A new survey has revealed that 77 per cent of family businesses in Nigeria plan to pass on management to the next generation but only 10 per cent have a robust, documented succession plan.
PwC, in its 2018 Family Business Survey, said family businesses should seek to maximise the competitive advantage that comes from their strong values-led culture.
The Family Business Survey is a global market survey among key decision makers in family businesses within a number of PwC’s key territories. The goal of the survey is to get an understanding of what family businesses are thinking on the key issues of the day.
This year’s report with the theme ‘Building a lasting competitive advantage through your values and purpose in a digital age’ saw family business leaders globally reporting robust health, with levels of growth at their highest level since 2007.
Regionally, businesses in the Middle East and Africa were the most optimistic, with 28 per cent expecting aggressive growth. They are followed by those in Asia Pacific (24 per cent), Eastern Europe (17 per cent), North America (16 per cent), Central/South America (12 per cent) and Western Europe (11 per cent).
According to the report, growth among Nigerian family businesses over the last 12 months is lower than the global average with only 53 per cent reporting growth in the last 12 months against 69 per cent globally.
However, 87 per cent expected to grow over the next two years, with 40 per cent saying growth would be quick and aggressive against 16 per cent globally.
The top three challenges cited by Nigerian family businesses as militating the personal and business goals were economic environment (70 per cent), corruption (67 per cent) and regulation (57 per cent).
The report said, “Corruption, which PwC estimates could cost up to 37 per cent of Nigeria’s GDP by 2030 if unchecked, is associated with lower investment, higher prices as well as barriers of entry for businesses.
“Most strikingly, the 2018 edition of the survey demonstrates a link between putting values at the heart of strategic planning and strong growth prospects. While 67 per cent of Nigerian family businesses have a clear sense of agreed values and purpose as a company, less than half (43 per cent) of respondents have those values articulated in written form.”
The Country Senior Partner, PwC Nigeria, Uyi Akpata, said, “The message is clear: adopting an active stance towards company values generates practices that pay off in real terms. A commitment to a clearly defined set of values can act as an ‘inner compass’ and provide a competitive edge for a family business as it navigates the challenges of technological and competitive disruption.
“What this survey clearly indicates, however, is that family business values are not simply the same as family values. Business values should be clearly defined and articulated, but also strongly embedded in the business culture and the day-to-day decision-making regularly reviewed.”
PwC found that Nigerian family businesses had a slightly lower level of perceived concern about the threat from digital disruption (23 per cent) or cyber security vulnerability (33 per cent), compared with global average of 30 per cent and 40 per cent respectively.
Women average 30 per cent of board members in Nigerian family businesses, according to the survey.
A Partner and Head Private Wealth Services, PwC Nigeria, Esiri Agbeyi, said, “A key take away from our findings is that there is an opportunity for family business owners that are committed to and adhere to a deep sense of social responsibility and sustainability to invest their resources in a manner that is consistent with their values.
“Also, the next generation is key to a family business’ lasting legacy and not involving them in plans to pass on the business risks disengagement. It’s crucial to have a written and documented plan for the continuity of the business to improve transparency and trust. The next generation need time to build a collective sense of purpose and be supported in developing their own framework for success.
“Our conversations with family businesses show that often they recognise the need to start the process, but those conversations can be difficult. Timing is crucial and so is communication to all stakeholders.”