An indisputable fact – which probably deserves more frequent reiteration – is that family-owned businesses are the heartbeat of the Nigerian economy.
From the local shop selling bread – to large factories spanning the country – family-owned businesses of all shapes and sizes have a great impact on Nigeria’s economy and society.
It is very gratifying to note that there are many thriving examples across Nigeria: FCMB Group – steered by Ladi Balogun and building on his father’s legacy; GiG Group – now under the leadership of Chidi Ajaere who also took over from his father. And let’s not forget Brila FM: run by Deborah Izamoje while her father – Larry Izamoje – chairs the parent company.
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Beyond major enterprises and conglomerates, outside of the bustling big cities, even more stories thrive in the informal sector. Ibadan-based Alhaja Betterlife is one such success, taking over the food service business from her mother and training two of her children for the future.
This phenomenon is not restricted to Nigeria. Family-owned businesses are estimated to contribute 70 percent of global GDP. In Nigeria specifically, family-owned businesses are resilient because they have to be. They have often weathered several economic and political storms without relying on investors, and sometimes even take pay cuts to keep the ship sailing.
While granular figures are hard to come by, 2018 data shows that education and healthcare were the leading family-owned business sectors in Nigeria, generating over $1 billion in revenues. Globally, family enterprises lean towards consumer goods such as food and fashion, with a notable presence in mobility, suggesting much room remains for Nigerian family businesses to diversify.
But what does a family business look like? And how does it operate and survive?
Wherever you travel to in Nigeria, it is easy to find youngsters learning how to run businesses from a parent, an uncle or aunt, or another family figure of authority.
“Globally, family enterprises lean towards consumer goods such as food and fashion, with a notable presence in mobility, suggesting much room remains for Nigerian family businesses to diversify.”
For new entrepreneurs, establishing a business in a parent’s trade is an attractive proposition. Having learned from their parents, offspring often go on to build adjacent businesses either supporting or diversifying the main family business. Such diversification leverages the main business’s brand reputation and social goodwill to help it thrive. This set-up ensures that when times are tough, the family-based group can support any needy part of the portfolio with proceeds from thriving ones.
Regardless of the sector, or company structure, a critical currency for businesses is trust. Family-owned businesses typically benefit from abundant trust both internally and with customers. Studies show customers are 12 percent more likely to trust family-owned businesses.
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Data also shows family-owned businesses tend to have stronger cash flow, which they invest back into the business. This is a key factor in their success; as family businesses typically must make sure the business makes money across generations and has solid cash flow. Business processes must also be watertight to prevent issues with theft or missing funds.
A relentless focus on cash flow and processes is a fantastic base for family-owned businesses seeking expansion. However, what often enables fast-growing businesses to take the next step is access to capital.
Fortunately, family-owned businesses can – by using technology to meet this need, grow and prosper. Thanks to the growing availability of digital business banking systems providing effective cash flow management and smooth payments, credit histories can be established, making working capital loans possible. The next step for expansion – previously very difficult – now becomes realistic.
The story of Nigerian family-owned businesses is one of resilience, adaptation, and enduring legacy. I’m proud Moniepoint has been at the forefront of bringing financial security to millions of family-owned businesses nationwide via the provision of reliable business banking, smooth payments, and cash flow management products – all of which enable access to working capital loans.
With the proper support, these enterprises can navigate the challenges of the modern world, ensuring their place in Nigeria’s economic history and future prosperity.
Tosin Eniolorunda is Group CEO of Moniepoint Inc.
