African ‘barons’ seek firmer foundations

By William Wallis in London

Time will tell whether new philanthropic groups are reliable

Like their American counterparts did in the 19th and early 20th centuries some of the richest Africans are beginning to look a little guilt struck.

Or, so it might seem from the number of philanthropic foundations springing up across the continent designed by business tycoons, former generals and assorted other multimillionaires to offload part of their recent fortunes on chosen causes and those in need.

In the past week two new entries have joined the lengthening list of Africa’s wealthy taking their cue from the Rockefellers, Carnegies and Fords.

Patrice Motsepe, the mining magnate who was South Africa’s first black billionaire, became the first African to join Warren Buffett’s “giving pledge” which seeks to persuade the wealthiest Americans to donate a majority of their wealth to philanthropy.

On Friday, Olusegun Obasanjo, Nigeria’s former head of state, is launching his own UK-registered foundation to promote education for girls, food security and youth employment and tackle disease.

Mr Motsepe’s gesture is well timed. The enduring inequities of South Africa post-apartheid have been brought into sharp relief by industrial and social unrest. Public anger there has been turning on the politically connected tycoons who have profited from a policy of “black economic empowerment.” Mr Motsepe is worth an estimated $2.65bn.

Mr Obasanjo’s gesture falls into the more grandiose category of former statesmen. He has already built a presidential library at his home town where papers from his time as head of state are accessible, in the style of US presidents.

Now, like his friend Jimmy Carter, whose long battle against the guinea worm has brought one of Africa’s nastier parasites to the point of extinction, Mr Obasanjo says he wants to use his influence to channel money into tackling some of Africa’s more intractable problems. “Are there already too many foundations? With all the problems we still have, I would say there are not enough,” Mr Obasanjo told the Financial Times.

As well as being one of the world’s fastest growing markets for champagne, Nigeria is also one of the fastest evolving platforms for foundations. This partly reflects the rapid accumulation of capital in a small number of hands since the country began emerging on the back of rising oil prices and liberal market reforms from the prolonged slump under military misrule.

You can trace the contours of Nigeria’s recent commercial evolution by the source of foundation wealth – oil, cement, banking and to some extent government largesse – as you could in the US with the Rockefeller (oil) Carnegie (steel) and Ford (cars) foundations. At their best, some of the newer foundations have had a catalytic effect, focusing discussion on issues critical to Africa’s future and helping to build powerful pan-African constituencies around reform.

At their more questionable, they have looked more like an exercise in image laundering, or an accessory to gain influence and profile on the international stage.

A more fundamental question is whether ultimately the work carried out by unaccountable philanthropic groups, and the growing influence they are exerting, is reliable and effective. Since the phenomenon is relatively young in Africa, the source of funding, and way in which it is spent, can be opaque and poorly regulated.

Foundations, both western and African, are filling the gap in African countries where the state has been hollowed out and services are left wanting. Effectively this is the privatisation of public goods.

The flipside is that this relieves African states of responsibility. When foundations are scrambling to provide bed nets and clinics, stretched African governments breathe a sigh of relief.

Some American 19th century industrialists were also of course known as robber barons. Mr Obasanjo concedes that foundations throwing bad money after good will quickly fall away. But he adds with a chuckle: “If it is image laundering in the service of humanity. So much the better.”

Copyright The Financial Times Limited 2013.