KEY POINTS

• Within 24 hours, Otedola lost over $480 million due to the oil price crisis. He also lost $280 million due to Naira devaluation and another $160 million when his stocks crashed.
• Before his comeback, Masiyiwa hit rock bottom after losing his fortune in funding a case against the government.
• Abdulsamad Rabiu bounced back after pulling off a near-impossible coalition with competitors to compete for market shares with the prominent market leader.

There is a popular saying that – maintaining success is a more difficult task than attaining it. For someone to attain billionaire status, they have to work harder than everyone else.

Then, to maintain this status, one has to triple the workload, discipline, and dedication that gave them that success in the first place. There are many millionaires and billionaires across the globe who learned the hard way and lost all their fortunes before a twinkle of an eye.

It is normal for businessmen and women to experience turbulence, but when they lose their fortunes – only a few are able to walk their way back to the top. There are many examples of businessmen who lost their fortunes and never made a comeback – not only in Africa but the world at large.

However, this article will be focusing on African businessmen who lost it all and made dramatic comebacks. Their stories give hope and offer a new perspective on the definition of failure.

Check out 3 African billionaires who hit rock bottom but picked themselves up and rebuilt their businesses from the ground up.

Femi Otedola

Femi Otedola is a name we still hear around the billionaire club today because of his doggedness and sheer determination to succeed. In 2008, the Nigerian billionaire experienced a business tornado that was capable of adding him to the list of people who fell from the top.

At that time, Otedola’s company, Forte Oil, was the number one diesel supplier and a big name in the Nigerian market. He had more than 500 retail petroleum stations across the country and had the potential to expand even further.

In 2008, Otedola – who was looking to further tighten his grip as the biggest importer of diesel in Nigeria, controlling over 98% of the market share at that time, ordered one million tons of diesel.

But unfortunately, while his shipment was still at sea, heading for Nigeria, the international oil price dropped from $146 per barrel to $34 per barrel overnight.

To add salt to the injury, the Nigerian economy, which was affected by the fall in oil price, took a decision to devalue the Naira and increase interest rates on loans. Within the space of 24 hours, Otedola lost over $480 million due to the oil price crisis.

He also lost another $280 million as a result of the naira devaluation, and his interest debt rose to a staggering $320 million. As if that was not enough, he lost another $160 million when his stocks crashed in the financial market.

With a debt of over $ 1.2 billion, Otedola was kicked out of the Forbes list of billionaires.

“After I lost the money, something that struck me was that my father had always been my role model in life and the first thing I had to do was to protect his name. He had a policy; honesty was the best policy, so I had to protect that name and his integrity,” Otedola recalled.

So, he remained determined to take the bull by the horn and fight his way back to the top by making strategic decisions. He was able to get his bank to write off $400 million, and he was left with a total of about $800 million to pay.

The next step was to value and sell a huge part of his assets, especially his real estate and shares in several multinationals, and pay off the debt. He sold some of his shares at African Petroleum (AP) and was left with only 34 percent before rebranding it to Forte Oil.

He would go on to further make some key strategic decisions and pay off his debts while slowly but steadily building his business empire back up. In 2014, Otedola shocked the world when Forbes released its list of African billionaires and enlisted Otedola with a net worth of $ 1.8 billion.

Strive Masiyiwa

The name – Strive Masiyiwa is a household name across Africa for many reasons, but his association with Econet Wireless ranks tops the list. Currently, the Zimbabwean billionaire is worth about $3.8 billion, according to Forbes’s latest ranking.

But this did not come overnight; indeed, Mr. Masiyiwa has been up and down – and up the ladder. In the eighties, Strive owned a hugely successful engineering company in Zimbabwe, and as his fortunes grew, he decided to invest in the telecommunication industry in Africa – which was taking shape at that time.

He decided to start his own telecoms company in Africa – Econet Wireless, but the government of Zimbabwe, led by former president Robert Mugabe refused to grant him the license to start the company and operations in Zimbabwe.

But the businessman refused to accept the decision and took the government to court – starting a legal battle that lasted for many years and nearly rendered the African billionaire bankrupt.

He hit rock bottom and lost his fortunes as he continued to fund the case against the government’s decision. After five years of the legal battle, which also ended up affecting his other business operations in the country, the constitutional court ruled in his favour, and Strive Masiyiwa launched Econet Wireless which saw his fortunes rise again.

