Small grants, early capital: what the Tony Elumelu Foundation’s 15-year report says about funding African entrepreneurs

Feature image: Ghanaian entrepreneurs funded by the Tony Elumelu Foundation hold their country’s flag. Photo: Tony Elumelu Foundation.

For many African entrepreneurs, the constraint is not ideas but the capital, knowledge, and support needed to turn them into working businesses. Philanthropy can reach that gap in ways banks and other lenders often do not.

The Tony Elumelu Foundation (TEF), established by Nigerian investor Tony Elumelu in 2010, offers one example. Its 15-year report, launched on September 23 alongside the 81st United Nations General Assembly in New York, sets out what the foundation’s grant program has produced since 2015.

Since 2015, TEF says it has funded more than 24,000 entrepreneurs across all 54 African countries. It estimates that their businesses have generated more than $4.2 billion in revenue and 1.5 million direct and indirect jobs.

The program’s design follows from its founder’s thesis. Elumelu has described his vision for the foundation as one that would “unlock the obstacles that African entrepreneurs face, so that they, rather than aid agencies or governments will spur the continent’s transformation.”

That ambition speaks to a wider challenge facing Africa. According to the African Development Bank (AfDB), 10–12 million young Africans enter the workforce each year, while only about 3 million formal jobs are created. The most important detail of TEF’s approach may be its timing: the money reaches entrepreneurs early, when many are still too small or too risky for banks and investors.

Reaching businesses before banks will

Small businesses struggle to raise capital. The International Finance Corporation (IFC) estimates that 70% of micro, small, and medium-sized enterprises (MSMEs) in emerging markets lack adequate financing to grow. It puts the gap at $5.2 trillion for formal MSMEs and $2.9 trillion for informal ones across developing countries.

Philanthropy can absorb some of that risk. Rather than lending money that must be repaid, foundations can offer grants at the stage where a business is still being tested and may not yet turn a profit.

What the numbers show

TEF’s model pairs a $5,000 grant with training, mentoring, and access to a wider network of entrepreneurs. An assessment commissioned by TEF from Qualiquant Services Limited found survival rates above 80% from the second to the fifth year of operation. A quarter of grantees have since attracted outside investors.

In announcing the report, TEF said the grants have created jobs at a cost of under $80 each. These figures come from TEF and its commissioned assessment, and job counts that include indirect employment are difficult to measure. Even so, they suggest a role for philanthropy in backing businesses before other sources of finance will.

Beyond the grant

For Dorcas Sampson, who runs Brilliant Dorcas Media Limited, receiving the TEF grant in 2018 was a turning point. “The funding helped me build my marketing and advertising company, attract retainer clients, and generate consistent monthly sales within the first two years,” she said. “It gave me the financial foundation I needed to turn my business idea into a sustainable company.”

The impact, Sampson said, extended beyond the money. “The lessons I learned about marketing, sales, and business management have continued to shape how I run my company.” As she works towards building a bigger, more structured advertising agency, she continues to apply the knowledge gained through the program. “Its impact has gone far beyond the initial grant,” she said.

Money is only part of what entrepreneurs need. In the Qualiquant assessment, 91% of grantees reported improved technical and business skills, and 73% said the seed funding was sufficient. Money can buy equipment or stock. It does not necessarily teach an entrepreneur how to manage cash, find customers, price products, or prepare a business for investment.

Networks matter too. Because the program runs across all 54 countries, the foundation’s CEO, Somachi Chris-Asoluka, said in written responses to Philanthropy Circuit, “entrepreneurs organically network with each other across borders, and will typically conduct business together, while becoming customers of each other’s businesses.”

Where philanthropy fits

Charitable giving initiatives often respond to immediate needs such as food, healthcare, or emergency relief. Backing entrepreneurs works differently: it gives people capital and skills they can use to earn income, employ others, and build businesses in their own communities.

Entrepreneurship cannot solve every social or economic problem. Not every business will survive, and many people face difficulties that starting a business will not fix. TEF’s own report acknowledges that its impact has been uneven across regions and that attracting follow-on investment still remains a challenge for some grantees. Still, philanthropy can fill the gap between social support and commercial finance, giving businesses time to show their ideas can work.

The financing gap facing African businesses is far too large for philanthropy to close alone, and governments, banks, investors, and development finance institutions all have their part to play. Chris-Asoluka put it this way: “The role of African philanthropy is to take the early risks that unlock larger flows of private and institutional capital, and to measure outcomes, such as jobs, revenue and poverty reduction, rigorously enough to prove the model.”

TEF’s record suggests that modest grants, paired with training, mentoring, and networks, can carry early-stage businesses to the point where banks and investors will consider them.