African family businesses do not appear to have a good record for succession planning, but there are a few exceptions.
Late Nigerian philanthropist Moshood Kashimawo Abiola was believed to be one of the wealthiest African with business interests in Airline, media, real estate, fishery and retail.
At the peak of his business empire’s operation, it employed thousands. But after Abiola died in 1998, the empire collapsed, and there is barely any trace of the family businesses today.
The same can be said of Joram Kamau, who used to be one of the wealthiest Kenyans several decades ago.
He was the owner of Tuskys Supermarket Chain, a retail giant that employed over 6000 people at some point, but after the founder died in 2002, a series of events, including siblings’ rivalry, debt-fuelled expansion and corruption, led to the death of the business.
This problem is common in Africa, where family businesses struggle almost as soon as the founders die, largely due to the absence of a framework that clearly defines the succession procedure.
In Nigeria, for example, most of the family businesses that were established in the 70s and 80s, no longer exist. The only family businesses that have survived into the third generation are those owned by non-Nigerian families.
Tsitsi Mutendi, the co-founder of African Family Firm, an organisation that facilitates continuity of African family businesses across generations, explains that a critical issue facing these businesses is family dynamics, such as succession planning and the absence of a family constitution/charter.
A PricewaterhouseCooper research in 2021 on family-owned businesses confirms that most African family businesses do not have an established succession system.
The report stated that 76 per cent of African family-owned businesses don’t have a succession plan to make sure that the company passes down to the next generation in a planned and formalised manner.
“You see situations where the founder dies and then in the absence of a will there is so much chaos around trying to make sure that those assets are ministered into an estate,” The Lead, Family Business Services of PwC Nigeria, Esiri Agbeyi said.
Agbeyi noted that addressing this anomaly is important because most Small and Medium enterprises are family run and they play a vital role in job creation and economic development.
Aside from lacking a well-defined succession plan, there is an absence of a strict governance system to ensure that the company is run based on global best practices and not sentiments.
Establishing best practices helps to minimise conflict, ensure professionalism and build resilience.
This is particularly important in the African business climate, where businesses must innovate quickly to stay relevant.
But not all African family businesses have ended badly after the first generation. There are a few examples of those whose baton of leadership have seamlessly been passed on to the second and third generation with proven success.
This piece focuses on some of the successful family businesses in Africa, with annual revenue of at least $50 million. At least a second generation of the family holds a controlling share of the company.
The Dantata Organisation
The Dantata Organisation is more than 100 years old. It was founded in 1910 by the patriarch of the family, Alhassan Dantata, who started trading in commodities like kola nut, cocoa, beads, and groundnut in Lagos and Accra under the company name Alhassan Dantata & Sons Limited.
Dantata continued to run the businesses successfully until he died in 1956. His four sons – Mamuda, Sanusi, Ahmadu and Aminu took over the mantle of leadership and expanded into other segments.
The leadership of the businesses is now in the hands of the third generation of the Dantatas as Aminu’s eldest son, Tajudeen has now taken charge.
Tajudeen first took over in 1988, starting as Group Director of Dantata Organisation Limited. But in 1994, he was appointed the Group Managing Director.
The Dantata Organisation has grown into a Multi-Million dollar conglomerate with interest in construction, oil exploration, manufacturing, farming, import and export, merchandise and commodity trading.
According to a 2014 report by Forbes, the Group’s annual revenue exceeds $300 million.
The Ibru Organisation
The Ibru Organisation was founded by businessman Olorogun Michael Ibru in 1957 when he started importing frozen fish. At the time, frozen fish was non-existent in Nigeria, but Michael was so persuaded it was a goldmine.
Even when detractors tried to discourage him and labelled his product ‘mortuary fish’, he ignored their mockery and was focused on growing his enterprise.
By 1960, Ibru became a household name in Lagos as demand grew for his fish. He made so much money from selling frozen fish and later invested in other markets like brewing, construction, petroleum distribution and bulk storage warehousing and importation.
In 1980, Michael stepped down and surrendered leadership of the family business to his first son Oskar. He is still in charge of the company to date.
Under Oskar, the Ibru Organisation has made an aggressive investment in agriculture and livestock. The Ibru farm is said to have over 2000 pigs and 25,000 birds.
Madhvani Group is today the largest sugar manufacturer in East Africa, producing an estimated 165,000 metric tonnes of sugar.
The company first started doing business in 1918, when its founder Maljibhai Madhvani bought a piece of land in Kakira, a small commercial town in Eastern Uganda.
Today, the Madhvani is known for more than sugar; the Group is a conglomerate that owns a chain of hotels, tea estate, construction, insurance and distribution companies.
It also owns and operates the Kkira Airport. The Group is now being managed by a second-generation Madhvani – Mayur, who is the youngest son of the founder.
Mayur took over the job of CEO following the untimely demise of his elder brother.
Since taking charge of the Organisation, he has helped to inspire growth and led a diversifications effort that brought new revenue streams.
Under his watch, the Group now boasts of over 10,000 employees and has expanded into other East African markets like Rwanda, Kenya and Tanzania.
Ramco Group is one of Kenya’s longest surviving family businesses. It was founded by an Indian immigrant who settled in Nairobi in the 1940s.
The business was officially started in 1948 when Rambhai Patel started a hardware store in the city’s downtown district.
Though he ran the businesses fairly successfully by his standard, his three sons – Kirit, Mahendra and Chandrakant – triggered the aggressive growth phase of the enterprise.
His sons joined the company as soon as they completed their college education, and their impact was immediately felt as the company diversified its investment portfolio beyond hardware.
The Group has interests in at least six sectors including print, hardware, manufacturing, office supplies, service and properties.
Rambhai’s three children currently run the company, and Kirit is the Chairman, while the other brothers serve on the company’s board.
Remgroup Limited is an investment holding company based in Stellenbosch, South Africa.
The company’s business interests include banking, financial services, packaging, glass product, medical services, mining, petroleum, beverages, food and personal care.
The company’s humble beginning is traceable to 1941, when Anton Rupert, an Afrikaner businessman, started manufacturing cigarettes from his garage with a 10-pounds capital.
The company, which he called Rembrandt quickly grew to become one of Africa’s largest tobacco companies.
Buoyed by the success of the tobacco company, Rupert diversified into the industrial and luxury goods sector. In 1988, his son Johann joined the company and began restructuring for more growth.
The business was divided into two parts – Remgro; a Johannesburg Stock Exchange-listed investment company with holdings in banking, healthcare and the industrial sector; Richemont, a Swiss-based luxury goods company.
Johann is the Chairman of both entities and has been CEO of Richemont since 2010.
Johann has had a tremendous impact on the company since taking over from his father as Remgro Limited is now the 9th biggest publicly traded company in South Africa and 1436th in the world.
Pick N Pay
Pick N Pay is another African family business that has flourished. The retail brand was founded in 1967 by Raymond Ackerman after he got fired as Managing Director of Checkers.
In 2010, Raymond stepped down as executive chairman, making way for his first son, Gareth, to lead the company.
Pick N Play is now one of the largest retail chains in Africa, operating in over 1600 locations in over six countries and with more than 90,000 workers.