Family-owned businesses account for more than 70 per cent of small and medium-sized enterprises (SMEs) in Nigeria, highlighting their critical role in employment, entrepreneurship and private-sector growth, a new report by PwC has revealed.
The report said family enterprises constitute a major part of Nigeria’s business ecosystem, with many growing from small family-run ventures into larger commercial operations across different sectors of the economy.
PwC, however, warned that the long-term survival of many family businesses could be threatened by challenges including poor succession planning, weak governance structures, limited access to finance and difficulties in transferring ownership and management between generations.
According to the report, the dominance of family-owned enterprises within the SME sector means that challenges affecting their sustainability could have wider implications for Nigeria’s economy.
The firm said many family businesses struggle to separate family interests from business decisions, particularly as their operations expand and require more professional and formal management structures.
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PwC stressed the need for family-owned businesses to strengthen their governance systems and develop clear succession plans to ensure continuity beyond their founders.
The report noted that institutionalising business processes could help family enterprises become more resilient, attract investment and maintain competitiveness in an increasingly challenging Nigerian business environment.
It also called for greater attention to the specific needs of family-owned businesses from policymakers, financial institutions and other stakeholders, particularly in access to capital, capacity development, governance and succession planning.
The firm said effective succession planning was particularly important because the transition of leadership and ownership from one generation to another could determine whether a family enterprise survives or collapses.
PwC noted that Nigeria’s SMEs generally remain important to the economy because of their contribution to job creation, household incomes, entrepreneurship and economic diversification.
With family-owned enterprises making up more than 70 per cent of the country’s SME base, the firm said their performance and longevity would have significant implications for the wider private sector.
The report urged family businesses to begin preparing early for leadership transitions and establish structures capable of sustaining operations beyond the founding generation.
It further emphasised that separating ownership, family relationships and day-to-day business management could help enterprises make more effective decisions as they expand.
