29/05/2025
Always “draw up the papers”
__Business is business!
The young woman drove up to the home of her grandmother, a retired diplomat who had lived in one of the Lagos suburbs. She was excited because her grandmother had agreed to invest in her business.
To her surprise, she found her grandmother sitting with a lawyer and an accountant.
“Since I have decided to invest money in your business, I have invited Bola, my lawyer, to handle all the legal issues and my accountant here to handle all the financial issues,” the grandmother said quietly before leaving the room.
A few minutes later, an old friend of her late grandfather also arrived. A retired company executive, he had agreed to serve on the board of the new company.
“Grandma, I thought you were going to give me money,” she protested, once she was able to take her aside.
“No, Chidi, I’m not going to “GIVE” you money; you asked me to “INVEST” some of my life’s savings, which is also an inheritance of other family members. If we are going to go this, then it must be done properly,” she said sternly.
Chidi went back into the dining room where the , , and now board sat.
“First things first," the lawyer began. “Have you registered a company yet?”
“I can see from your face that you have not done so. Don’t worry; I will do that for you.”
“Your grandmother has decided that she will not invest more than N100,000 because she must limit it to 10% of her savings. She has informed her other children,” the lawyer continued.
Now it was the accountant’s turn:
“I will need to go through your business plan with Uncle here," he explained, looking at the retired company executive and family friend. "Then we must attend to all the compliance issues, including registering for tax. I have also drawn up all the share certificates that will need to be issued for you and your grandmother."
As papers began to move around the table with Uncle watching and occasionally explaining to her why such formalities were necessary, Chidi now realized just how serious business is.
“I thought I was just going to hustle around like some of my friends. I never imagined all this formality,“ she remarked quietly.
“You have a big vision for yourself and your business," the Uncle said. "And most importantly, you have an outside investor [even though she is your grandmother]. Your grandmother is an educated woman who worked hard for her money, and she has responsibilities towards other family members. In future, you will thank her for her thoughtful preparations to get this done right," he continued.
"Your grandmother knows she might lose the money she is investing," the Uncle explained, "but she wants to make sure you will not end up in a big fight with other family members in the future.”
In the end, Chidi found that it was really not that daunting as it had first appeared. The accountant and the lawyer had done it all before for other Nigerian families.
“You know Chidi, here in Nigeria, there are a lot of retired executives, civil servants, and even others living in the diaspora, who are helping relatives like you get into business," the lawyer explained.
"They are not billionaires or anything, just middle-class people living comfortably, and they want to help their kids. We help them do it properly.”
A few months later, everything was ready and they all met again in her grandmother’s dining room.
The and the laid out the key documents, including the company registration certificates and other documents required under CAMA [Companies and Allied Matters Act].
Finally they handed out two key documents:
“Here are the share certificates. We have issued 5,000 shares to Grandma for her 60% of the company, since she put up all the money. Please sign here.”
They both signed. Chidi got her own share certificate.
“My lawyer will hold my shares in trust for the other family members,” Grandma said proudly.
“Let’s go make money, Chidi!”
“What if I want you to invest more money?” Chidi asked.
“I'm maxed out, so you will have to find other investors at that time. Our board, which is you and Uncle for now, will make all the necessary recommendations. I will come as a shareholder to make decisions with you about any new investor.”
“Grandma, I’m so impressed you know so much about business. I thought you were a civil servant diplomat in the Nigerian foreign service?!”
“Chidi, I have always been careful to read about management of money," Grandma replied in a serious tone.
"We all should, even if we are 'just civil servants,' as you put it. To invest in your company, I had to sell shares that your grandfather bought years ago in Dangote. We are smart, modern Africans, and there are people like us all over Africa.”
Conclusion:
I made up this story in order to teach a lot of very important principles about investing as and in modern Africa. There are some very powerful messages here for family, friends and would-be entrepreneurs of the modern era.
Let’s do things the right way.
Image credit: KWB-Ubuntu Hope via Ai.
