Building on the legacy of a family business

Tuesday May 11 2010

Mr Madhvani

Mr Madhvani 

By Sumin Namaganda

Everyone sees the family business as a safety net. If you fail in the corporate world, you can always put your talent to work at the family business. But if your family doesn’t prepare, that safety net likely won’t be around for the next generation.

The Madhvani family has built a successful family business empire in the hands of family members. Mr Roni Madhvani is a third generation member of the Madhvani family and one of the family involved in the operations of the business in Uganda.

“A successful family business entails many key factors including the contribution of everyone involved in the organisation, a formal corporate structure and corporate governance and many other factors,” he says.
Before I met him, I did not know what to expect of one of the directors of one of the largest diversified private-sector groups in East Africa, a conglomerate which set-out with humble beginnings in 1914.

I expected to find a gentleman in a suit, necktie and polished black shoes.
I was wrong; Roni – a director of the Madhvani Group - can easily be mistaken for another man next door.

He is casual, courteous and a perfect gentleman. Unlike many of them in his caliber, he actually stood up and walked towards me ushering me into his office with a handshake.

I was flattered and could not believe this is the man responsible for some of the current day-to-day operations within the Group, which is synonymous with wealth in Uganda.

Knowledge comes from education, interacting with people, seeing what is happening around you, according to Roni and it is on this philosophy that he contributes to bearing the flag of the Group high.

The Madhvani Group of Companies, commonly referred to as the Madhvani Group, is the largest conglomerate in Uganda with a total asset base in excess of $250 million. The Group has investments in Uganda, Kenya, Rwanda, Tanzania, the Middle East, India and elsewhere.

As to why the Group is so diversified (agriculture, construction, hotel and tourism, steel rolling, insurance among others), Roni says this stems from the vision of his grandfather the late Muljibhai Madhvani who had the ability and foresight to identify profitable sectors to invest in and to subsequent preceding family members.

In his mid 40’s, Roni went to primary school in Kakira - a suburb in Jinja District – until the 1972 Asian expulsion when he went to England to complete his schooling and graduated from the London School of Economics and Political Science with a degree in Economics specializing in International Relations.

“I came back from England in 1983 but went back when I was ambushed and shot in a robbery,” the jovial graduate of economics says.
Married with one child, Roni worked as the head of Nile Breweries Limited from 1992 to 2002 when the family sold off the beer manufacturing company to SAB Miller – a South African firm.

According to Roni, Uganda is an attractive destination for investment but has some inherent disadvantages for many types of businesses given its limited market size and the limited levels of disposable income of the people.

“There is also a need to more thoroughly vet the background of potential investors in terms of examining what value they will add to our country,” says Roni who was once the chairman of the Uganda Tourism Board in early 2006, a position he held for one and half years before resigning due to personal commitments and frustration due to the lack of forthcoming funding to the sector.

The Group employs about 10,000 people although Roni admits that they do have a number of expatriates in the Group because Uganda lacks professionals in certain fields and cites the need for developing a stronger culture of values such as integrity and honesty for some of the younger generation.

Roni is inspired by successful global entrepreneurs and some of his friends and peers all over the world. ”I have been fortunate to be able to travel abroad often and it is necessary to look at things from the bigger picture and benchmark against what is taking place all around the world rather than only view things in our local perspective,” says Roni.

Roni is part of the management Group that has a turnover of about $100 million per year and it paid over Shs70 billion in taxes to the Government of Uganda in the 2009/10 financial year.

According to Roni, the challenges of doing business in Uganda include: access to competitive financing and the limitations of the market itself.
The Madhvani Group continues to invest heavily in Corporate Social Responsibility. The family invests in medical, educational and social services as well as scholarships.

“The Muljibhai Madhvani Foundation was started by the Group in recognition of its founder the late Muljibhai Madhvani and it embodies the values to which he believed in and they are found in the current strapline ’Empowering through education’,” Roni says. Uganda’s oldest private scholarship fund, Madhvani Foundation offered Shs516 million last year in university scholarships to 175 students.

The scholarship, which was revived in the 2003 when the Government returned back the assets to the Madhvani Foundation, has seen 817 students sponsored through university at a cost of Shs3 billion.

“The selection criteria for the Madhvani Foundation includes completion of the first year at University by applying candidates and thereafter the need to demonstrate financial need to the Selection committee,” Roni says adding that scholarships are only availed to certain key disciplines that the Board of Trustees have identified as being most beneficial to the development of Uganda.

He says the Group decided to invest in education because education is recognised as the prerequisite bedrock to the successful development of any nation.

He, however, expressed concern at one of the key challenges facing the country today, that of creating employment for the younger generation and feels that whilst the solution may not come totally from the formal sector, entrepreneurship may well be a solution if the skills and culture can be developed at a national level.