Eleganza and the succession clouds over the Okoya empire

Eleganza Industries is facing a succession and leadership test that could weaken one of Nigeria's most storied indigenous business empires. The Okoya family business grew from a tiny tailoring accessories shop into a manufacturing and real estate group, but its manufacturing base has plateaued and the transition to a new economy remains unresolved.

From shop to industrial giant

The founder started with a small shop selling tailoring accessories. From that base, he and his brother built a business that expanded into giant factories and plastics. The Okoya empire became a major household plastics player, with products including biro, plastics and chairs. It flooded Lagos with factories and large warehouse spaces that supported storage, warehousing and logistics for its products.

The first era can be called the seed era, from the tiny shop to the trading and confidence-building stage. The second era was the golden era, when the business expanded into giant factories and plastics. During that expansion, the founder's children joined the business and took strategic positions, including running factories. The factories were divided into stand-alone businesses with stringent performance indices. The business later moved towards real estate, led by the founder and supported by biological human capital. The brother later left to run his own business, which covered manufacturing and real estate, mainly real estate, while maintaining a pseudo-advisory stance as Eleganza powered on.

The real estate pivot

Eleganza now holds one of the biggest real estate holdings in the country, with revenue from rent and other real estate-related sources. As a privately held company, its financials are not public. But the bulk of revenue is likely coming from real estate, rather than traditional manufacturing, which has plateaued and most likely flattened.

The flattening of earnings and the influence of manufacturing income reflect inclement macro and micro economic factors, as well as a change of guard in leadership with human capital relatively inexperienced in that area. The business has not transmuted from an old economy giant into a major player in the new economy, with its drivers of technology and service.

Succession and the new economy

Leadership has changed hands from one set of biological leadership to another, taking with it years of experience, clarity and understanding of manufacturing. That has led to a dearth of innovation, vision-driven leadership and positioning in the new economy. What remains is a maintenance of the status quo, a whipping of the business to maintain lifestyle with little or no investment in R&D, market expansion and HR training.

Succession remains a central issue. Leadership is firmly in the hands of filial relationships. Players from the last two eras are no longer within scope, having been dislinked either forcefully or voluntarily. A few months ago, a piece on the lack of a formal and institutionalised succession plan in one of Nigeria's most heralded business empires ruffled feathers. There were responses in off-mainstream media not aimed directly at the writer or the article, but a feeble attempt to show that all is good in the Okoya Ajah Mecca.

Nigeria has watched MKO Abiola, FRA Williams, Adebowale, Adedoyin and Elizade wobble to death a few years after the passing of their progenitors. It has also seen generational transfer of control in firms such as AIICO, Olaniwun Ajayi and FCMB. That makes the Okoya case interesting to watch. Control is under what can be called Consort leadership, supported by her sons who would rather be on a musical stage than on a factory floor. To strengthen governance, one other son of an older generation has been pulled from a bank to serve as CFO. It is a brilliant move that should strengthen corporate governance and discipline if he has the scope to act.