Today, Strive has an almost permanent spot on the Forbes list of African billionaires and is credited for pioneering the introduction of telecommunication in Africa. He is still in control of over 50 percent of shares in Econet to date.

Abdulsamad Rabiu

Abdulsamad Rabiu is the Chairman of BUA Group. His name appeared on the Forbes list of billionaires for the first time in 2013 after some impressive business decisions that saw his fortunes increase above the one billion dollars mark.

However, the status was short-lived after his name was removed from the list a few years later. The reason for this was that the Nigerian billionaire experienced a huge decline in his worth owing to a devaluation in the Naira in 2017 that affected his finances.

Rather than make negative business decisions to protect what he had left, the Chairman of BUA Group began to make strategic business decisions, including branching into the viable cement market. He raised his cement production capacity by building factories.

Today, with a production capacity of 11 million metric tons, his company, BUA Cement, is the second-largest cement producer in Nigeria. One of his biggest and most successful decisions was merging Kalambaina Cement, a subsidiary company of BUA Cement, with Cement Company of Northern Nigeria (CCNN) – a company that traded on the floor of the Nigerian Stock Exchange.

As a controlling shareholder, his fortunes rose, and he became the third richest man in Nigeria – taking him back to the Forbes list in 2020.

According to the latest Forbes report, Abdulsamad is now the second richest man in Nigeria, behind Aliko Dangote, with an estimated worth of about $ 6.5 billion.

Some companies usually do business using foreign trademarks licensed under franchise arrangements. This allows a locally registered entity to locally use a trademark owned by a foreign company, usually for a fee and subject to certain standards as specified.

Considering the nature of the arrangement, which on the face of it, offers a business advantage to the local entity; there has always been an issue as to whether the local/ Ugandan company is considered imported a service into Uganda?

This issue was the subject of a ruling by the Tax Appeals Tribunal in the case of Apollo Hotel Corporation Ltd v Uganda Revenue Authority TAT Application No. 68 of 2018.

The facts were that in 2008, Apollo Hotel Corporation Ltd (the Applicant) entered into an international license agreement with Sheraton International Inc. a company incorporated in the United States of America. The agreement granted the Applicant the right to operate its hotel in Kampala under the trademarked brand name “Sheraton” and also to use Sheraton International’s centralized reservation system by paying franchise fees to Sheraton International. URA raised a tax assessment of VAT amounting to Ugx. 398,418,285 on the franchise fees. Apollo objected to the assessment and the matter was left for determination by the Tribunal.

The main issue was whether the use of the brand name “Sheraton” and the provision of the centralized reservation system amounted to a supply of an “imported service” for purposes of VAT?

Tax Appeal’s Tribunal in their ruling dated 27th August 2021, dismissed the Application holding that;

i. The use of the trademarked brand name “Sheraton” and the provision of the centralized reservation system amounted to a supply of an imported service.

ii. That VAT was only due on the principal service namely, the right to operate the hotel under the trademark name “Sheraton” using the centralized reservation system.

In reaching its holding, the Tribunal relied on the case of Sagar Ratna Restaurants Pvt Ltd & Ors v The Value Added Tax Officer Where the Delhi High Court in India found that the use of the trademark McDonald’s amounted to a service and not goods for purposes of VAT. The Tribunal thus concluded that the use of the brand name Sheraton under the agreement amounted to service and not goods.

The Tribunal also invoked the destination principle which provides that services supplied from a foreign jurisdiction and consumed in one’s own jurisdiction are considered as imported services. The Tribunal thus reasoned that the Sheraton brand and reservation system was supplied for use in Uganda by Sheraton International Inc. and was used by the Applicant in Uganda. It follows that these services were imported services for the reason that they were supplied from a foreign jurisdiction and consumed in Uganda.

Effect of the decision.

The above decision by the Tribunal sets a precedent that all companies in Uganda which are running businesses using foreign trademarks by paying franchise fees must charge VAT on payments to those foreign persons. The principle in the decision is of wide application and will most likely affect all businesses operating under the franchise arrangements in Uganda.

