By ANNE JOLIS, WSJLondon
Mohammed Ibrahim is a strange sort of philanthropist, in that he doesn't do handouts. "It's my conviction that Africa doesn't need help, doesn't need aid," the 66-year-old telecom billionaire says, as the sounds of west London traffic on Portman Square drift into his office through the open doors of a third-floor balcony.
"It's a very rich continent. There is no justification for us to be poor," says Mr. Ibrahim, who was born near Lake Nubia in northern Sudan. The mineral-packed country is one of Africa's most chronic humanitarian catastrophes. Sudan has also been one of the largest recipients of international aid for 50 years. If charity could unlock Sudan's potential, the United Nations, World Bank and American taxpayers would have managed it a few billion-dollar cycles ago.
The problem in Sudan and the rest of Africa, Mr. Ibrahim says, isn't lack of money. It's "governance—the way Africans govern themselves. Without good governance, there's no way forward."
So Mr. Ibraham has a different idea: He gives directly to individuals—specifically to political leaders—who have to earn the money. The Mo Ibrahim Foundation, begun in 2006, tracks the quality of governance across Africa and awards cash prizes to leaders who leave office with relatively uncorrupt records.
The Ibrahim Prize for Achievement in African Leadership offers a tidy $5 million over 10 years and then $200,000 annually for life. You might call it offering payoffs to leaders who don't take payoffs.
If the idea seems counter-intuitive, it's no more so than the gamble that made Mr. Ibrahim a billionaire: cellphones in Africa. In the 1990s, "no one else wanted to do what I was doing—it's not that I was smart, it's that the others were lazy," Mr. Ibrahim says.
After studying engineering in Egypt and coming to Britain in 1974, Mr. Ibrahim earned U.K. citizenship, got an engineering doctorate from the University of Birmingham and in 1983 went to work for British Telecom, which was developing a mobile network, albeit not fast enough for Mr. Ibrahim. In 1989, he resigned and set up Mobile Systems International from his dining room. Over the next decade, his consultancy, MSI, designed half the networks in Europe.
"We were also in Moscow, Singapore, Hong Kong, the U.S.," he says, waving his hand by way of suggesting much of the rest of the world. "But we noticed that we didn't have any work in Africa, because there were no networks in Africa, because there were no operators willing to go and invest in Africa—it was seen as too dodgy, too risky."
So in 1998 Mr. Ibrahim started his own operator, Celtel. The continent's terrible reputation, Mr. Ibrahim says, was severely overstated. Celtel faced few competitors as it snapped up cheap licenses. At the time, less than 1% of Africans had a mobile phone. Today, more than 50% do—and most have never used a fixed-line phone.
By 2005, Celtel was operating in 13 countries, even as competitors poured into Africa, and the company had more than 20% of the African subscription market. Mr. Ibrahim sold Celtel that year to a Kuwaiti firm for $3.4 billion.
He is the first to admit that he didn't foresee that low-cost, prepaid mobile plans would transform African society, though in retrospect it seems obvious. The continent has 80% fewer roads (paved and unpaved) per square mile than the global average. Fixed-line telephony is still largely controlled by state monopolies and prohibitively expensive. Cellphones now connect millions of previously isolated villagers to banking services, literacy programs, business logistics and information about health and transportation.
"I was amazed" by the impact, Mr. Ibrahim says, grinning. He had invested simply because he saw "a wonderful business opportunity."
Having made his money, Mr. Ibrahim considered "doing the usual aid thing," and he is quick to praise "all those wonderful people and governments giving aid, I appreciate that very much." After some more polite disclaimers, he states the obvious: "I really don't think that's what will change Africa."
Better governance, though, "will open up the continent for investment," he says. "Investment will create jobs, and when people have decent jobs, they look after themselves, they look after the education of their kids, they look after their health."
Heads of state or government are eligible for the prize if they were democratically elected, served within their constitutional term limits, demonstrated "excellence" in office and peacefully transferred power within the past three years.
The prize is meant to be awarded annually but has been given only three times since its 2007 launch—to former presidents Joaquim Chissano of Mozambique, Festus Mogae of Botswana and Pedro Pires of Cape Verde.
Mr. Ibrahim, who does not sit on the prize committee, shrugs. "If there is no winner, it's only right to say there is no winner. You have to be credible, you know?" The next award will be announced in October, if it's made this year at all.
The lack of emphasis on accountability is a widespread problem in the aid business, he says, which too often ends up supporting corrupt or failed leaders. "Sometimes I feel it's an African hobby to refuse to take responsibility and always blame others for our problems," he muses. "We need to look in the mirror. If you see something ugly, maybe it's because you're ugly, not because the mirror is lying or distorted. We need brutal honesty if we're serious about moving forward."
