. Poor succession plans, ESG seen as major challenges

Stakeholders have stressed the need for family businesses to succeed and transcend generations as they contribute nearly $200 billion to the nation’s economy yearly. This is even as they accounted for millions of jobs in the country.

The stakeholders stated this yesterday in Lagos at a First Bank sponsored event, tagged: “My Family My Business,” designed to promote business succession and sustainable planning with a view to ensuring the preservation of businesses for future generations.

Special Adviser to President Bola Tinubu on Presidential Enabling Business Environment Council (PEBEC), Dr. Jumoke Oduwole, said many family businesses have succeeded in transcending generations, providing significant amounts of jobs and contributing to continuity in development and underpinning economic growth across all advanced economies of the world.

She listed the Ibru family and other family-owned organisations to make up 60 per cent of the Micro, Small and Medium Enterprises (MSME), which she said collectively contributed over 50 per cent to the nation’s Gross Domestic Product (GDP).

Oduwole said 23.8 million family businesses in Nigeria account for millions of jobs and contribute nearly $200 billion to the nation’s economy each year.

She said these figures reflect the glaring significance and impact that family businesses have on Nigeria’s economy and the need for everyone to ensure the sustainability of multi-generational businesses.

Oduwole also noted that 150 global multi-generational businesses employ more than three 30 million persons with a combined revenue base of $9 trillion per year.

“We realise how important you are to the economy and we look forward to partnering with you to make Nigeria progressively an easier place for you to start and grow your businesses for generations to come,” she said.

The Group Executive, Private Banking and Wealth Management, FirstBank, Idowu Thompson, said it was important for the next generation to get involved in family business to ensure continuity, especially as these businesses contribute largely to the GDP of the nation.

He said there was a need for the next generation to get experiences outside of the core business of the family, such as structured exposure either through short courses, learning things related to accounting, bookkeeping, the very basics and moral guidance for them to understand the place of money.

“A lot of the matriarchs and patriarchs of the wealth that we see today had actually spent years saving and also ensuring that they were able to grow the funds or the monies that they built up through the years. It’s not a case of giving a value judgment on lifestyle. It’s a case of saying that there has to be a balanced view to life,” he said.

The Country Senior Partner, PwC Nigeria, Sam Abu, said private businesses are ruling the world as the top one per cent of households own 43 per cent of global wealth, noting that this is significant for resolving the issues across the world today. He said in Nigeria, the top 100 billionaires have a combined wealth of $68 billion, with the top three family businesses having over $20 billion in market capitalisation.

Abu said only 38 per cent of the next generation is involved in the family business, with 28 per cent of them on the management board, noting that the statistics has to go up as a very critical task of building lasting family business in spite of the significant economic challenges that are experienced in Nigeria.

He, however, listed factors that affect the success and sustainability of family businesses in Nigeria to include, poor succession planning, which he said only 25 per cent of family businesses have a succession plan as well as lack of trust with customers, employees, stakeholders and family members.

Abu listed others to include, environmental, social, and governance (ESG) issues, which he said are critical to the success of every single organisation and nation.

He said the only path to economic prosperity in Nigeria lies in the family businesses, noting that the government’s responsibility is to ensure that the environment and infrastructure required for businesses to succeed continues to be there.