It is no gainsaying that family-owned businesses are the vital force of the Nigerian economy, playing a crucial role in communities across the country. Whether it’s a small corner store selling everyday goods or a sprawling factory, these businesses of varying sizes have a profound impact on Nigeria’s economic landscape and society. Across Nigeria, successful companies like GIG Group and FCMB Group are thriving under the leadership of individuals like Chidi Ajaere and Ladi Balogun respectively, who have taken over from their fathers and are continuing to build on their legacies. This trend is truly inspiring to see.
There is also the Dantata organization, which stands out as one of the rare family conglomerates still operating in Nigeria. It has successfully expanded its operations into the oil, real estate, and Construction industries, generating hundreds of millions of dollars in revenue. In addition to the prominent enterprises and conglomerates, there are numerous tales of success in the informal sector, flourishing in rural areas away from the bustling metropolises. Alhaja Betterlife, who is based in Ibadan, Oyo State, has achieved success by inheriting her mother’s food service business. This trend is not limited to Nigeria, as family-owned companies are believed to make up 70 percent of the global GDP. In Nigeria, these family businesses are known for their resilience, a trait that is essential for survival in this competitive market.
Education, healthcare are the top sectors for family-run businesses.
These businesses have shown resilience in facing economic and political challenges, often choosing to forgo outside Investors and making personal sacrifices to ensure the continuity of their operations. While specific numbers are scarce, statistics from 2018 indicate that the Education and healthcare industries emerged as the top sectors for family-owned businesses in Nigeria, collectively generating revenues exceeding $1 billion. On a global scale, family-owned businesses tend to specialize in industries like food, fashion, and mobility. This trend indicates that Nigerian family enterprises have the opportunity to explore new avenues for expansion.
Young people in Nigeria can often be seen acquiring business skills from a family member or guardian while traveling. Many new entrepreneurs are drawn to starting a business in the same industry as their parents, while some open businesses that complement or expand upon the family’s primary enterprise. By expanding into different ventures, the primary business can utilize its strong brand reputation and positive social impact to succeed. This structure guarantees that in difficult times, the family-owned conglomerate can assist struggling sectors of the portfolio with profits from the bustling ones.
Family-run enterprises often have healthier cash flow.
Key to this is that family-run businesses tend to have a surplus of trust, fostering strong relationships with both employees and customers. Research indicates that customers are more inclined to trust family-owned businesses compared to other types of enterprises, with a 12 percent higher level of trust. Additionally, data suggests that family-run enterprises often have healthier cash flow, enabling them to reinvest in the growth and development of the company. Family businesses rely heavily on this key element for their success, as they need to maintain profitability over multiple generations while also maintaining a stable cash flow.
Moreover, Nigerian family-owned businesses have a long history of overcoming challenges and creating a lasting impact. With a contribution of over $200 billion to the economy, these businesses play a crucial role, representing half of all businesses in Nigeria. The country is known for having the largest number of influential family-owned businesses in West Africa. A report by Asoko Insight, a research firm, has highlighted the presence of Nigerian businesses within a pool of more than 500 companies surveyed in the Economic Community of West African States (ECOWAS).
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As per the research, titled “West Africa’s Family-Owned Business Landscape”, Nigerian businesses make up the largest portion at 36 percent. Senegal, Ghana, Mali and Côte d’Ivoire combined make up 42.5 percent , while the remaining ECOWAS markets account for 21.5 percent. Nigeria holds significant sway with 10 percent of the surveyed companies operating in the oil and gas industry, closely trailing consumer goods and Retail businesses at 11 percent. The report highlighted these companies based on their market presence, revenue, and employment size.