An Arsenal of Operator-Investors for Africa

Secha Capital
7 min readNov 20, 2023

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Like FDR’s “Arsenal of Democracy,” Africa should build from the bottom: Internal instead of external, bottom-up instead of top-down, and focusing on repeatability instead of scalability.

Arsenal of Operator-Investors in Africa, (DALLE)

Reprinted with permission from Stanford Social Innovation Review

A few years ago, Secha Capital co-founder, Brendan Mullen, suggested the Marshall Plan as inspiration for a new impact investing model designed for Africa. Because the United States’ postwar development strategy was agile enough to intervene in the market — where its support could create a long-term, multiplier effect — it not only catalyzed the European economy but lifted the continent out of wartime devastation.

However, the Marshall Plan required top-down, outside resources to rebuild a once vibrant economy. And in Africa, our task is different. We are not trying to rebuild: We are emerging, trying to build for the first time. Even more importantly, Africa can no longer rely on outside resources to solve our problems. We must do better, and we must do it with the great and sizeable resources that we already have on the continent.

For this reason, we want to take inspiration from a different WWII-era plan, one that organized and leveraged pre-existing, local resources for a new, long-term, and repeatable growth framework: FDR’s “Arsenal of Democracy,” his 1940 plan to — as he put it — “bring the country’s resources and talents into action” to direct a “collective, gigantic effort” to win a war, grow the economy and create jobs.

In 1940, with the United States facing the geopolitical challenges of WWII and its uncertain aftermath, the economy was in tatters: 35 percent of the population was functionally unemployed. In between Christmas and the New Year, Roosevelt’s fireside chat called upon private industry to help invigorate the economy and turn the tide of the war. Calling for “planes, ships, and many other things [to] be built in the factories,” he emphasized that “they have to be produced by workers and managers and engineers with the aid of machines which in turn have to be built by hundreds of thousands of workers throughout the land.”

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“We must be,” FDR said, “the great arsenal of democracy.”

To do this, the administration met with business leaders across the country and asked them to grow, to produce, and to hire. This clear vision and alignment between government policy and capitalism modernized production, advanced technological abilities, and trained a new generation of managers, inventors, leaders. FDR’s plan coalesced the nation to invest and allocate resources where the country needed them most — where it could fight the war, stimulate the economy, and grow jobs. And by the spring of 1943, US manufacturing capacity was equal to those of its allies and enemies combined, unemployment had fallen to 4.7 percent, and American was ably to produce what was needed to fight a war.

Africa needs a similar plan, to fight the (metaphorical) struggle we face today. To enrich the continent, grow local businesses and sectors, and lessen our reliance on developed markets, we need a plan that gives our youth an opportunity to get employment, make an impact, and grow.

The Challenge

Our challenge is on multiple fronts. The effects of COVID highlight our inequality and make it harder to catch-up, economically, with the West; we have a youth demographic bulge coming, but too few jobs and a brain drain for the talent we want to keep; and we lack sufficient capital to invest in ideas, companies, and projects because many people think the risk is too high and the returns too low to invest in Africa.

However, like the US in FDR’s time, we have incredible potential. As a member of what I hope to be Africa’s “Demographic Dividend,” I believe we must, like FDR, invest in and allocate resources where they are needed and where they can create repeatable growth.

An Arsenal of Operator-Investors

An operator-investor is local, young, and looking for investing and operational experience. She will have a few years of corporate work experience but also a deep desire for impact. And she will be tasked to find, fund, and grow SMEs:

  • Find SMEs that ordinarily would not attract capital,
  • Fund growth capital into SMEs and align their interests with the entrepreneurs, and
  • Grow the SME by embedding herself into the SME’s operations and implement and transfer skills alongside the entrepreneur.

We need to alter the flows of human capital and get our youth to invest in and work with the entrepreneurs of our small and growing businesses, to build the architecture so that Africa’s best and brightest can eschew multi-nationals, join multiplier industries and create a growing ecosystem built on human capital. We must give our youth a chance to learn management skills, make an impact in a local business and care about its long-term prospects for both job creation and financial returns.

