialogue”. The network postulates that through collaboration and knowledge sharing, African philanthropists can broaden the reach and results of their gift giving. Perhaps Motsepe’s collaboration with the international philanthropic community through The Giving Pledge and the banding together of Africans with common aspirations through the APF will spur on more such partnerships.
Of course, there is still a huge amount of philanthropy that occurs in the more traditional sense of giving cash donations to particular causes. Millions of dollars are poured into disaster relief every year. After witnessing the devastating effect of the Kogi floods in 2012, which killed almost 400 and left more than two million Nigerians homeless, Dangote made a $15.8 million contribution to the government’s relief efforts. “Sometimes we need to have the genuine experience of deprivation and poverty in order to appreciate the need to be our brother’s keeper,” he said at a fundraising dinner. Arthur Eze, often known as one of Nigeria’s secret billionaires, along with bankers Elumelu and Ovia, also dedicated a healthy round sum of one billion Naira ($6.3 million) each to flood efforts.
This emerging trend of African “billionaire philanthropists” is seeing more grassroots projects get underway and affect real change on this dynamic and developing continent. But while millions of dollars are dedicated, and inspirational initiatives launched, a lack of formal institutionalised philanthropy policy seems to be holding many back from giving and utilising this generosity to its full potential. It is an exciting time in Africa’s history as philanthropy continues to evolve and grow.