5 Business Lessons From Nigerian Oil Multimillionaire Muhammadu Indimi . . .
Mfonobong Nsehe . CONTRIBUTOR
I chronicle Africa’s success stories and track its richest people
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Nigerian oilman Muhammadu Indimi is one of Africa’s most successful businessmen. Indimi, who has a net worth of $500 million according to FORBES Magazine’s 2015 ranking of Africa’s richest people, is the founder of Oriental Energy Resources, a leading privately owned Nigerian oil exploration and production company. Oriental, which he founded in 1990, has three projects offshore of Nigeria’s Niger Delta region.
His current status in Nigerian society is a far cry from his origins. Born in Maiduguri, northern Nigeria in 1947, Indimi had a deprived childhood. His father was a poor hides and skin trader and the young Indimi could not get a formal education because his father could barely afford it. At a very young age, Indimi was forced to take over his father’s business. Indimi says it was the springboard to the success he enjoys today.
Indimi, who is currently working on his memoirs ahead of his 70th birthday next year, rarely grants interviews to the media. He recently invited me over for a chat in Abuja, Nigeria, where he offered a sneak peek into his memoirs, recounted his life story, and spent well over an hour sharing five of the most important lessons he has learned in business. I share the lessons here, in his own words:
1. Learn Your Trade
In 1957, I was ten years old and I was working with my father in his hides and skins trading business. We collected the skins from the villages around Maiduguri – some of them as far as 200 km away. My father and I traveled by foot on seasonal roads, and later, I would go by bicycle. If it rained, and it could rain continuously for 10 to 15 days, the road overseers closed the roads with roadblocks. We carried food with us, but it could take a month to travel 100 km, so all our food would be finished. Sometimes we ate terrible things along the way, things like rats and frogs, because that was what was available. The road overseers would catch the rats in the bush and boil them and all we had to do was brush them to remove the skin, and eat them with salt.
Anyway, I soon learned that the most expensive skins for trading were leopard skins, followed by crocodile, anaconda, and sealskins. Cow skins were the cheapest, as well as sheep and goatskins, and these were sold by weight. Other skins, like the crocodile and anaconda, were valued by their width. Most animals were skinned and cut down the belly, but for crocodiles, the belly skin was what was valuable, so it had to be cut down the back and then stretched. These were some of the things I had to learn. Many villagers didn’t know how to stretch the skins, so my father and I would do it. First we put the skins into water to make them more flexible. Then we would punch holes in the edges using nails to hold it flat, and leave it overnight. The skin could stretch up to one or two feet more, which meant more money.
The skins were also graded. Grade 1 was the best: no markings and no puncture wounds; grades 2 and 3 followed. If there were a small puncture in the skin, we would sew it so the buyer wouldn’t know. I know now that this is wrong, and I looking back, I regret it. In any case, I learned everything I could learn about the hides and skins trading business and I am proud to say that I became a master in this business. While it was not an extremely profitable, it was my start in business and it would lead me on to greater things. It is important that you learn your trade completely.
2. Pay your debts
In 1963 when I was 16, I got my independence from my father. I wanted to be my own man, and since I had nowhere to sleep, I decided to pitch my tent at a friend’s house. My hides and skin business was struggling and I was struggling to make ends meet. One day at 6am, I heard a knock on the door. It was my father. He had borrowed £100 from a neighbor friend of his so that I could continue doing business on my own. My father was well trusted, so he was given the money without any paperwork.
In 1963, £100 was an incredible amount of money and I needed to pay off this loan or else my family’s credibility. He couldn’t pay it back himself, and if I couldn’t either, it would have been shameful. But I didn’t squander his gift. Everyday, I would come back from trading and balance my accounts. I kept trading hides and skins and I also bought some acreage to farm wheat. It took me a few years to finally pay off that loan but I eventually did. That earned me reputational capital among the big businessmen in Maiduguri at the time, and when I needed loans in the future, everyone was glad to support me.
3. Always keep your eyes open for opportunity
As time went on, I decided to expand my business activities from hides trading into selling clothes. I was around 20 at the time and this was during the period of the Biafran war. Because of the war, it was a bit challenging for me to get goods into northern Nigeria. So I started crossing the border to Cameroon to buy ready-made clothes to sell in Maiduguri. As my clothing business prospered, I began to look for the next business opportunity in order to grow my income. In 1973, there was a shortage of flour in Maiduguri. The state government at the time was importing flour and selling it at a subsidized rate to locals. I soon got information from a reliable friend that there was flour for sale in Sokoto state. Sokoto at the time had excess flour and so I got in touch with the Chief Commercial Officer of the Ministry of Commerce for Sokoto state, the organization that was handling the sale. I called him and told him that I was interested in buying all his flour and wanted to see him. We met up in Jos, and when he saw me, he was shocked to see a young man. I was 26 years old at the time. At first, he doubted my seriousness- especially because I wanted to buy 50,000 bags of flour which cost £300,000. He allocated the bags to me and since I didn’t have the money, I had to return to Maiduguri to raise the money from some of the leading business people of the time. I eventually transported the bags of flour from Sokoto to Maiduguri and made a £50,000 profit on that one deal. £50,000 is not a lot of money today, but in those days it was a big deal.
4. Diversify your operations and take your business to the next level
In 1979, Nigeria was transitioning from a military to civilian government and President Olusegun Obasanjo commissioned the South Chad Irrigation Project. A pumping station was built with canals from Lake Chad. Three months before the station was to open, the water pulled back and the pumping station was left hanging. It was a very embarrassing situation. An engineer friend of mine was the project manager. He came to me and told me there was a company in Florida that was building mobile water pumps. Since I had been traveling abroad to Europe, he thought I could go to America to buy the pumps and bring them back to Nigeria.
I had never been to America, but I asked him how many pumps he needed. Within 48 hours, I was in the U.S.A. In those days, getting an American visa was not as tedious as it is now. I swiftly went to the American consulate in Kaduna and got my Visa, then went to Lagos and flew PanAM to New York, and connected to Florida.
I bought 30 pumps worth $1.3 million. To transport them, I rented an Antonov, a big Russian cargo plane. We filled the entire canal with water using the new pumps. The President of Nigeria commissioned publications about the irrigation pump projects for publicity purposes, and soon everyone wanted to do the same thing. I quickly set up an agency so that no one could sell the water pumps except for me. Six years later, I built the first irrigation pump factory in Maiduguri. It became an extremely successful venture and that was when I started making real money.
5. Exhaust all possibilities and never give up
In 1991, I was still in the mobile pump business when I started working in the oil industry in the Niger Delta. The Nigerian President at the time, General Ibrahim Babangida was encouraging indigenous participation in oil exploration and production, and so I was given the opportunity to own some oil prospecting licenses – along with some other prominent business people. It would take 20 years and over a billion dollars in capital to get to the point where I could sell oil.
Those twenty years were very uncertain and required a lot of determination and money. We drilled many dry wells. I started the first well with Conoco, an oil company based in Houston. We drilled three wells: two dry, and one with the discovery of gas. They ran away. I then partnered with Nexen, a Canadian company. We drilled one well, which was water wet, and they ran away. Then came Eer, from the UK. We drilled one well, which was not a commercial discovery, and they ran away.
Finally, I partnered with Afren, headquartered in the UK, in 2006. It was with determination that we found oil in 2011. Some of the international oil companies that abandoned us along the way came back to me to inform me that they regretted their impatience.
You need to exercise patience to be successful in life. Many young people today just want to start business today and be successful the next day. In whatever you do, do it properly and honestly. And be patient; never give up.