EA’s family businesses face challenges, study says

Sunday November 19 2023

An open business shop along Moi Avene in Nairobi, Kenya on July 12, 2023. PHOTO | NMG


East African family-run businesses have not prioritised research and innovation in a move to help them recover from the post-Covid-19 economic challenges.

The latest survey by consultancy firm PricewaterhouseCoopers (PwC) shows that only 12 percent of the sampled family-owned businesses in the region have put significant focus on, investment and resources into innovation or research.

In addition to lack of innovation and research, the survey shows that the on-going wave of business digitalisation that is sweeping across the region is yet to take root in family-owned businesses, with only 46 percent of them saying they have strong digital capabilities.

Read: Kenya, Tanzania and Rwanda rank top for rapid digital growth

Family-owned businesses in the region have strong growth ambitions over the next two years, with 75 percent them saying they expect to see growth.

“There is great optimism even in the face of significant challenges and disruption, which speaks to the resilience of these family businesses and their owners, stakeholders and communities,” the survey says.


“The optimism of a post-Covid world has been sorely tested by geopolitical turmoil including the war in Ukraine and the recent outbreak of violence in Israel and Palestine.”

According to the survey, family businesses in the region are rising to the economic challenges with 64 percent experiencing growth with only 13 percent seeing a sales reduction.

This is a significant departure from the 46 percent who reported experiencing growth and 31 percent sales reduction in 2021, largely as a result of the Covid-19 pandemic.

The survey, which covers Kenya, Tanzania, Uganda, Rwanda and Ethiopia, was conducted between October 2022 and January 2023 when the world had finally emerged from the impact of Covid-19 with a renewed sense of hope for the future.

Read: EA economies’ growth stronger than peers amid global crises

War in Ukraine

Last year, the regional economies experienced the effects of the invasion of Ukraine — with all the human and economic implications such as spiraling inflation, supply chain shocks and a looming energy crisis.

The key priorities facing East African family businesses over the next two years are expanding into new markets and increasing customer loyalty.

This year’s survey findings include over 2,000 responses from 82 territories, 95 who were from Eastern Africa.

The survey notes that while most businesses believe that it is essential to be trusted by customers, employees and family members, only 56 percent and 47 percent of the businesses believe that they are fully trusted by their customers and employees respectively.

According to the survey, 56 percent of the businesses said they are fully trusted by customers, 47 percent are fully trusted by employees while 77 percent are fully trusted by family members.

Read: Kenya small savers dump banks for mobile wallets

In Kenya, family businesses experienced solid financial performance in 2022 with 70 percent of the businesses achieving growth and only 18 percent reduction in sales.

This compares with 52 percent growth and 28 percent sales reduction in 2021.

While Kenyan family businesses leveraged on trust from family members and their loyal customers, they still have an ambition for growth with over 82 percent expecting to grow compared to the 77 percent from global counterparts.

The key priorities for Kenyan family businesses over the next two years are territory expansion and increasing customer loyalty, while their immediate focus is customers, shareholders and investors.