Tony O. Elumelu Speaks on the State of Start-Ups at the World Economic Forum
THE STATE OF START-UPS – CONGRESS CENTRE, ASPEN 1.
Small and medium-sized enterprises contribute up to 60% of total employment and up to 40% of national income in emerging economies. If start-up enterprises are the engine for inclusive growth, how can leaders reignite the fire?
Dimensions to be addressed:
– Addressing youth unemployment through workforce training
– Lowering the cost of doing business from corruption
– Increasing consumer choices and safety
- Moderator- R. May Lee.
- Speaker- Tony O. Elumelu
- Speaker- Alice Gast.
- Speaker- Will.i.am.
- Speaker- Badr Jafar.
Moderator- R. May Lee. She introduced the speakers and stated that two things make them extraordinary.
- The first is that they are a group of people that have found internet excellence, passion and purpose.
- They are business people in the private sector from the middle east, Africa, UK and US that have taken a new view on entrepreneurship, that is, from the perspective of development and inclusion. This is because prior to now the focus has been on development from the silicon valley narrative (a narrative that explains the development of major devices such as transistor and microprocessor in a chronological sequence and made it look as if the invention of something so grand was inevitable by not mentioning the difficulties and hardships that were experienced before these things were developed).
Question 1: For Tony Elumelu,
- As the chairman of one of the largest banks in Africa, you have grown the bank across 22 countries and you have used the platform to encourage entrepreneurship again across African countries. Can you share with us the model that you used in the motivation of entrepreneurs and how you think about entrepreneurship?
Tony Elumelu : First, I would like to commend the chairman of WEF, Klaus, for making this possible. I wrote to him a few months back and I said that for this kind of gathering of global political leaders, something was missing and I thought what was missing was discussions about entrepreneurship and start-ups and the future of business leaders. We are all here today but as some point in time, we were just start-ups. I also felt in particular that African entrepreneurs also needed a voice on a global stage like this and he was kind and gracious enough with his team to make this possible. I would like to say well done to him. The case of entrepreneurship in Africa is huge, it is an interesting environment or continent. 60% of our population is under the age of 30 and we know the consequences of this. Africa is not yet industrialised, access to electricity on the continent is very poor and over half of our population does not have access to electricity and we know how that impacts entrepreneurship. So to me, the issue of unemployment that is a natural consequence of high population, low industrialisation and low income is one that needs and demands everyone’s attention at this stage because if we fix it in Africa, the world would have peace and would be a better place. Looking at our own lives and how we’ve come to where we are today, we took over a distressed bank some years ago, turned the bank around and grew it to a level where it became one of the biggest banks in Nigeria, in West Africa and now a leading pan-African bank serving over 14 million customers across over 8000 branches. We didn’t get there overnight, so the case is how did we get there, how do we make sure we have great companies like this that can help create employment for our people? That is why we started the Tony Elumelu entrepreneurship program where we committed $100 million to help, train, provide seed capital, mentor 10000 African entrepreneurs by taking 1000 every year. A bigger issue that came out of this is:
- First, we realised that capital was not everything about entrepreneurship. People have to be trained, mentored, hear success stories as well as challenges and failures. These are things that motivate young people and so we designed the program in a way that we have a 12-week intensive online training (and I would engage Imperial College to see how they can be part of that).
- Secondly, we also appointed 400 mentors from across the world and those who are interested in becoming mentors to young African entrepreneurs, should please visit the TEF website because these entrepreneurs need the support of everyone.
- We also created networking platform and opportunities for them to trade amongst themselves and then we provide non-returnable seed capital of $5000 for each of the 1000 young Africans that cuts across the 54 African countries and from different unique sectors.
- We also realized that for a long time a lot of donor funds have come into Africa (billions of it) but unfortunately, we have not succeeded in moving up so much.
So, for us the question for us is what next? And we have seen that entrepreneurship is the way to go and I want to use this platform to encourage everyone. Everyone should commit to supporting start-ups because they actually have the future of the world. If we can fix it at that level, extremism would come down and so many challenges we have in the world today would be a thing of the past.
QUESTION 2- For Tony Elumelu – Your foundation borders efforts around employment and solving particular problems that are endemic to Nigeria and other African countries. But I also want to know, that as you look through the applications, how do you choose the successful applicants, what measures do you use?
Tony Elumelu – So every year, we create awareness to the young Africans and they apply. Last year, we got 98,000 applications but unfortunately we were able to select a 1000. Talking about scalability, we would love to scale it further. Our commitment is just $100m but the needs on ground is a lot more than that. We have partnership with Accenture, a consulting firm and we pass on the applications to them, they then help us go through based on certain criteria’s and one of them is scalability of the business (how sound the business is). Equally important, we look at the SDG’S and note which of the goals the business initiative seeks to address and then we capture all of this. These are the criteria that help to select the 1000 that benefit from the programme and we have seen these young, energetic, intelligent Africans (male and female). The statistics are interesting because when we started we had less than 30% of women participation but last year we had 33%. The interesting thing is we see people who are interested in agriculture, technology, entertainment, and even sectors that you won’t ordinarily advertise and have great ideas. We believe that scalability begins with creating opportunities for them to go into the mainstream and prove themselves and then we support them further. It is important for us to see that we support SDG’s and that the people we are training and helping, we help them become self-reliant, independent so that in the future they can help to replicate this across the continent and other parts of the world. This is so that all of us can bring an end to poverty which has been a major challenge for all of us.
QUESTION 3- For WILL.I.AM -Because she has the silicon valley narrative, she doesn’t think failure is ok and asks if there is any other word for failure?
Chairman’s response- This is a very interesting question. Most times when I give speeches, people ask me this question. Infact I was asked two weeks ago to share my failures. Failure can be modified, maybe called challenges. But the truth is, behind every successful man, there are many failures. But the world sees and celebrates just success which is good but it is also good to tell people about resilience, tenacity and just as will.i.am said’ you fall, you continue’. That is what makes entrepreneurs. For entrepreneurs the journey is not smooth but when you plot it you see an upward movement and finally my word or advice is (maybe the moderator can share it with her students), it is good to share most importantly how I overcome failures and my learning points from failures. So my principles are:
- You must be resilient.
- You must think long term because if you do, short-term failures won’t set you back so much because the journey is long
- Most importantly, you need laser focus and tenacity and know success would come at the end of the day if you are disciplined and focus.
I think we should talk to people about how to overcome challenges and failures.
QUESTION 4- For Tony Elumelu – How you think about scalability, what are your challenges and what you have done that has worked?
Tony Elumelu –
So the TEF entrepreneurs that are about 3000 across Africa, what were realized was that:
- They need the right operating environment to succeed and so I would say we need our government to develop capacity and create the right environment for the entrepreneurs because if we give them all the money it doesn’t solve their problems if they don’t have access to electricity and water.
- We need to encourage women, when the entrepreneurship program started we had less than 30% of women that showed interest and what we did was that we went all out and created more awareness and now a lot more women are participating. We need more female mentors to share their success stories and help encourage the female entrepreneurs.
- Last point is, upon reviewing applications over the last four years, we found that the rural areas need entrepreneurship more than the urban areas, so we need to collectively create more awareness in the rural areas. This year, we are going to give more opportunity to people in the rural areas because some of them don’t even have access to internet to apply and their challenges are many. We cannot fix unemployment, poverty, address inclusive growth and development if we do not first prioritize our women participation and focus on people in the rural areas.