Family businesses have become part of Nigeria’s ecosystem. According to Moniepoint, they account for about 50 percent of the total businesses in Nigeria. From education to manufacturing, Nigerian family businesses are represented in every sphere of the economy.
A family business can be defined as one that has significant management involvement from family members. These businesses range from mom-and-pop shops to multinationals. For example, South Korea’s largest Chaebols, Samsung, Hyundai, and LG are family businesses.
In Nigeria, some prominent family businesses include Abdulsamad Rabiu’s BUA Group, a business birthed out of Isyaku Rabiu’s IRS Group.
FCMB Group is also another example, with the bank founded by Otunba Subomi Balogun, now run by his son, Ladi Balogun. Chidi Ajaere, the CEO of GiG Motors, also took over the business from his father, Edwin Ajaere.
Aliko Dangote’s business empire also evolved from his great-grandfather’s Dantata organisation, which is one of the longest-surviving family business empires. Aigboje Aig-Imoukhuede and Herbert Wigwe established a family office to manage their shareholdings in Access Holdings and oversee their other business ventures.
Tony Elumelu’s Heirs Holdings is also another family business, with shareholding in more than 20 business ventures across Nigeria.
Family businesses are characterised by unique attributes and values which reflect in their longevity. One of these factors is their core values.
According to PwC’s Family Business Survey 2021, 79 percent of family businesses globally highlight their core values as key factors in their longevity. Within the Nigerian context, the survey showed that a core value for Nigerian family businesses is community trust and integrity, with 65 percent of the surveyed businesses placing a strong emphasis on contributing to the community.
Read also: What’s the fuss about Nigerian family businesses’ next-generation successors?
In Nigeria, just like tribes and cultures, these values also vary from region to region. Northerners are likely to recourse to Islamic principles and values in business governance decisions, with Westerners adopting a more patriarchal approach and Easterners adopting the Igbo apprenticeship system.
Essentially, across the different regions, community trust is highly emphasised, with businesses putting in effort to support their community to maintain that trust.
Family businesses also prioritise long-term successes over short-term gains, a significant value that sets them apart from non-family businesses. Their long-term outlook enables them to prioritise sustainable growth over short-term profits, ensuring future stability.
PwC describes them as “typically less driven by the pressures of quarterly earnings reports or shareholder expectations, allowing them to take a patient approach to decision-making.”
This approach also encourages family businesses to prioritise investments that drive long-term growth such as innovation, research and development, and talent cultivation. For example, through the Igbo apprenticeship system, ‘Igba-boi’ adopted by family businesses in the East, entrepreneurial skill transfer is carried from generation to generation, with each cycle taking years to complete.
Family businesses benefit from knowledge passed down through generations, giving them an advantage that helps them outlast and outperform non-family businesses without this continuity.
Adoption of these values and attributes across generations helps in grooming the next generation of business leaders, as they are passed on as family values rather than business ethos.
However, a significant challenge for family businesses is the succession plan, as it is estimated that only 16 percent of family businesses survive into the fourth generation. In 2018, PwC noted that only 10 percent of Nigerian family businesses had a well-documented and communicated succession plan, falling below the global average of 15 percent. This figure improved to 25 percent in the 2021 Family Business Survey, a signification of an upward trend in business planning for succession.
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