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Africa is as vast in land, language, and tribes as it is in ecosystems. In a previous article, we studied the different archetypes of extremophile business profiles of African family businesses. In this article, let’s explore the four main types of African family businesses; the general and surface analysis of their characteristics and some of their drivers; how these tally with the extremophile archetypes; and how this may play out in the continent’s growth.
The Native African Business:
The Dynasties: The royal clans that have managed to stay strong and prominent despite the turbulent history of Africa. They have vast land holdings and vast businesses that are managed for the benefit of their families and their “nation,” or tribal clans.
The fact that they have lasted multiple successions and stayed strong whilst running a business and a family attests to the fact that their culture and governance methods have been successful.
Transitions may happen because of generational changes, but their ability to uphold traditional rites and governance is their greatest strength. The case is the Eswatini, Lesotho, and Zulus in Southern Africa and a lot of kingdoms in West Africa.
The Startups: These are the family businesses started by families who continue to be entrepreneurial. Some grow into national, regional, continental, and, at times, global businesses. At the apex is a global business. These black-owned businesses are rare but are growing in number. The billionaires on the Forbes list represent many of these businesses.
Also in this group are the vast start-ups at the bottom of the pyramid. They are smaller mom-and-pop stores and small to medium businesses that are slowly growing and creating economic growth as well as increasing employment and innovation on the continent.
Many of the businesses in this category, regardless of position on the pyramid, struggle with the ever-looming succession transition. Not enough are able to transition from Founder to the Next Generation. Once the initial transition is made, there is a blueprint and promise for the transition to work effectively in coming generations.
However, this group is plagued by cultural governance, which still has to transition and grow to allow the new modern family set up. The traditional three-circle model of family business and Ownership can be blurred if work is not done to ensure that the family governance reflects the family cultural governance.
The One-Stop Shop: These are the vast empire builders mentioned in the start-up group that grow to become formidable influencers in society and business. They fall across the extremophile archetype spectrum. Their biggest flaw is the “James Bond” leadership strategies that lead them to fall and fail when they pass on.
There is no succession, and this then falls to an already fragile and fragmented family, which then fails to run the empire, and in a period ranging from months to decades, the business stalls and starts disintegrating, and is quickly replaced by a similar business model and family.
This mostly impacts industry growth in Africa. The continent then fails to extend skills and industry development and lags in those areas.
The Colonialists: As the name implies, these come from a descendant of colonialism and have obviously benefited from the time. Their wealth has been passed on generationally. They have ownership of wealth from businesses that were passed on from their colonial forefathers. They are African; in the essence of them being born and raised on the continent and usually do not have ties to their historical ancestral homes.
Their businesses and wealth have been built and passed on from the past generations, and each generation continues to add on to the skills, knowledge, and wealth. Some are enterprising families, where in each generation there are family members who have built their own businesses and grown. Their capital can come from inherited wealth or, in some cases, they build it from scratch.
However, their unique advantage is the historical psychology that can push them to remain optimistic and go into essential industries that can be passed on to the next generation for success.
Extractors: These are from colonial backgrounds but focus on extractive industries. Rooted and sometimes born in Africa, they tend to feel safer in their historical ancestral homes and keep based in both with the outlook of settling in their ancestral homes.
Their only interest in Africa is what they can get from the continent, and not in the long-term investment of settling in the continent unless it suits them. Their next gen is groomed in their ancestral bases, and they only return to check on investments.
Dynastic Farmers: Their colonial background is rooted in farming and their family knowledge is in farming and commercializing food production. Despite upheavals in and around the continent, they remain steadfast in this industry and are part of the Extremophile archetypes of artisans.
They move from country to country depending on the issues they face but prefer to settle in one country and hone their skills and create vast wealth in food production and farming spaces. At some point, they are headhunted globally for their skills and knowledge.
Old Money: This depends on inherited money from a family enterprise or historical inheritance. They invest in new businesses, but only out of necessity. They instead look for steady investments and tend to be conservative. They are found across all races.
New Money: They have made a lot of money from opportunities made available by new policies and can be very flashy with no cap on their risk appetite. They are usually not focused on succession as they have made the money rapidly and can go through it at the same pace.
The Brought-Ins: The Brought-Ins are a unique group that is a mix of people who come mainly from other colonies that were held by colonial countries. They either choose to come to Africa or are brought to work by force. They then opt to adopt this continent as home as they find themselves in unique positions where they are no longer the lower caste or the poor demographic but instead hold higher positions than those of the native Africans.
