Nigeria needs more family businesses to achieve economic growth-PwC

More long lasting family businesses need to emerge in Nigeria in order for the country to realise its desired growth potentials of four percent – six percent yearly, post-COVID-19.

This is the assertion of professional services company, PricewaterhouseCooper (PwC Nigeria).
PwC in its 10th Family Business Survey, entitled: “From trust to impact” also said family businesses are essential to the success of the global economy, as they are responsible for half of the global Gross Domestic Product (GDP) and employment.

“The largest 750 family businesses alone have combined revenues of $9 trillion a year and employ more than 30 million people. Additionally, family-owned businesses account for over 30 percent of companies with sales over $1 billion. 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,” the survey said.

The survey is run every two years globally among key decision makers in family businesses within a number of PwC’s key territories. The survey takes the pulse 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.
This year’s report surveyed 2, 801 family business leaders across 87 territories, including Nigeria, covering a wide range of sectors, from agriculture to technology.

Act Now

The goal of the survey was to get an understanding of what family businesses are thinking on the key issues of the day.
The theme of this year’s publication is: “Why family businesses need to act now to protect their legacy tomorrow.” It was written by PwC Country and Regional Senior Partner, Uyi Apata; Fiscal Policy Partner and Africa Tax Leader, Taiwo Oyedele; and Private and Family Business Leader, Esiri Agbeyi.

Apata explained that the fundamental philosophy behind this year’s theme was that global disruptions like the COVID-19 pandemic has shown the need to focus on factors that turn 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,” he said, expressing hope that family businesses will find the report valuable and that its insights will help them make better decisions.”

Highlighting some of the key findings of the survey, Agbeyi said Nigerian family businesses have had a challenging year –but rewarding as well. “They have had to face tremendous headwinds with the currency issues and stock market fluctuations in addition to the pandemic.

‘Growth is slowly returning to the market. We have seen how they have stepped in with their generous support of the communities during the pandemic,” she said.

She also said families are thinking about how to protect their legacy and getting the NextGen upskilled to be able to professionalise their organisations.
“The NextGen are also the ones to bring in a more evidence-based approach both for the business and philanthropy as well as leverage technology and digital trends. The time to act is now if family businesses want to keep their legacy for future generations,” Agbeyi stated.

The PwC survey covered the following themes, providing insights and making recommendations for family businesses and other stakeholders.
The report said, for instance, that growth reduced during the pandemic, but businesses were resilient. According to the survey, 41 percent expected a decline in sales growth in 2020 (46 percent globally).

This was a sharp turnaround relative to 53 percent who experienced growth pre-COVID. On a brighter note, 66 percent expect to grow in 2021 and are more ambitious for 2022 (94 percent). Only 25 percent cut dividends at the expense of salaries to owners, but staff of Nigerian businesses received less staff support than the global average.

Concluding, the survey said family businesses remain a strong support for the growth of the Nigerian economy, albeit, there is room for additional improvement.

Some of the survey’s major findings include that most family businesses see the need for sustainable practices like paying more attention to the environment; giving back to the society and promoting:

Culture and values; governance in family businesses is a top priority and should be reviewed periodically for effectiveness, adequacy and efficiency.

Others include that majority of family businesses perceive their digital capacity as weak, but see digital transformation as a top priority; more family businesses see value in paying their fair share of taxes and are prepared to sacrifice to improve the communities they operate in. However, they want more accountability from the government so the taxes deliver greater good.

Nation/Hauwa Abu