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41% Of Family Businesses In Nigeria Will Decline In 2021 According To Survey.

Findings from the PwC’s global family business survey for 2021 says 41% of family businesses in Nigeria expect a decline in sales growth in 2021. The survey, which builds on PwC’s long-time involvement in supporting family businesses around the world, examines the views of 2,801 family business leaders and decision-makers across 87 territories. It covers a wide range of sectors ranging from agriculture to technology, takes the pulse of, and explores the trends in, family businesses. It covers questions on the family business’ values and purpose, performance and challenges, as well as preparations for the future.

Other key findings from the Family Business Survey 2021 report include: 63% say one of their key priorities over the next two years is introducing new products/services well over the global average of 50%. 60% say that their digital capabilities are not strong, but only 34% have deemed it a priority. It is a similar picture globally. 50% have no governance policies (21% globally). 70% say that in order to succeed going forward they must deliver greater benefits for the planet and human society (Global 53%).

This tenth edition of the PwC Global Family Business Survey, which is run biennially, had sufficient responses to have a Nigeria-specific report for the first time. At a virtual launch on Wednesday April 28, guest speakers included Kabiru Rabiu, Group Executive Director, BUA Group & ASR Africa and Nnenna Obiejesi, Group Executive Director Nestoil & Obi-Jackson Foundation.

Esiri Agbeyi, Partner & Family Business Leader PwC Nigeria says, “with global disruptions like COVID-19, there is the need to focus on factors that turn current businesses into legacies for generations to come. There is a big task for family businesses, especially in Nigeria to effectively manage emerging risks by adopting business resilience measures across all service lines – sales, production, human capital, technology and research”.

The Panel session moderated by Taiwo Oyedele, Fiscal Policy Partner & Africa Tax Leader, focused on sustainable philanthropy. On the issue of governance, Kabiru Rabiu says that family businesses must continue to improve their governance by ensuring that they have good audit mechanisms and the right people at management and trustee levels. This will ensure that every naira invested is put to the best use. The panel also noted the importance of balancing transparent disclosures to stakeholders with the desire of family businesses to be private.

Nnenna Obiejesi, reiterated that communication and transparency are key ingredients for operating on a global platform and this will ensure the sustainability of the business from one generation to another.

As part of his remark at the launch, Uma Kymal, Associate Director Family Business & Foundations PwC Nigeria says about family-owned businesses, “…They helped the world reboot after the financial crisis; they need to be strong to do it again after COVID-19 and secure their legacy. Based on their significance, it is pertinent that lasting family businesses emerge in Nigeria if Nigeria will realise its desired growth potentials of 4% - 6% annually.”

Although some family businesses have thrived relatively well, the COVID-19 pandemic revealed some of the lapses in family businesses in Nigeria. Of utmost importance is the need to build trust, improve on effective governance, ply the digital transformation route and embrace innovative financing for business expansion and diversification if these businesses would continue to thrive and play the very crucial role they are saddled with in the society.

The world over, family-owned businesses have no doubt been recognized as the backbone of major economies, contributing meaningfully to the gross domestic product, employment creation and economic development in general. It is estimated that the total economic impact of family businesses to the global gross domestic product (GDP) is over 70%, the largest 750 alone employ more than 30 million people and have combined revenues of $9 trillion a year.

In countries such as the United States of America, Italy and India, family-owned businesses have played significant role in the socio-economic development, as well as in most other countries. From current trends, they remain very relevant even for the future. In the United States, for instance, family businesses account for 64% of the country's GDP, generating 62% of the country's employment, and accounting for 78% of all new job creation. In India, the gross output of family businesses accounts for 90% of the country's industrial output, 79% of the country's organized private sector employment, and 27% of overall employment. In addition, it has been reported that European family businesses' turnover is around 1 trillion Euros, which is about 60% of all European companies, creating over 5 million jobs (about 50% of the continent's overall employment). 

In Nigeria, the informal sector, which is largely made up of small and medium family businesses, accounts for over 60% of the country's economy. Typically, the role of family businesses in African economies includes creating and sustaining jobs as well as reducing poverty. Even during the COVID-19 pandemic, many businesses have continued to play this crucial role.

In 2009 after the global financial crisis, family businesses rebounded to build back opportunities in the distressed world economy, and this is expected to repeat itself in the post–COVID-19 recovery for two main reasons: family businesses are more trusted than other institutions and leaders, and, in most sectors, they are more resilient.

While family businesses present lots of opportunities for global economic development, yet, like every other business concern, they are also bedeviled by certain unique threats and challenges which tend to erode the gains of the work and efforts of the families behind them and threaten, in some instances, to make them close business. 

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