Family businesses in East Africa may be impeding their own growth, as revealed by a recent PricewaterhouseCoopers (PwC) study. The findings show that merely 12% of family-owned enterprises in the region prioritize research and innovation, which could hinder their ability to recover economically in the post-COVID era.

The study underscores a lack of emphasis on innovation among East African family businesses, a factor that poses challenges for their recovery from the economic constraints imposed by the COVID-19 pandemic. Specifically, only 46% of the surveyed family-owned firms in the region claim to possess strong digital skills, indicating a significant gap in adapting to the ongoing trend of corporate digitalization.

According to the PwC study, East African family-run enterprises have not given due importance to research and innovation as key drivers for overcoming the economic challenges brought about by the COVID-19 pandemic. The study reports that a mere 12% of the sampled family-owned firms in the region have made substantial investments in innovation or research.

Additional insights from the research reveal that, beyond the issues of inadequate innovation and research, family-owned businesses are not fully embracing corporate digitalization, with only 46% of them asserting proficiency in digital skills.

Despite these obstacles, family-owned firms in the region express high growth aspirations for the next two years, with 75% anticipating growth, as reported by the East African news publication. The survey reflects a sense of optimism among these businesses, highlighting their resilience in the face of significant challenges and disruptions.

The study further indicates that family businesses in the area are overcoming financial difficulties, with 64% reporting growth and only 13% reporting a decline in sales. This marks a substantial shift from the previous year, where 46% reported growth and 31% reported a decrease in sales, primarily attributable to the impact of the Covid-19 epidemic.

Conducted between October 2022 and January 2023, during a period when global conditions were showing signs of recovery from the effects of COVID-19, the study covers family businesses in Kenya, Tanzania, Uganda, Rwanda, and Ethiopia.

The impacts and implications

The impacts include challenges in innovation and digital adaptation, a positive outlook for growth, and a shift in financial performance compared to the previous year. These insights can guide family businesses, policymakers, and stakeholders in addressing specific areas for improvement and capitalizing on opportunities for growth and resilience.

Limited Emphasis on Research and Innovation:

Impact Family businesses in East Africa face challenges in terms of growth and resilience due to a lack of prioritization of research and innovation.

Obstacles to Post-COVID Economic Recovery:

The insufficient emphasis on innovation poses challenges for family businesses in recovering from the economic constraints brought about by the COVID-19 pandemic.

Digital Skills Gap:

The limited possession of strong digital skills (reported by only 46% of surveyed firms) indicates a potential obstacle to adapting to the ongoing trend of corporate digitalization.

Optimism Despite Challenges:

Family-owned firms in East Africa demonstrate resilience and optimism, with 75% expressing high growth aspirations for the next two years. This positive outlook reflects a determination to overcome challenges.

Financial Performance and Growth:

Despite the obstacles, a significant portion (64%) of family businesses report growth, indicating an ability to navigate financial difficulties. This contrasts with the previous year's challenges, primarily linked to the COVID-19 epidemic.

Shift in Sales Performance:

The study highlights a substantial change in sales performance, with only 13% reporting a decline compared to the previous year. This shift suggests a recovery from the economic downturn caused by the pandemic.

Regional Variances:

The study covers family businesses in Kenya, Tanzania, Uganda, Rwanda, and Ethiopia, suggesting that the impacts and challenges are region-specific. Understanding these variations can help tailor strategies to address specific regional dynamics.

Timeframe Consideration:

The study was conducted between October 2022 and January 2023, indicating that the findings reflect a period when global conditions were showing signs of recovery. This timeframe is crucial for interpreting the context of the study results.