This decision is a great win for URA in its attempt to tax the digital economy and intangible intellectual property rights. The use of the centralized reservation system which is located in the United States of America is similar to the running of most digital platform-based businesses. This poses a challenge for taxation under the permanent establishment principle which provides for taxation only when an entity has a physical presence in a foreign jurisdiction. The decision provides a window for the taxation of the digital economy.

1. Be A Good Employer

As a good employer, you should set clear expectations for your employees. You should inform them what needs to be done, the deadlines, and where their work is shown once they are done with their responsibilities. Tracktime24 can help you to outline deadlines, tasks, and responsibilities. With these expectations, you should be able to set clear boundaries, demonstrate healthy leadership, and provide the best direction. You need to spell out rules, policies, regulations, and procedures. It’s easy enough to accomplish this by having a proper employee manual in place.

Also, you should try using personal touch and talk to your employees one on one or in a group. Set expectations that are consistent with all your employees. You should include everything including break times, clocking in early, and much more. For instance, is it okay to clock in early and leave early? Are there mandatory breaks? Will your employees’ wages be docked if they take too long with lunch? If you outline more issues and expectations, you will have fewer problems and have productive workers.

2. Help Your Employees Feel Valued

You need to be more encouraging to your employees and give them praise whenever appropriate. You should always thank them by doing a good job and show them that you value them. If something goes wrong or if one of your employees makes a mistake, you shouldn’t punish the person. Instead, you should talk to the person, teach them correct procedures and offer encouragement or further teaching whenever necessary. By punishing your employee, you will be making things worse because your employer is likely going to get angry and bitter. Actually, they might end up sabotaging their work to get back at the company.

If there are further errors after correction, you can evaluate the person to make sure they are a good fit for the job. Remember, as an employer, you have an excellent opportunity to make a difference in the lives of your employees. Take the time to smile at them, ask them about their family, ask about their problems or interests too. If you feel that someone is depressed, you can help them get the necessary therapy. Note that, employees with depression will have higher absenteeism rates, decreased performance and increased health problems.

3. Create A Productive Atmosphere

The physical layout of your office is important if you want to maximize productivity. You need to give your employees enough room to work, provide the right supplies/materials, and a pleasant and comfortable environment. You should have ergonomic equipment that motivates your workers positively to help them with the needs they require for their job. Don’t forget about ecotherapy since it is an important element in a productive environment.
Some of the most important factors to note about ecotherapy include:

• The environment should have live green plants. People will feel better about themselves, their jobs, and their duties when there is a connection to nature around them. Actually, workers who are near plants or windows will have higher job satisfaction, boss appreciation and coworker cooperation compared to those without. They are also happier. If you can’t have live plants, you can include murals or pictures of outdoor scenes.
• Make sure your employees are breathing in healthy air. A lot of buildings have indoor air pollution. You should have air purifiers and change your air filters regularly. Also, you should allow your employees to keep their windows open.
• Utilize real sunlight whenever possible. If there are no windows in the offices or workspaces, you should install full spectrum or light bulbs in all fixtures including the overhead fluorescent lights.
• Make sure there are healthy food choices in the break room or cafeteria. Healthy food allows people to think better. It also improves their mood and boosts their energy levels. You should have healthy food challenges at work to encourage people to eat better. Make sure your restaurant brings in healthy food occasionally for catered lunches.
• Allow your employees to personalize their workspace but within reason. Everyone should have a place they can call their own.

Finally, the workplace should be family-friendly. Allow your employees to take time off for their children’s school events. You should also allow them to stay home if their children are sick. They should also take their vacation days. If possible, you should offer child care on the premises or near it. Give your employees at least 13 weeks of maternity leave and paternity leave.

4. Get Everyone Involved

Make sure there is a clear and comprehensive employee manual. It should include procedures on how to handle various scenarios including family emergencies. Ask your employees for their ideas regarding the manual so they can feel like they belong to the company. Allow them to contribute their opinions and voice their concerns. Your company should be able to gain valuable information about products and concerns that will hurt the bottom line.

You should plan for special employee events where the family will be involved such as fairs, picnics, and workshops. If you create more sense of family in the workplace, your employees will become productive. Create a designated charity where people can donate money and time. That way, everyone can see the larger picture. Research shows that people feel better and their lives will improve when they volunteer. It will boost their overall performance too.