Stakeholders have emphasized the importance of family businesses not only in their significant annual contribution of nearly $200 billion to the nation’s economy but also in their role as employers of millions of individuals in the country.
These sentiments were expressed at a recent event sponsored by First Bank in Lagos, titled “My Family My Business.”
The event aimed to promote effective business succession and sustainable planning, ultimately ensuring the preservation of these businesses for future generations.
Dr. Jumoke Oduwole, the Special Adviser to President Bola Tinubu on Presidential Enabling Business Environment Council (PEBEC), highlighted that numerous family businesses have successfully transcended generations, creating substantial job opportunities and playing a pivotal role in the ongoing economic development of advanced economies.
She pointed out that family-owned organizations, like the Ibru family, constitute 60 percent of Micro, Small, and Medium Enterprises (MSMEs) in Nigeria, collectively contributing over 50 percent to the nation’s Gross Domestic Product (GDP).
Oduwole emphasized that Nigeria’s 23.8 million family businesses play a vital role in employment and the economy, underlining the importance of ensuring their sustainability for future generations. She also noted that globally, 150 multi-generational businesses employ over 30 million individuals and generate a combined annual revenue of $9 trillion.
In support of family businesses, she expressed a commitment to making Nigeria an even more conducive environment for them to start and grow their businesses across generations.
Idowu Thompson, the Group Executive of Private Banking and Wealth Management at FirstBank, stressed the need for the next generation to become involved in family businesses to ensure their continuity, given their substantial contributions to the nation’s GDP.
He emphasized the value of the next generation gaining diverse experiences and knowledge outside the core family business, including financial literacy and moral guidance.
Sam Abu, the Country Senior Partner at PwC Nigeria, highlighted the global dominance of private businesses, where the top one percent of households possess 43 percent of global wealth.
In Nigeria, the top 100 billionaires collectively hold $68 billion in wealth, with the top three family businesses having a market capitalization exceeding $20 billion.
Abu pointed out that only 38 percent of the next generation is currently involved in family businesses, with a mere 28 percent participating on the management board.
He emphasized the necessity of increasing these statistics to ensure the sustainability of family businesses in the face of economic challenges.
Abu also outlined key factors affecting the success and longevity of family businesses in Nigeria, including inadequate succession planning, limited trust among customers, employees, stakeholders, and family members, as well as the importance of addressing environmental, social, and governance (ESG) issues for overall success.
He concluded by underscoring the pivotal role of family businesses in driving economic prosperity in Nigeria, with the government’s responsibility lying in maintaining a conducive business environment and essential infrastructure for their continued success.
