If the International Corporate Research (ICR), a Lagos-based business research firm is to be believed, a good number of Africa’s most successful businessmen are in danger of dying soon. A report recently released by the firm has come to the conclusion that “we might just be losing many of our celebrated capitalists sooner than we can replace them”. The firm explains why the prospects of those entrepreneurs dying should be seen as ominous: “Losing a business founder may put his enterprise at risk of extinction and the ripple effect of such corporate disappearance is definitely not good for the continent; the negative fallouts (if there are any positives) are better imagined.”
The report, titled “Africa’s Endangered Kings of Capitalism – Entrepreneurs Africa is at the risk of losing” and released in October 2009, contains 55 names, from 8 African countries.
It considered “more than one hundred and fifty entrepreneurs who have founded a company listed on a stock exchange in Africa from twenty (20) African countries” before arriving at the list of businessmen from South Africa (35), Nigeria (8), Morocco (4), Egypt (3), Mauritius (2), Kenya, Zambia and Tunisia (1 each).
The eight Nigerians are Michael Ibru (Oceanic Bank), Subomi Balogun (FCMB Group), Michael Ade Ojo (RT Briscoe), Pascal Dozie (Diamond Bank), Samuel Adegbite (Oasis Insurance Plc), Julius Adelusi-Adeluyi (Juli Plc), Goodie Ibru (Ikeja Hotels) and Oba Otudeko (Honeywell Flour).
Michael Ibru, 77, is the oldest of the Nigerians, while Oba Otudeko, 66, is the youngest.
The criterion for being classified as “endangered” is age; and the report sets a cut-off age of 60.
“Sixty years was chosen because perception suggests that this age (60) will be the life expectancy of the average human if official life expectancy figures are ignored. In many cultures across Africa, a person is perceived to have spent a fair enough time on earth when he lives up to the age of sixty.” It adds that “incidentally, the average life expectancy for the eight countries represented on the Endangered List is 60 years.”
The rich and the rest
Not everyone buys the life expectancy argument upon which the report is based. “The rich don’t die at the ages at which the rest of the population die; they have access to better healthcare... they can live longer than average” says Opeyemi Agbaje, CEO Resources and Trust Company Limited, a Lagos-based strategy and business advisory consultancy.
Ayo Teriba, CEO of Economic Associates, a financial analysis and modelling consultancy, thinks that the life expectancy premise makes the listing “a false alarm.”
“One cannot compile a list of eight people and make generalisations.”
According to him, a visit to a place like the Metropolitan Club in Lagos will reveal a good number of “counter-examples” – entrepreneurs “who are in their eighties”, therefore belying the life expectancy-induced hypothesis of endangered African capitalism. He cites examples as Akintola Williams (90), Chris Ogunbanjo (85), Jimoh Odutola (who is 104 this year).
Sanyaolu Kehinde, Chief Research Analyst at Stakes Capital, ICR’s parent company, says that the overriding purpose of the report is to raise awareness about the need for succession planning for African businesses.
“We should be conscious of the fact that these guys can go and their businesses can go with them, if there are no succession plans on ground.”
He adds that a look at the list reveals that the profilees are “leaders in their industries” which heightens the urgent need for Africa to “begin to build new companies that are going to become leaders as well.”
Mr. Agbaje equally believes that the succession-planning argument cannot be over-emphasized.
“Businesses have to be institutionalised before the CEOs die – that’s the point I’d want to take away,” he says.
He rues the fact that successful Nigerian businesses hardly ever outlive their founders and go on to the next generation.
“People who were rich in the seventies have disappeared,” he laments, citing the examples of the empires of Odumegwu Ojukwu and Henry Fajemirokun. Even the businesses of more recent tycoons like MKO Abiola, he says, are no longer to be reckoned with.
“The Nigerian Millionaires”
Odumegwu Ojukwu is one of eight Nigerian businessmen mentioned by Time Magazine in a September 1965 article on the emerging generation of post-independent indigenous entrepreneurs. The article, titled “The Nigerian Millionaires” said: “With a population of 55 million and an economy that grows 4% each year, the number of Nigerian millionaires is growing almost as fast as the country itself.” The other profilees are Sanusi Dantata, Mobolaji Bank-Anthony, Emmanuel Akwiwu, Shafi Lawal Edu, Timothy Adeola Odutola, Ade Tuyo and Bayo Braithwaite.
Of all the businesses, only Mr. Braithwaite’s African Alliance Insurance and Dantata’s conglomerate (still largely a family business) remain worthy of being reckoned with four decades after the magazine’s report.
African Alliance Insurance is not only still thriving but now also quoted on the floor of the Nigerian Stock Exchange, having gone public in September 2009, forty-nine years after its founding.
Akwiwu Motors is still in existence, but a company profile available on the internet indicates that as recently as 2007, the company’s board was still chaired by its founder.
Mr. Odutola’s tyre-manufacturing business, once one of the pillars of his empire is no longer in operation, and is listed in The News Magazine’s January 2009 report: “A catalogue of dead industries across Nigeria.”
“Defying the Odds”
In 2006, LEAP Africa, a Lagos-based Non Governmental Organisation (NGO) published a book, “Defying the Odds”, a profile of seven Nigerian businesses that had accomplished a successful transition of power to a succeeding generation of leaders. The major criteria that businesses had to fulfill to qualify for profiling were: the founder had to have formally handed the business over to a new set of managers, and there had to be verifiable evidence that the business was currently doing well.
According to Ndidi Nwuneli, Founder and Director of LEAP: “Unfortunately, there were very few companies that passed this screening test. This reinforced our initial belief that the issue of succession was a critical one in the Nigerian context.”
Ms. Nwuneli adds that “discussing succession-planning is akin to discussing the will-creation process with Nigerian businessmen. Many prefer to avoid the discussion about what life in their business could be without them. They fail to distinguish between ownership and management. As a result, they continue to run largely one-man businesses, which often crash when they exit from the business.”
To account for this practice of evading succession-planning discussions would have to take into consideration the reluctance of many African cultures to dwell on matters of death and dying.
Wills and Trusteeships
“Whether we like it or not we still have to talk about death,” insists Mr. Kehinde. He, however, argues that even beyond making plans for their businesses after their deaths, entrepreneurs should seriously consider “relinquishing power even before they die.”
He cites the example of Pascal Dozie. Mr. Dozie founded Diamond Bank in 1991, served as its Chairperson and CEO till 2005 (the year he took it public) and then retired; first as CEO in December 2005, and then as Chairperson a year later.
Mr. Kehinde also suggests that instead of a will, which is “something that is already associated with death”, business leaders should seriously consider trusteeships, which “can be executed while they are alive or [after] they have passed on.” He says that trusteeship schemes are “more valid in law” than wills.
According to Ms. Nwuneli, one of LEAP Africa’s “core missions” is spreading the gospel of succession-planning. Most of the work will have to be of reorientation, to counter a culture of “fear and distrust” as well as the “often [wrong]” assumption by Nigerian businessmen “that their children will succeed them.”
And she says that LEAP is making progress, even as it remains open to more partnership opportunities.
“Through our training programmes offered in six cities across Nigeria in collaboration with Nigeria’s leading banks and SME development organizations, we are training entrepreneurs to plan for their succession, institute Boards, motivate and coach their staff and build organizations that will outlive them,” she said.