Family Businesses in Kenya in Robust Health – PwC

A survey carried out by PwC has revealed that family businesses in Kenya are in robust health, with revenues expected to continue growing for the vast majority (82 percent), compared to 84 percent globally.

The survey, dubbed, PwC 2018 Family Business Survey, was conducted in late 2018 and involved key decision makers in family businesses in 53 countries including 46 business leaders from Kenya. The report highlights specific trends, challenges and opportunities for family businesses.

According to the findings from the survey, 30 percent of Kenyan family business respondents were hopeful that growth will be ‘quick’ and ‘aggressive’ in 2019 as compared to only 16 percent of respondents globally.

74 percent of respondents in Kenya experienced revenue growth in the last 12 months before the survey was conducted, compared to 69 percent globally. This represents a slight improvement from the 71 percent in Kenya and 64 percent globally who reported revenue growth over the same period PwC conducted the survey in 2016.

According to PwC, these findings echo what PwC found in the private company cut, in the global 2018 CEO Survey, where a solid majority of private company chief executives said they were somewhat confident or very confident about their company’s growth prospects in the next 12 months.

Challenges Facing Kenyan Family Businesses

The top five challenges that Kenyan family businesses face were; corruption (72 percent), accessing the right skills and capabilities (52 percent), prices of energy and raw materials (52 percent), increasing international competition (52 percent) and the need to innovate to stay ahead (50 percent).

“This publication, based on conversations with family business owners, is an effort to share insight about some of the trends affecting family businesses in Kenya. Family businesses and private companies contribute exceptional value to the economy in Kenya and the East Africa region and our publication focuses on their purpose and values as well as their challenges and opportunities going forward,” said Peter Ngahu, Regional and Country Senior Partner, PwC, East Africa Region.

Despite these challenges, family businesses have proven to have a competitive advantage in disruptive times.

Both globally and in Kenya PwC’s survey respondents shared concerns about new market entrants and their potential to collapse established businesses.

However, fewer businesses in Kenya (35 percent) feel vulnerable to digital disruption compared to the 2016 survey (40 percent) results. This result stands in contrast to the global survey, where 30 percent of global respondents feel vulnerable compared to 25 percent in 2016.

“In a fast-changing and challenging business environment, family businesses in Kenya need to be able to think beyond the immediate demands of the day-to-day business and develop an informed view of the future. Digital technology is disrupting business; sustainability is becoming key to the conduct of business; winning trust is more important than it has ever been and millennials present an enduring demographic change,” said Michael Mugasa, Partner PwC Kenya and the firm’s Private Company Services Leader.

The specific technological advances cited as challenges by Kenya survey respondents include cybersecurity (39 percent) and digitization (30 percent) and 67 percent of Kenya respondents are aiming to take significant steps in terms of digital capabilities in the next two years, compared to 57 percent of global respondents.

“Our survey shows that Kenya’s family businesses may feel more vulnerable, overall, than their global counterparts but they are investing in digital capabilities – perhaps helping them to feel more confident about the changes ahead,” said Mr. Mugasa.