The operator-investor model addresses each challenge mentioned above: It is internal instead of external, bottom-up instead of top-down, and focuses on repeatability instead of scalability.

Sustainable developmental policy leverages pre-existing resources and directs them to the gaps where they can maximize additionality. Building infrastructure is necessary, but not sufficient as it does not create services on top of this enabling infrastructure nor does it create a bottom-up path of inspiration for Africa’s youth. We need our own path to development, in part, because, our best and brightest often work for international companies and, in doing so, our local ecosystem loses out on this talent.

Let me use a Secha Capital portfolio company, Nativechild, as an example of how we can achieve great things by combining, incentivizing, and stimulating the best of our local human capital resources. Nativechild sells natural hair care products, which means that every time a consumer buys hair growth oil or moisture cream from Sonto and her team, that money re-circulates in the African economy, instead of further enriching competitors based in the US and Europe. Moreover, Secha and Nativechild have helped seed our future generation of leaders: a former intern at Nativechild, Onkgopotse Khumalo would leave McKinsey to start her own health tech business. Seema Lalloo, an INSEAD and Bain alum, had offers in locations from New York to London, but decided to stay in South Africa to invest in and grow SMEs like Nativechild. And my story is the same: If not for the operator-investor role at Secha, I might be at a major American bank instead of growing SMEs and creating jobs here on the continent.

Perhaps more importantly, we can create incredible financial value if we invest small amounts of agile capital into growing businesses and complement it with high-powered human capital via these operator-investors. BCG wrote that “investors that broaden their horizons will find abundant investment targets. Great opportunities in Africa are with smaller companies that are growing fast — and have the potential to grow much further with infusions of outside capital and management help.”

Unfortunately, most investment firms I speak with do not aim for innovative strategies but lament the many hurdles to investing. As Chamath Palihapitiya put it, often when you work at a VC or PE fund, your job is not so much “investor” as it is “investor relations.” This is again why I propose the operator-investor model: we need to allocate capital that will propel a wide funnel of people whom we can train as managers and as leaders in myriad industries.

In the Secha Capital portfolio alone, we have two recent market comparables in WUKINA and Stoffelberg Biltong, both of whom have raised less than $1M in outside capital, but can create huge returns thanks in part to the operator-investor model: WUKINA is “Africa’s Avon for Wigs,” similar to the $40M VC-backed Mayvenn in the US, and Stoffelberg Biltong’s US comparable, Strye, just went public via a $170M SPAC deal. These are but two examples in sectors that are “old” and “unsexy,” but large. WUKINA and Stoffelberg are growing because they offer a great product, some innovation, and great execution via the entrepreneur and the Secha operator-investor.

It’s clear that there are many more companies out there like this in Africa. They just need a little bit of growth capital and human capital. We need to enable Africa’s best and brightest to become an arsenal of operator-investors to find, fund, and grow businesses on the continent for impact and returns!

Kuhle Mnisi is an Operator-Investor at Secha Capital. Her previous work experience includes investment banking with Goldman Sachs and auditing at PwC. Kuhle also worked as an assistant lecturer at the University of Cape Town and Act in Africa, a design thinking and entrepreneurship development program, based in Harare.

Dr. Nombuso Nkambule is an Associate Director at Merck (MSD Africa). Previously, at CHAI, Nombuso supported the mission to save lives and reduce the burden of disease. Nombuso spent two years as a clinical doctor at Helen Joseph Hospital and Rahima Moosa Hospital in Johannesburg. She co-founded and served as the executive director of P.O.E.M. Nombuso has an M.D from The University of Witwatersrand.

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Secha Capital
Secha Capital

Written by Secha Capital

Growth capital fund re-imagining Africa investing via its Operator-Investor model to create returns and impact

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