The Ibrahim Index of African Governance, which the foundation publishes every year, provides such honesty in granular detail. The report compiles 86 indicators in each of Africa's 54 nations, ranking governments by their effectiveness in delivering safety, rule of law, civil rights, economic opportunity and human development.
Last year, Mauritius topped the list with an overall score of 82 out of 100 possible points, ranking first in "sustainable economic opportunity" and "safety and rule of law." The bottom rung: Somalia, with eight out of 100 overall and zeros for rule of law and education.
By tracking progress or decline in each area, the idea is to "move the narrative from meaningless electioneering speeches and slogans and demagoguery, to facts."
Mr. Ibrahim leans forward: "We don't care about ideology or statements of goodwill, but what has been done? How many kilometers of road paved? How many schools built? How many beds in how many hospitals, how many people arrested unfairly? Can women walk outside safely? Are the courts independent—that's a really big thing—and how effective are they? Can people go to the courts and get justice quickly?"
He slaps his thigh. "All of that—I say that's it, that's governance. So what have they been doing about it?" By providing a reliable answer, Mr. Ibrahim hopes to "enable a more sensible debate."
The big-ticket prize means the index is closely watched by the African press. South African media went into a collective tailspin every year that ex-President Thabo Mbeki failed to receive the award. He left office in 2008 and South Africa has consistently ranked in the top five best-governed countries on the Ibrahim Index. Mozambique, on the other hand, has never broken the top 20, yet ex-President Chissano received the prize in 2007, having ruled from 1986 to 2005.
Mr. Ibrahim explains that "it doesn't matter if you're low in the index, what matters is where you're coming from." Mr. Chissano took office during Mozambique's 16-year civil war and left behind peace and the beginnings of a market economy. Mr. Mbeki inherited one of the most secure and developed nations in Africa but let safety, rule of law and civil rights slide.
The 2011 report highlights the most-improved governance of Sierra Leone and Liberia, which both ended bloody civil wars in the past decade and currently rank 30th and 36th, respectively. "They came from a very bad place, and just by trying to establish security and peace and starting to build infrastructure, they're really managing to move forward," says Mr. Ibrahim. "They're not really near the top, but they don't have to be, they're improving and that's fine."
He's more bearish on Sudan, currently sixth from last. This year for the first time, the index will measure Sudan and South Sudan separately. But despite the secession-by-referendum that produced South Sudan last year, fighting has continued along the border. In western Sudan, the Khartoum-based government and assorted rebel groups are still slaughtering civilian Darfuris. "In the absence of security," Mr. Ibrahim says of his homeland, "who can talk about development?"
Another concern is the nearly continent-wide disregard for property rights. "The glaring issue here is the land title," he says. Almost without exception, "states hold title to everything," meaning the 70% of Africans who farm for a living "can't monetize their profits, they have no collateral—if you don't have title, how can you raise money, how can you borrow money? It's a major issue in agricultural development, and it needs to be faced head-on."
He says it's never "comfortable" to deliver such blunt messages, but unlike the global aid-giving establishment, he doesn't mind throwing a few sharp elbows.
That brings us to Mr. Ibrahim's broader "disappointment" with the West: the "decline of capitalism over the last 20 years," for which he blames "the collapse of communism." How's that? "The demise of the Soviet Union was probably the worst thing that could have happened to capitalism," which until the 1990s "had been under pressure, with the presence of a competing system, to demonstrate that it can deliver what is best for the people."
Mr. Ibrahim says Western governments have since relaxed into a cronyism of business loopholes and selective bailouts. "We now see a very strange phenomenon where we have capitalist institutions—companies—that have been allowed to privatize profits and socialize their losses. Is that capitalism?"
Not the helpful kind, anyway. But if the end of the Cold War made for a "complacent" West, Mr. Ibrahim says it did the opposite in Africa. There was "no longer an excuse," he says, for Western governments "to back up terrible dictators and thieves" while pursuing strategic interests. Successive administrations in Washington had supported the murderous and kleptocratic likes of Mobutu Sese Seko in old Zaire, for the sole reason that they were also anti-Soviet.
Today, Western governments still humor disreputable leaders while pursuing strategic interests. But the Westerners no longer ignore what African governments do for—and to—their citizens. This shift "really helped democratize Africa a lot," Mr. Ibrahim says. The leaders there are hardly perfect, he adds, "but they're moving in the right direction." He is only too happy to dangle a gold-plated carrot to keep them moving that way.
Miss Jolis is an editorial page writer for The Wall Street Journal Europe.