Why 'philanthrocapitalists' should take on the world's big challenges

One of the remarkable outcomes of the climate change negotiations in Paris is an initiative launched by 28 billionaires on the sidelines of COP21 to push for an increase in funding for clean energy technologies.

The Breakthrough Energy Coalition was pioneered by Microsoft founder Bill Gates. It is aware of the limits of what governments can achieve on their own in shifting the pattern of industrial development and consumption towards cleaner energy. Even though public funding is critical to the development of new technologies, commercialisation by the private sector is what brings them to the market.

In the age of austerity, many governments are not equal to the weight of the challenge at hand. This is particularly true when it comes to increasing public investment into new areas of research and managing a future that is confronted by multiple risks.

The energy challenge is particularly daunting for Africa. Sub-Saharan Africa is energy starved, with 600 million people out of a population of 973 million without access to electricity. The entire region, excluding South Africa, has an installed generation capacity of 28 Gigawatts, equivalent to Argentina.

This, in turn, affects growth, industrial development and employment. It condemns Africa to a perpetual state of catch-up, chasing after elusive shadows of growth and prosperity.

Plugging the gap

Given the general lack of fiscal resources and technical capacity in many African governments to deal with this backlog, working with the private sector becomes a necessity. Africa provides a testing ground for innovative solutions, and initiatives such as the one Gates has pioneered could offer a great opportunity to plug the gap.

Without a doubt, governments need to play their part in creating the right environment to attract greater private sector investment. But ultimately success will hinge on collaboration.

In today’s global system, power to effect change is more laterally organised, and diffused across states, business, wealthy individuals and other influential non-state actors. Solutions to major social challenges at the domestic and global level hinge on co-funding, co-design of solutions and harnessing of will across the private and public sectors.

As William Eggers and Paul Macmillan point out:

citizens, businesses, entrepreneurs, and foundations, often turn to each other rather than relying solely on the public sector to coordinate solutions to every problem.

The fundamental mark of the shift in the global landscape of power today may not be the rise of emerging economies but the growing role of private individuals and a host of non-state actors. Some may well be far more resourced than many states.

Writing about a Third Industrial Revolution nearly a decade ago, the futurist Jeremy Rifkin predicted that there would in future emerge an infrastructure of collaboration to build momentum for what he called a “post-carbon” future. This collaborative network would comprise the private sector, civil society and governments.

The role of wealthy individuals

Although they are often maligned and associated with greed, billionaires such as Gates and others have shown that wealth can be deployed in the service of humanity, especially to purchase a more sustainable future for the next generation.

Since wealthy individuals tap into their personal resources, they do not need to jump bureaucratic hurdles before they commit resources. And the reach of their impact can defy artificial national borders.

Dubbed the philanthrocapitalists, the 28 billionaires who clubbed together in Paris, are collectively worth an estimated $350 billion. They are drawn from both the developed and the developing world. Apart from household names such as Gates, Mark Zuckerberg and Richard Branson, there are also Chinese magnates such as Jack Ma and Neil Shen; Indians (Ratan Tata and Mukesh Ambani); a Gulf prince Alwaleed bin Talal; Nigeria’s Aliko Dangote; and South Africa’s Patrice Motsepe.

They have found a social outlet for their wealth. Their aim is to push for a shift away from the production paradigm of 18th to 19th centuries' industrial revolution, and to create a more sustainable future driven by clean technologies.

In the context of mitigating the effects of climate change, the Gates-led super elites will be working with 19 governments from developed and developing countries. The countries have signed up to an initiative called Mission Innovation aimed at achieving global innovation on clean energy.

Developing countries that are part of the initiative include Indonesia, India, Mexico, Brazil, Chile, China and the United Arab Emirates. Not a single African country is member.

There are touted benefits for member countries. The group of 28 investors will prioritise countries that are part of the project in channelling investment into research pipelines.

The collective is seeking to address the twin challenges of:

low scales of investment into green technologies of the future; and

energy security.

For example, they cite the fact that the current scale of funding towards clean energy research is a paltry at $10 billion. The investors are committing themselves to double this to$20bn over next five years.

Given South Africa’s energy constraints and its commitment to a low-carbon trajectory, it is surprising that it did not sign up to the initiative. It would make sense for the country to use this platform to draw lessons and position itself closer to evolving frontiers of clean energy. Hopefully South Africa and other African countries will, in time, participate.

Why collaboration is important

There are a number of lessons that can be drawn from the initiative.

The first is that individual philanthropists or governments working apart from the private sector cannot address major national and global challenges. Collaboration is the future.

Collaboration and networks are likely to be the most effective instruments for tackling social problems from health to food security to climate change and a host of collective problems that confront us in the 21st century.

Remarkably, the group of philanthrocapitalists acknowledge that governments can act proactively by increasing their role in investing in research to stimulate new industries and to seed private creativity. The role of philanthrocapitalists and entreprenuers is to scale up funding and push these technologies towards commercialisation.

If this initiative is sustained, it can be a pioneer for a new form of progressive global capitalism.

There is a need for more philanthrocapitalists who care about the future, who seek to create something that would sustain long after they are gone, and who understand that the value of wealth is to contribute to the betterment of humankind.

Author: Mzukisi Qobo is an Associate Professor at the Pan African Institute, University of Johannesburg.