Ghanaian family businesses face significant risks due to inadequately prepared successors, according to the International Finance Corporation (IFC). Many family enterprises fail during transitions because new leaders lack the necessary knowledge and experience.
Moez Miaoui, the IFC's Acting ESG Advisory Lead for Africa, stated this at an Environmental, Social, and Governance (ESG) Roundtable in Accra. He emphasized that a lack of deliberate effort to equip the next generation with leadership capabilities is a major challenge. This problem is compounded by a reluctance among founders to relinquish control of their businesses.
This issue is critical for Ghana's economy, where family businesses play a vital role. They contribute significantly to economic development and job creation. Across Africa, family-owned enterprises account for about 90% of all private sector jobs. Their long-term perspective on community impact makes them key partners for inclusive growth.
Miaoui highlighted the specific challenge: "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 further explained that even with a strong educational background, successors might not fully understand the business operations. This is due to insufficient preparation by the family, the business, or current leadership.
Founders' attachment to their businesses also hinders smooth transitions. Miaoui noted, "The other challenge is leaders who are not ready to let go because their identity and the business are one and the same." This merging of personal identity and business makes the transfer of leadership particularly difficult.
A structured approach is essential for successful succession. This includes preparing future leaders and establishing robust governance mechanisms. These measures ensure a smooth transfer of leadership and responsibility.
Yewande Giwa, IFC Senior Country Officer, underscored the importance of family businesses in economic development. She explained that these firms focus beyond just profits. They aim to create opportunities for their communities and support broader economic development. "When you are a family business, you do not just think about your bottom line," Giwa said. She added, "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."
The IFC views strong family governance as crucial for business longevity. They seek to ensure businesses endure and create value across generations. The ESG Roundtable brought together key institutions like the World Bank Group and GIZ. They discussed strategies for strengthening governance practices and promoting sustainable business growth.
Decision-makers must prioritize supporting family businesses in developing structured succession plans. This will safeguard their long-term economic contributions. Investors and financial institutions will closely watch how these businesses adapt. Effective succession planning will ensure continued stability and growth in Ghana's private sector.