Family businesses are an underestimated economic driving force according to the Africa Investment Forum.
Earlier this year, a survey from PricewaterhouseCoopers (PwC), revealed that 17 per cent of Kenya family business owners report having a robust, documented and communicated succession plan in place, compared to 15 per cent globally.
Family businesses are rarely viewed as a sector which could influence economic growth, but the Africa Investment Forum is recognising them as important players on the continent.
In its third edition, a report dubbed the Family Business Survey 2018 by PricewaterhouseCoopers (PWC) noted that digital technology is disrupting businesses; sustainability is becoming key to the conduct of business; winning trust is more important than it’s ever been; and millenials present an enduring demographic change.
The 2018 survey results shows that family businesses in Kenya are in robust health, with revenues expected to continue growing for the vast majority 82 per cent, compared to 84 per cent globally, with 30 per cent of Kenya respondents saying that growth will be ‘quick’ and ‘aggressive’ compared to 16 per cent globally.
According to a statement by African Development Bank (AfDB), family businesses are rarely viewed as a sector which could influence economic growth, but the Africa Investment Forum is recognising them as important players on the continent.
The Elnefeidi Group, a family-owned business with more than 80 years of experience in various industries, is run by second and third generation members. It is one of the businesses that believes start-ups can help turn around the continent’s economies if they are supported and nurtured.
“We need to take care of the youth, having money is not enough. Start-ups should be helped with business plans, helped to structure their business model and to position their businesses where there are opportunities,” said Hana Elnefeidi, the company’s representative at the Africa Investment Forum.
Elnefeidi, with businesses including agriculture, automotive, mining and real estate, located in several countries across the continent, believes families should not just share their money with start-up companies, but also their networks, knowledge and expertise.
“We need to take care of the youth, having money is not enough? Start-ups should be helped with business plans, helped to structure their business model and to position their businesses where there are opportunities,” said Hana Elnefeidim, the company’s representative at the Africa Investment Forum.
According to Delloite’s Global family business survey 2019, family businesses tend to lean towards a long-term view that is rooted in shared values, vision and culture. “But even though many of them strive to maintain family control, family ownership in itself doesn’t guarantee that a business will survive the decades. In the context of today’s rapidly and fundamentally changing business environment, simply having a long-term orientation is not enough.
To thrive, family businesses also need to take relevant short-term action.” The study by Deloitte read.
How can family business leaders achieve the right balance between the short and the long-term—in the context of the unique family, marketplace and sociocultural dynamics that characterize the family enterprise?
That’s the question that the study by Deloitte’s fifth annual global family business survey, explored by tapping into the views of hundreds of family-owned companies in four key areas: ownership, governance, succession, and strategy.
“While we found that just over one-half believe their organizations are fit for the future, we also found that many family businesses lack clarity in at least one of these four areas. For these businesses, it will be important to find ways to align stakeholder goals, develop a strategy that matches short-term actions to long-term priorities, and explore diversification to become sustainable for the long haul.” A statement from Deloitte says.
Foreign Direct Investment flows to Africa rose by 11 per cent to $46 billion in the past year, and several factors, including the realization of the African Continental Free Trade Area Agreement (AfCFTA) could boost this further. The past decade has seen African family-owned companies grow quickly.
Different management strategies have been highly successful in Latin America and the Middle East, where family businesses comprise about 70% of the top 100. Family businesses in Africa represent only 20% of the top 100.Elnefeidi, with businesses including agriculture, automotive, mining and real estate, located in several countries across the continent, believes families should not just share their money with start-up companies, but also their networks, knowledge and expertise.
The family business session focused on how to build alliances and partnerships in Africa and the Middle East, which could play an important role in stimulating investment in the continent. Family businesses by nature often build lasting relationships, valuable in any investment climate.