Family businesses are the backbone of our economies, generating nearly 70% of the continent’s GDP. However, only a minority of them survive beyond the second generation. When these businesses collapse, the consequences extend far beyond the family realm: jobs disappear, supply chains weaken, and local economies lose essential stabilizing forces. This vulnerability is not inevitable. It is the direct result of two chronic weaknesses that continue to undermine family businesses across the continent: poorly structured governance and the lack of succession planning. As long as these flaws are not addressed, Africa risks facing further business losses. For example, the downfall of Tuskys, once one of Kenya’s largest retailers, led to the loss of over 6,000 jobs.
Governance is the first fault line
In many of these businesses, decision-making remains informal and concentrated in the hands of the founder or a small circle of relatives. This model works until it doesn’t. Without clearly defined roles, independent oversight mechanisms, or conflict resolution mechanisms, businesses become fragile as they grow too quickly or face external shocks. Professional governance structures are not a luxury; they are a competitive necessity. An operational board of directors with independent directors and a family constitution that clarifies the rules among family members are fundamental prerequisites for long-term sustainability. Investors and strategic partners increasingly demand them. Companies that adopt such frameworks generally grow faster, attract better talent, and better withstand market volatility.
Succession represents the second fault line, often the most delicate
On the continent, founders frequently delay discussions about succession due to cultural sensitivities or fear of losing their authority. Yet, the passing of the baton is not a one-time event but a process. It requires early identification of potential successors, their preparation, and a gradual transfer of responsibilities and legitimacy. Without generational transition planning, the outcome is predictable: confusion, conflicts, and ultimately decline.
Conversely, families that involve new generations from the start, exposing them to governance structures and fostering intergenerational dialogue, not only manage to preserve the business but also family unity. None of this is out of reach. The segment of African mid-sized businesses is full of dynamic players capable of becoming regional or pan-African champions. But they can no longer rely solely on entrepreneurial instinct; they must institutionalize their leadership and heritage.
Financial institutions, business schools on the continent, and professional organizations clearly have a role to play in professionalizing our family businesses. Encouraging governance reforms, offering programs dedicated to family businesses, and promoting access to professional advisory services would help strengthen this essential segment of the African economy. African family businesses have already demonstrated their ability to innovate, create jobs, and structure local industries. Their next challenge, perhaps the greatest, is to evolve from founder-led structures to sustainable institutions. If they wish to survive beyond the second generation, our family businesses must understand that the right time to professionalize governance and prepare for leadership and capital succession is not when a crisis erupts but now. Thus, Africa will become the giant it has always been.
About Hakim Benbadra
Hakim Benbadra is a family business advisor and CEO of Tigritud. He works closely with family business owners and leaders across Africa, supporting them in their growth. He also creates spaces for dialogue and reflection to facilitate governance and intergenerational transition. He has organized numerous strategic sessions, regional workshops, and training on key themes for family business leaders.
