The excerpt above was from a Q&A video I did for the Institute of Agribusiness Manufacturing Nigeria (IAMN). It is was the last question where I talk about governance using dual signatory as an example of one of the financial governance processes required in a business and the fact that whilst you as an individual own a business, you do not own the money in the business because it is an independent entity. What you own are dividends, it may be 100%, but it's dividends nonetheless.

The video was shot by my brother aka Image Faculty just before he was about to start a workshop with other professional photographers. There were five of them in the studio. The moment he said, "And cut", they all jumped and said

What do you mean I don't own the money. Which Nigerian are you telling they own a business but not the money. The money is mine o

As much as I smile each time I recall this memory, it equally frusrates me. It reveals a deeply entrenched approach to building a business. One where the belief is that the individual and the business are one, where the business owner can dip into the finances of the business at any time for personal purposes without accountability or the need to pay it back.

In a recent conversation with an Industrialist operating in several countrires in West and East Africa, he told me of a couple of stories where he'd won multi-million dollar contracts, had off-taker agreements in place but needed a local partner. He'd been fortunate to meet what initially appeared to be stable companies for a joint venture. They just needed to tidy themselves up from a branding and marketing perspective, write a solid business plan etc. They were being assisted by an EY employee as a side gig (so they'd be meeting EY standards but not at EY prices). Both companies coughed up the money without question and embarked on the process. Then the request came for audited accounts and they suddenly went quiet. Continual chasing over months was met with stone cold silence. Eventually the Industrialist in question door stepped one of the companies to find out what was wrong, assuring them that whatever it is, it could be fixed. Then came the revelation about how business finances had been spent hence no audited accounts and no way to fill the financial gaps.

None of this is news to anyone on the continent or who does business on the continent. Those that are large enough just manage to cover it up well by siphoning money via subsidiary companies, partner companies that they own etc.

By no means am I saying all African businesses operate in this manner. Neither is financial misappropriation unique to Africa. I've come across some fantastically run small and medium sized companies that could teach Western businesses a thing or two about optimising their operations and team for rapid growth and high profit margins. Whilst some were run by commercial astute individuals (and no, they were not educated in the UK, US or anywhere else outside of Nigeria), others were lucky enough to have the right local investor who taught them operational excellence. Such investors and business mentors are few and far between and prefer to stay in the shadows unfortunately.

However, this issue of separating the individual from the business and it's money is one of the major stumbling blocks in trying to acquire funding, be it equity for a project, credit for trade or working capital. A bank or finance provider looking at an export or import transaction is trying to understand the financial robustness of the business applying for credit. Amongst other factors, this means doing financial analysis of the business's capital position. They are asking questions like how exposed is the business, how much liquidity do they have, if there is a devaluation in the local currency, will the business still be able to meet its debt obligations. Securing a large export order or having a line of customers demanding your product is simply not enough to get credit. The ability to demonstrate that you are financial diligent and are not a NPL risk is however.

I look forward to the day when the norm is redefined and financial governance is understood as a core tenet for defining bankability and creditworthiness of a business.

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