Experience has shown that most local businesses are jinxed. Reason: they hardly survive as soon as their founders and promoters die. In this report, Ibrahim Apekhade Yusuf examines the issues

UNLIKE other climes where businesses have survived generations after generations, in Africa, nay Nigeria, most businesses have had the misfortune of dying with their founders.

In the view of analysts, Nigeria has a high turnover of businesses with many crumbling midway or dying a natural death as soon as their owners are no more.

A horse of recall

For the avoidance of doubt and confusion, a few examples would suffice.

The late Chief Adeola Timothy Odutola of the Odutola Holding fame remains a reference point as far as indigenous business is concerned. The late Odutola came to national limelight in the early 50s with investments spanning several sectors.

According to the Manufacturers Association of Nigeria, MAN, Odutola remains the foremost Nigerian, and perhaps, African, industrialist in history who had businesses that were household names in the country. His fleet of companies included: Odutola Nigerian Industries Limited – manufacturers of bicycle tyres and tubes in Ijebu-Ode; Odutola Tyre soles Company Limited with factories in Ibadan, Kano and Onitsha – re-threading automotive tyres; Odutola Tyre & Rubber Company Limited, etc.

Investigation by The Nation, however, revealed that Odutola Tyre & Rubber Company is no longer in existence as the premises which housed the company at the old Lagos Road, Ijebu-Ode, Ogun State, has been converted to a residential building.

Like Odutola, the late Hamzat Adebowale founded Adebowale Stores as a retail outlet in Lagos. Taking advantage of the federal government’s favourable industrial policies later on, Adebowale incorporated Adebowale Electrical Industries Limited as a manufacturing concern.

The move marked a turning point in his career from a businessman to a manufacturer, especially in 1975, when the young company rolled out its first set of locally manufactured electrical/electronic products, opening branches in Ibadan, Kano and Lagos.

Investigation by The Nation also revealed that following the death of Adebowale few years ago, his estate, which comprises his vast business empire, is no longer what it used to be.

An insider who used to work with the patriarch of the Adebowale family confided in The Nation that the lack of proper succession plan has been the bane of the once-thriving business empire of the late business mogul.

Like Odutola, the late business mogul and politician Chief Moshood Abiola was a widely acclaimed businessman, with business interests cutting across manufacturing, aviation, construction, publishing, oil and gas, school, agriculture, to mention just a few.

But following Abiola’s demise, his business empire has gone downhill, with little or no hope of a rebound.

Abiola’s businesses, including Concord Press, Summit Oil, Radio Communication of Nigeria (RCN), Concord Publishing Limited, Abiola Bookshop, Concorde Airline, to mention just a few, are in shambles.

Family sources, who confided in The Nation, said most of the businesses have either been bought over or have ceased to exist outright.

Other businesses that had existed under family holdings but are now moribund include Okada Airline, Igbinedion Motors and Crown Merchant Bank hitherto owned by Chief Gabriel Igbinedion. The Igbinedion business empire grew in fame and popularity but has since fizzled out like an effervescent.

ACB, West African Pilot, African Insurance Company, all parts of the late Nnamdi Azikiwe’s business concerns, have also become extinct, ditto for Ojukwu Transport and Retired Brigadier General Buba Marwa’s Al-barka Air.

Manufacturing firms have also suffered similar fate with many no longer existing, thus leading to job losses.

Specifically, the NASCO conglomerate, African Ocean Line, Eleganza Industries in Lagos, Okin Biscuits and Okin Foam, Offa, Kwara State, Crown Beverages are a few of these firms that have gone to extinction, even with the founders of Eleganza, Crown Beverages and the Okin Industries still alive.

Confirming the escalating job losses in the leather sector, Mustapha Nabegu, Chairman, Leather and Allied Products branch of the Manufacturers Association of Nigeria (MAN), said the development was worrisome.

“LAPAN –The Leather and Allied Products Manufacturers Association of Nigeria represents more than 200 business organisations (BMOs) in the leather production value chain.”

Nigeria, he recalled, “used to have a vibrant footwear industry with companies such as Bata, which is now known as FAMAD, Anita, Silver, Superior Shoes, Lennards, Top Crown, Whanu Shoe, John White, Unik Shoes, Lado Shoes, among others, in operation. Most of these companies are either dead or moribund, mainly due to unpatriotic abuse of government policies that have genuinely been put in place to ginger non-oil exports through Export Expansion Grant (EEG), which unfortunately leads to the mad rush for raw material export, to the detriment of local shoe factories.

“In the artisan segment, in Kano alone, we lost not less than 1,000,000 jobs courtesy the failure of the EEG scheme, as well as other factors, the most obvious of these are electricity and water challenges.

“We have also confirmed that about 80 to 120 million pairs of shoes are being imported into Nigeria every year. It is our belief that with little support from government, our local footwear industry is capable of meeting these needs. This will in turn create hundreds of thousands of jobs, through the value chain, create enormous wealth and also help to conserve our scarce foreign exchange.”

Making of successful legacy companies

Some existing foreign businesses with long years of history dating back over a century and counting include the following: Ford Motors, Kentucky Fried Chicken, Wal-Mart, MacDonald’s, Johnnie Walker, Coca Cola, General Electric, Sony, Panasonic, Julius Bergers, General Motors, to mention just a few.

The common thread which runs through most of these companies is their “survivability”, which according to Mr. Sola Oladipupo, a brand specialist, is the ability to sustain brand equity.

Expatiating, Oladipupo said: “Compared to most of our indigenous businesses, a lot of companies that have survived centuries and are still in existence have been able to achieve that longevity simply by adopting winning techniques which have stood them in good stead. Winning techniques, if you may, are not cast in stones. The world is dynamic, and so it also requires any business set for the top to be able to think out of the box.”

