- East Africa family businesses need to focus on new priorities to secure their legacy, and to build trust.
East African family businesses have seen strong performance over the last financial year with 64% experiencing growth compared to 46% in 2021.
This key finding from PwC’s East Africa Family Business Survey 2023 confirms that family businesses are resilient and keep rising above geopolitical challenges.
The report covers the East Africa countries of Kenya, Tanzania, Uganda, Rwanda and Ethiopia.
We surveyed 95 family business owners to gauge whether current leaders and the next generation of family businesses are prioritising the most key issues to build trust and secure their legacy.
“Considering the optimism broadly shared amongst many family business owners, now is an opportune time to focus on one of the key strengths of East Africa’s family enterprises: trust,” says Michael Mugasa, Partner and Leader, Private Business Services, PwC East Market Area. “ While family businesses have long relied on the trust premium they’ve built for ensuring strong relationships with key stakeholders like their customers, our survey showed many organisations have been slow to adapt to the evolving nature of trust today.”
Most East African family businesses believe that it is essential to be trusted by customers, employees and family members.
Among those who consider trust among each group important:56% are fully trusted by customers, 47% are fully trusted by employees and 77% are fully trusted by family members, this is slightly higher than the global results respectively.
Sunny Vikram, Partner, Tax and Private Business Service, PwC Kenya, says: “Our East Africa Family Business survey shows that most family businesses set goals and targets for customer satisfaction and growth but only a minority set goals and targets for diversity and inclusion and social impact.
Their strategies end up focusing on business outcomes demonstrated through financial metrics and growth outcomes from an expansion perspective.
Such a focus can limit the potential arising from other opportunities in the future.” The notion of how to build trust in business is changing – fundamentally and rapidly.
For everyone –including customers and employees – issues like environmental, social, and governance (ESG) and diversity, equity and inclusion (DEI) have become litmus tests for trustworthiness.
Transforming for Future Success
Insights from the survey show that growth aims in East Africa are ambitious. When we asked family business owners what their top five priorities are for the next two years, expanding into new markets and increasing customer loyalty was at the top of the list.
Issues related to strategic acquisitions, the business’ carbon footprint and social responsibility tend not to be key priorities.
Part of mapping business’ forward-looking trajectory is considering the pertinent matter of sustainability, and under the new trust formula, strong environmental, social and governance (ESG) credentials are essential.
An expanded audience of stakeholders, including the general public and younger generations such as Millennials and Generation Z have higher expectations above and beyond standard goals like customer satisfaction and growth.
Not only do they expect excellent products and services delivered by quality brands, but increasingly prioritise brands with a defined purpose, commitments to ESG and diversity, and transparent communications.
Family businesses need to be more transparent, and take a stand on matters that are important to the public.
PwC research shows a strong correlation between trust and profitability, and family businesses will need to transform to ensure they remain trusted by customers, employees and family members.
Given some of these findings, family businesses not only need to make transformative changes to build trust, but have to make their efforts visible and communicate them clearly to their stakeholders.