Family-owned businesses across Africa risk failing to survive beyond the founder generation unless they strengthen succession planning and corporate governance structures, the International Finance Corporation (IFC) has warned.
Speaking at a Family Governance Workshop in Accra, IFC ESG Advisory Lead for Africa, Moez Miaoui, said succession remains the single biggest challenge confronting family businesses worldwide, with the problem particularly pronounced in Africa where many firms struggle to transfer leadership successfully from founders to the next generation.
He explained that founders of family businesses often lead their companies for between 20 and 30 years, making early and structured succession planning essential for long-term business continuity.
“In any family business setting, succession is the most critical challenge that the family will face and the business will face,” Miaoui said.
According to him, many successors are inadequately prepared to assume leadership because they lack sufficient exposure to the business, practical experience and the skills required to manage complex enterprises.
At the same time, he noted that many founders find it difficult to relinquish control because their personal identity is closely intertwined with the businesses they established.
“The successors are not prepared enough, not well educated, not well prepared and do not know the business well enough. Leaders are not ready to let go because their identity and the business are one and the same,” he stated.
To address these challenges, Miaoui called for stronger governance systems within both the family and the business, including the establishment of family constitutions, family councils and formal decision-making mechanisms.
He explained that family councils provide structured platforms for family members to discuss succession planning, leadership development, education of future generations, philanthropy and shared family values, while remaining distinct from the day-to-day management of the business.
“The family council is for a family what a board of directors is for the business,” he said.
Miaoui further stressed that effective family businesses require governance structures that clearly define the roles of the family, ownership and business management.
He said balancing these “three circles” enables businesses to make coordinated decisions, reduce conflicts and ensure continuity across generations.
Also addressing participants, IFC Senior Country Officer Yewande Giwa described family businesses as the backbone of Africa’s private sector, noting that about 90 percent of jobs on the continent are created by private enterprises.
She said family businesses play a unique role in economic development because they often pursue broader social objectives alongside profitability, including job creation and community development.
“Most family businesses have the right intentions. The challenge is putting the right structures in place to improve productivity, strengthen governance and expand their impact. With strong governance frameworks, family businesses can build lasting legacies that endure from one generation to the next,” she said.
Giwa added that family-owned enterprises typically focus not only on financial returns but also on improving the welfare of the communities in which they operate.
“When you are a family business, you do not just think about your bottom line. You are thinking about how do I influence my community, how do I make a difference, how do I create more jobs,” she said.
Despite their significant contribution to economic growth, she observed that many family businesses fail to outlive their founders because of inadequate governance systems and poor succession planning.
She therefore urged business owners to establish boards of directors or advisory committees and ensure that leadership appointments are based on competence, qualifications and experience rather than family relationships alone.
“Even though it’s a family business, there must be qualifications in place for the people who are running the business,” Giwa said.
The IFC believes strengthening governance frameworks and succession planning will be essential to helping family businesses remain competitive, preserve family wealth and continue driving employment, investment and economic growth across Africa for generations to come.