“There are also bad stories out there. For instance, IBM typewriters, Polaroid cameras, to mention just two, are no longer in vogue. The promoters of these businesses probably didn’t take the initiative when their contemporaries did and hence were driven out of business,” he stressed.

Echoing similar sentiments, Mr. Ifeanyi Nwade, General Manager, Finance, Nigeria Import Export Bank (NEXIM), at a public forum in Lagos recently, observed that any businessman worth his salt must adopt what he described as “the IMF, the three nuggets of business success, which are ideas, management and finance.”

In the view of Funso Olaolu, an ICT expert, studies have shown that most businesses that have stood the test of time was because their founders had sound vision, ideas, clear succession plan, and governance structure to drive same.

Longevity

As far as longevity is concerned, Johnnie Walker has had to weather more than 200 years of existence on the global market and 92 years on the Nigerian scene. Giving some insight on the company’s history, Thomas Jones, Global Brand Ambassador of Johnnie Walker, said, “Nearly 200 years ago, a farm hand named John Walker began a journey – selling blended whisky from a small grocery store in Kilmarnock, Scotland. John Walker was born at Toddriggs Farm, Ayrshire, Scotland in 1805.

“After the death of his father, he opened his grocery shop in Kilmarnock, Scotland, in 1820, selling malt Scotch whisky. Before long, he started blending his own whisky; hence the Johnnie Walker Scotch Whisky was born.”

Jones attributed the success of the Johnnie Walker brand to the consistency of “flavours, commitment to our connoisseurs and building a brand that is recognised by all for its enduring qualities.”

Experts’ recipe for building legacy companies

While attempting a prognosis of the crisis facing indigenous businesses, analysts have argued that unfavourable policies of government may have contributed in part to the inability of these businesses to survive.

Citing the Structural Adjustment Programme (SAP), Dr. Greg Idaho, an economist, said the policy which came with its abundant devaluation of the naira led to the collapse of many businesses. “Because the quantum of naira they required to purchase the appropriate amount of foreign exchange for their raw materials had risen considerably, most of them were forced to close down due to shortage of working capital required to finance constant importation of raw materials. The banks could not help them because most of them were either undercapitalised or about to be distressed as a result of the effects of SAP. This continued until the naira became totally devalued and both the interest rate and the rate of inflation got out of hand,” Idaho recalled.

“Business failure, especially from indigenous point of view in Nigeria, is quite rampant and is quite disturbing. When you consider notable businesses, indigenous business individuals, such as the late Moshood Abiola, had a very big time business empire and at the end you could see that that is a huge loss to the economy because when Abiola was alive he gave massive employment to the country. But death brought an end to that business. That goes to say that some of the indigenous entrepreneurs are not good managers, including the late Abiola himself, because of lack of succession plan. The whole business was built around himself (Abiola) and that was not good for the country and his name as well.

“You can also consider the Igbinedion empire, the massive investment. For instance, Okada Air was a name to reckon with in this country; but because of inadequate plan or lack of succession plan, that business has gone down. Again, it goes further to say a lot about the lifestyle of the entrepreneur that you don’t make wealth and reduce those wealth to oneself, the wealth is no longer yours. You just have to eat from it, within the limit of your ability to eat and leave the rest behind for the country because when you die, it does not mean that all the people you gave birth to have to die.”

Speaking further, Oreoluwa said, “You can also go back to the recent one, Odumegwu Ojukwu. He was also a successful person. But there is legal tango here and there by his dependants that are struggling to control what he owned. That legal tango, which was also the case with the Abiola situation, would end up destroying his establishment. You look at Adedoyin, he was known everywhere but not many of his businesses are thriving today. Again, if you look at the culture of building businesses around oneself, you discover that as soon as the man dies, the business would not be there. Nigeria is not yet positioned for sustainable sovereignty. Sovereignty, because the wealth of the people is the wealth of the nation. Most businesses are not well-cultured, neither are they organised. It also tells you that Nigeria is standing with an imbalanced leg.”

Echoing similar sentiments, Dr. Thomas Oreoluwa, a credit analyst, however, warned that the present crop of businessmen and entrepreneurs should have a proper succession plan in place so as to ensure continuity even after they are gone.

“As an industrialist, you hope you have contributed to the GDP of the economy by creating jobs and all of that, but by yourself again, you’re destroying it on the long run. We look at the likes of Dangote now, Mike Adenuga, Jim Ovia, Tony Elumelu, Jimoh Ibrahim, Cosmas Maduka, these guys should put in place good succession plan, so that their successes which the nation and the world are celebrating today will not end up with them when they are no more,” Oreoluwa admonished.

In the view of Mr. Boniface Okezie, President, Progressive Shareholders Association of Nigeria, one best way to guarantee survival for business is for them to be listed on the stock exchange.

Speaking with The Nation over the weekend, the shareholders’ boss said, “The only way is for family businesses, personal business to be listed on the stock exchange. That way, the company is out of the control of the family, it then becomes a publicly quoted company, where professional consideration, and not sentiment, informs every decision to be taken in the interest of the company. That way, it is no longer a one-man show. I recall that the late Moshood Abiola was the president of the Manufacturing Association of Nigeria at a time but he never got his companies properly listed.”

Continuing, he said, “For instance, ABC Company, founded by Frank Nnaji, is one company that will outlive the owner simply because it is now owned by the public because the founder has taken the right steps by having it listed on the exchange.”

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Posted in Nigerian Newspapers. A DisNaija.Com network.

Source: The Nation Newspaper

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