This newfound advantage gives them confidence and leverage to grow and build new homes, which, as we have seen, become the multigenerational billionaire dynasties on the continent.
Natural Scavengers as per extremophile archetype, start in the trading and basic need commodities and scale to own and control production and supply chains and buying out parastatals being privatized. They use their advantages to the maximum and remain tightly closed communities that pass business and opportunities to each other and fellow family members.
Bondage Breakers: Brought in from other colonies, especially India by the British. They come from lower castes in their ancestral homes and take up bondage to go to new colonies to work for more income, so they can hopefully come home and raise their family’s fortune.
Some opt to stay in the colony when they realize that they have more options for growth and have an opportunity to be treated better than the natives, and they can bring the skills from their homes to this new territory.
Like the colonial supremacists, they see opportunities to exploit this new space. They fall under the scavenger archetype in the extremophile profiles, and they have grown from traders to conglomerates with multigenerational businesses that span into the oldest businesses on the continent.
Many of them are the most wealthy clans on the continent, and there is no slowing their growth. Their interests are in making more wealth, creating jobs, and growing their companies.
Migrants: These are similar to bondage breakers. They, however, chose to come to the continent as immigrants during colonialism, and they took advantage of the opportunities available and grew their family businesses to notable wealth and generational businesses.
Most importantly, they are almost like pilgrims who choose to come to start afresh and see opportunities in businesses they have back home, or they have seen back home, and they bring them to this new space, where they diligently grow and become artisans, chameleons, and scavengers.
Settlors: This group came after colonialism. They saw opportunities on the continent, and they followed family or work opportunities and decided they liked the offerings in this new place.
They adopted it as home whilst cutting ties with their ancestral homes and choosing to naturalize and grow their businesses and families in the new countries of choice.
They don’t have the entitlement of colonialists, but they respect the fact they have equal opportunities as everyone else.
The Immigrants: A group of family businesses has found their places on the continent in recent years, searching to make their fortunes in the African landscape. Almost like pirates, they look to plunder and leave. Their intentions are driven by profit and gains they can make and take outside the African continent. With no interest in the continent’s future, they see it as too underdeveloped and filled with too many vices.
Their archetypes cut across the archetypes of extremophiles but fall particularly in Scavengers, Chameleons, and Titans. Those who bring in vast investment incentives look to attach to top government officials and get into deals that benefit their final goal more than the benefit of the country or the communities.
These businesses focus on staying out of the limelight. However, their influence can be seen in policies that do not benefit anyone but their businesses. They bankroll political strategies to win favor and award large “incentives” to their “collaborators.”
They tend to have large companies that are in strategic extractor industries and rarely invest in long-term infrastructure investments. Some don’t even take residence in the countries but Instead, they choose to send “seat warmers” who keep operations at optimum while they only jet in to show face and pet egos.
Opportunists – No intention of settling, they just want to explore the opportunities of possible new markets. They have heard stories of the vast wealth of Africa and want to try to get a share of the promised land. Settling may be an option if they find the promised opportunities or if they find their own opportunities. The opportunities have to be better than what their home countries are currently offering, and they feel detached from their home countries.
Exploiters – They have heard of the vast opportunities Africa has. They are incentivized by seeing peers or government incentive programs. They have no intended future on the continent, and they are only interested in what they can get. They want to extract their benefits and move on to the next gold rush.
They identify with their homes and intend to go back after they get their fortunes in “developing” lands that are not being used by the locals. They tend to conflict a lot with local law enforcement authorities, governments, and communities. They bring vices, which tend to exploit local communities.
A prominent case is the one where Rwandan President Paul Kagame had to kick out such individuals from his country and ban them.
New Generations – Came for a new start, away from families or oppressive governments, looking to naturalize and make Africa their home.
This cross-section look at family businesses should help unpack the present behaviors of some businesses and the psyches of their controlling shareholders. How Africans can benefit from this is by recognizing the strength each group holds and the lessons each of the groups can learn from each other as they grow.
The future of the development of a continent is influenced by who holds the wealth and resources and what their motives for the continent are. Governments can benefit from understanding these nuances and harnessing them for their own societal development and the future of their countries.
Tsitsi Mutendi is a co-founder of African Family Firms, an organization that aims to facilitate the continuity of African family businesses across generations. She is also the lead consultant at Nhaka Legacy Planning and the host of the Enterprising Families Podcast.
