IN recent years, many African governments have been wrestling with the problem of a burgeoning youthful population coupled with limited opportunities in the formal sector by encouraging self-employment and entrepreneurship, through state-driven cash funds.
There are now funds targeting various social groups, such as the Women’s Fund, Rural Funds, Youth Funds and so on.
Critics have seen the fund drive as an underhanded move on the government’s part to unfairly place the burden of creating jobs on the citizens themselves.
But others have praised it as a much-needed formalisation of the “hand-out” culture, which has been misused for political ends.
In any case, rich African entrepreneurs are also borrowing a leaf and creating foundations and trusts, which are now becoming an increasingly important source of financing for communities across the continent.
Although lax regulation means that the line between private equity and philanthropy in Africa can sometimes be blurred, and there is inadequate scrutiny on the source of the funds, the flexibility offered by private donors is much needed, particularly in rapidly evolving crises like Ebola.
Working outside the politically charged government appropriations process and sluggish bureaucracy, foundations and private individuals have been able to offer much-needed relief for those on the front lines.
The Big Boys
The Tony Elumelu foundation, created in 2010 by Nigerian businessman and former CEO of United Bank for Africa (UBA) received much media attention at its inception, largely thanks to its sound-bite friendly “Africapitalism” philosophy, that Elumelu explains as a rallying cry for empowering the private sector to drive Africa’s social and economic growth.
The precise size of the foundation’s endowment is not known, but is though to be in the hundreds of millions of dollars, and has been investing in promising start-ups and small businesses, and in programmes to nurture the next generation of Africa’s business leaders.
The Dangote Foundation, founded by Nigeria’s industrial magnate Aliko Dangote, recently gave $1 million to fighting the Ebola outbreak in West Africa, and its total endowment is estimated at $100 million. The foundation also donated $2million to the relief efforts for Pakistani flood victims in 2010, and is working with the Bill & Melinda Gates Foundation to fight against polio.
In South Africa, the Patrice Motsepe Foundation works for economic empowerment of local communities, and has a particular focus on sports – the Sanlam Kay Motsepe Schools cup, a high-school football tournament which features over 5,000 schools, has a total prize money of about $310,000.
Last year, Motsepe, the executive chairperson of African Rainbow Minerals (ARM), raised the bar for African philanthropy when he announced that the Motsepe family would contribute half the funds generated from assets into the foundation.
Still in South Africa, the Allan Gray Orbis Foundation has an endowment estimated at $104million, offering high school scholarships and entrepreneurial development, and the Oppenheimer Foundation promotes academic exchanges between South Africa and the University of Oxford, giving a £6500 ($10,200) scholarship to graduate students to pursue their studies at Oxford.
In East Africa, the foundations landscape is slightly different, with corporate foundations having the biggest footprints. The Safaricom Foundation, the CSR arm of Kenya’s and East Africa’s telecom giant, says it has contributed over $21million towards Kenya’s development through 700 projects since 2003, with 830,000 Kenyans receiving specialised health services through mobile medical camps and the foundation building classrooms for over 680,000 children.
The company’s separate philanthropy arm from its hugely successful mobile money platform, the M-Pesa Foundation, last year funded projects worth $1.1 million, with a special focus on education, health and environmental conservation.
In 2013, the M-Pesa Foundation contributed to the construction of classrooms and dormitories at a girls high school, the fencing of Nairobi National Park, and the purchase of 650 handsets for an integrated maternal health programme.
The Equity Group Foundation has made a mark for itself giving secondary school and university scholarships to bright but needy students in Kenya, the latest figures from the foundation indicate that 8,761 scholarships worth $75 million have been given out so far, with a target of 10,000 by 2015.
One recent report on charitable organisations in East Africa showed that a total of about $30m was given out by 25 surveyed local foundation and trusts in 2012, an average of about $1m per organization. Three-quarters of funding for local foundations was from foreign donors while local companies account for 15%, the East Africa Giving Report 2012 indicated.
Contributions from individuals are below 1% while governments account for 7%- this is mostly the case in Rwanda. Education is the most funded sector at 26% of total funding raised by foundations, followed by food and agriculture at 24%.
But one recent trend is that foundations are putting money into either building their own endowments or helping their beneficiaries build endowments, taking up 13% of funds. This should be “supported in order to attain organisational sustainability”, the report states.
Although 50% of grants from foundations is channelled through NGOs and community organisations, surprisingly, government is a significant recipient of local philanthropy, receiving 16% of grants, according to the report.
Healthcare institutions, including hospitals and dispensaries received 13% of the funds while research and higher learning institutions got 11%.