Let us talk about four possible cards you could play if you have a successful family business in Nigeria.
Card 1: Successful Transition This is where many family businesses aspire to be, but many Nigerian entrepreneurs only understand the concept of building and striving, often forgetting when to pass the baton. At this stage, the next-generation entrepreneur is strategically integrated into critical areas of the business and introduced to major stakeholders in the industry until they receive the leadership mantle. For this to be successful, the current management must understand the role motivation plays in developing future leaders. It’s identified that people are often either intrinsically or extrinsically motivated. Intrinsically motivated individuals enjoy taking on challenging tasks and find satisfaction in the duties they undertake. Conversely, extrinsically motivated individuals seek recognition and adequate rewards for their contributions. Therefore, managers must understand the motivational drivers of the next-generation leaders they are training and motivate them appropriately to ensure they give their best to the company.
Card 2: Waiting Card Only a few businesses successfully pass on the mantle to the next generation, as many capable successors spend their entire youth waiting to receive it. Consider Mr. A from my hometown, Idanre, known for its rich cocoa beans. Before he passed away in 2022, Mr. A was a wealthy figure in the town, capable of supplying a minimum of 300 metric tons of cocoa beans annually, valued at N4.2 billion at an average price of N14 million per metric ton. However, less than three years after his death, his successor can barely supply cocoa worth N100 million a year. This sharp decline may be attributed to Mr. A holding onto the baton for too long; his successor was around 60 years old when Mr. A passed away. During this period, the successor had limited access to the company’s wealth, control over the company, and training, and was significantly underpaid. One trend observed in family businesses is that some Nigerians only pass the family business to the next successor when they are incapacitated, which can be detrimental to the company. Handing over a company to someone who should be retiring or preparing for retirement can hinder growth. I recently met another of his children in a bank, and he had just started a company in the same line of business, cocoa trading, starting from scratch and seeking capital.
This issue extends beyond family businesses, as low trust is deeply rooted in our culture. In the country’s political environment, young minds are rarely reflected in leadership positions. The older generation often clings to power for as long as possible instead of bringing in younger leaders who understand current trends and can contribute positively to the country’s growth. Mr. A’s business serves as a case study for many Nigerian businesses.
Card 3: Hijack – Unethical Practices In this scenario, the successor often uses any means necessary to take over the family business from the older generation. Many of us have likely heard the phrase, “Only the violent taketh it by force.” This was mentioned during a discussion on how the new generation of cocoa traders could achieve global success. It was suggested that we need to understand the older generation we are dealing with, which often lacks trust in our generation and is less likely to position us for a competitive advantage in the industry.
An example was given of a friend who benefited from the family business through unethical means, such as negotiating with customers to pay a certain amount for products while declaring a lower amount to the company. Other techniques include creating a shell company to buy products from the family business at a lower price and selling them at a much higher price, pocketing the difference. Sadly, many young leaders resort to these unethical practices because they believe that working in the family business will result in being severely underpaid and that the only way to make money is through these schemes. As Christians, we must uphold strong ethical principles on our journey to success. Moreover, these practices are not sustainable ways to generate wealth. What happens when the business owner implements better internal controls to protect their wealth? One of the consequences of resorting to unethical practices is the gradual erosion of family wealth. A company that should grow by 10% annually and gain more market share might only achieve a 6% growth rate due to the loss of funds caused by these unethical actions.
Card 4: Walk Away If you are involved in a successful family business, it’s crucial to understand whether your situation aligns more with card one or two. If there’s a high chance of achieving a successful transition, it’s important to understand critical areas of the business, accumulate more knowledge about the industry, and regularly conduct research on future trends. This preparation will help you position yourself for long-term success. However, if you recognize that the current leadership has low trust in you or is unwilling to pass the mantle, it may be wise to pack your bags and walk away, especially if it’s unlikely that you’ll build any reasonable amount of wealth in the long run—a situation faced by many people I’ve interviewed for this article.
Your ability to walk away and find your path often depends on your value and marketability in the job market. This is why, whether you are engaged in the family business, running your own business, or employed elsewhere, you must always seek to sharpen your skills. Remember, you have responsibilities and a family to care for, so waiting indefinitely and not engaging in anything productive might not be a good idea.
A Guide For The Next Generation Let’s briefly analyze four successful individuals and see which one you would like to emulate.
- Mr. B, a successful businessman in Nigeria’s manufacturing sector, built his company from scratch into a large enterprise. His son, seeking to capitalize on the company’s resources, proposed various initiatives requiring funding and often received responses like “You have to build the beginning” or “You need to suffer to understand the value of money” Meanwhile, an outsider who utilized Mr. B’s resources as a springboard received support and financial bailouts, ultimately becoming a millionaire and amassing more wealth than Mr. B’s son. His son has adopted card 4 and walked away to start building his own company.
- Mr. C is a successful Nigerian businessman and politician who has built a thriving financial services company. He appointed his son as the signatory to his accounts, granting him unlimited access to the company’s funds and positioning him as a leader for the next generation. His son has leveraged his expertise to grow the company significantly, earning substantial returns through a generous compensation package tied to his performance. As a result, both the company’s wealth and his son’s wealth have increased over the years.
- Mr. D is a successful businessman who built his agribusiness from scratch into a multi-million dollar company. He strongly believes that just as he struggled to build his business and acquire wealth, his successor must also go through a similar struggle. As a result, his intended successor has been given no access to the company’s funds, no level of control, and is significantly underpaid despite contributing to the company’s growth. While his successor faces challenges, outsiders have managed to leverage Mr. D’s resources to acquire more farms, build their own companies, and outperform Mr. D’s children.
- Mr. E, a very successful businessman in Nigeria’s agribusiness sector, has integrated his son into the company, providing him with full access to capital, company resources, and a high level of control over the company’s assets. This collaboration between father and son has propelled the company to become a global brand, making it one of the largest suppliers of cocoa beans in the country. As the company has grown significantly, both Mr. E and his son have amassed substantial wealth over the years.
Two simple questions: which of the successful businessmen would you like to emulate, and which of the next-generation builders can take on an investment of N100 million at the moment? Successors of A, B, and D have to start from scratch even with their expertise in the company’s business, while successors of C and E are already gaining more market share in their industry and acquiring more wealth for the family.
Two problems here: the Nigerian culture of low trust in the younger generation and the glorification of suffering in Nigeria. Does this sound like something the country does on a macro level—leaders keeping wealth in other countries, helping them generate wealth, while the citizens have to suffer or start again from the bottom?
As we embark on this wealth generation journey, remember the importance of succession planning and work with a Proverbs 13:22 mindset: “A good man leaves an inheritance to his grandchildren, but the sinner’s wealth is stored up for the righteous.” Many Nigerians who have lucrative family businesses are likely working for companies like Trump, LVMH, Amazon, or corporations owned by the Rothschild family.
Guess what, Fred Trump took a bet on his son Donald Trump; Jean Arnault took a bet on his son, who led the company’s real estate division, turned around his father’s business to huge success, and used part of the money he received to fund his dream. Similarly, Jackie and Mike Bezos invested $245,573 into their son Jeff Bezos’ business, Amazon, to support his dream. The Rothschild family has still been able to keep their wealth within the family. So we see Nigerians, whose parents have refused to bet on them, working all over the world for companies that were birthed solely because someone placed a bet on the next generation. Please let us know when to integrate the next generation into the family business or empower them and put an end to this “start from the beginning” and “you need to suffer” mindset.
Agosile Akinjide
