The future of many family-owned businesses in Ghana and across Africa is under serious threat due to poor succession planning and weak governance structures, the International Finance Corporation (IFC) has warned.
Speaking at the Environmental, Social, and Governance (ESG) Roundtable for Development Partners in Accra, IFC’s Acting ESG Advisory Lead for Africa, Moez Miaoui, highlighted succession planning as one of the most critical challenges confronting family enterprises today.
According to him, many family businesses struggle to survive beyond the founding generation because future leaders are often not adequately prepared to take over the reins when the time comes.
His remarks have reignited concerns about the long-term sustainability of family-owned enterprises, which form a significant part of Africa’s private sector and contribute immensely to employment and economic growth.
Unprepared Successors Creating a Dangerous Gap
Miaoui pointed out that one of the biggest weaknesses within many family businesses is the failure to intentionally groom the next generation of leaders.
He stressed that while successors may possess strong academic qualifications, many lack practical knowledge of the business and the leadership skills needed to successfully navigate increasingly competitive markets. “The fact that successors are not well prepared, not well educated about the business and do not have the necessary capabilities is a major challenge,” he said.
“In many cases, they may have the right educational background, but they do not know the business well enough because they have not been adequately prepared by the family, the business or the current leadership.”
Moez Miaoui
Industry experts have long argued that succession planning should begin years before leadership transitions occur. Without proper mentoring, exposure and strategic involvement in decision-making, successors often find themselves overwhelmed when they eventually assume leadership responsibilities.
The result can be internal conflicts, declining performance and, in some cases, the collapse of businesses that took decades to build.
Founders Struggling to Let Go
Beyond the challenge of preparing successors, Miaoui identified another major obstacle facing family businesses: the reluctance of founders to step aside.
Many entrepreneurs invest their lives into building their businesses and often view the enterprise as an extension of their identity. This emotional attachment can make succession planning extremely difficult.
“The other challenge is leaders who are not ready to let go because their identity and the business are one and the same. They find it very difficult to separate themselves from the business, making the transition process particularly challenging.”
Moez Miaoui
This reluctance frequently delays succession plans and creates uncertainty within organizations. In some instances, leadership transitions only occur when unexpected circumstances force a change, leaving businesses vulnerable to disruption.
Miaoui emphasized that successful succession requires a deliberate and structured process that prepares future leaders while creating governance frameworks capable of supporting a smooth transfer of authority.
Family Businesses Driving Africa’s Economy
Also speaking at the event, IFC Senior Country Officer, Yewande Giwa, highlighted the enormous contribution family-owned businesses make to economic development across the continent.
She noted that family enterprises are not only engines of growth but also major sources of employment, making their sustainability a matter of national and regional importance. “About 90 per cent of jobs in Africa come from the private sector, and family businesses are a significant part of that ecosystem,” she said.
The warning comes at a time when many African economies are relying heavily on private sector growth to create jobs, stimulate innovation and improve living standards.
With family businesses accounting for a large share of economic activity, ensuring their survival across generations has become a key development priority.
Beyond Profits: Building Communities and Creating Jobs
According to Giwa, family-owned businesses possess a unique advantage because they often think beyond immediate profits and focus on creating long-term value for families, employees and communities.
She explained that many family enterprises operate with a broader sense of responsibility, seeking to create opportunities for future generations while contributing to local development.
“When you are a family business, you do not just think about your bottom line. You think about how to influence your community, how to make a difference and how to create more jobs for your immediate family, your extended family and beyond.”
Yewande Giwa
This long-term perspective, she said, makes family businesses important partners in promoting inclusive economic growth and employment creation across Africa.
Governance Holds the Key to Longevity
As competition intensifies and business environments become increasingly complex, experts believe that strong governance structures will play a decisive role in determining which family businesses survive and which fail.
Giwa stressed that governance and succession planning remain central priorities for IFC’s work with family-owned enterprises.
“For us at IFC, family governance is very important because we want to see longevity and successful succession. We want to see businesses endure and continue creating value across generations.”
Yewande Giwa
The ESG Roundtable for Development Partners brought together key institutions within Ghana’s environmental, social and governance ecosystem, including the World Bank Group, GIZ, KfW, the United Nations Development Programme and other development partners.
The forum provided an opportunity for stakeholders to explore practical strategies for strengthening governance practices, improving business resilience and promoting sustainable growth across Ghana and the wider African region.
Without effective succession planning and strong governance systems, even the most successful enterprises risk seeing their legacy fade when leadership changes hands.
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