Governance of African family businesses: preparing transmission to perpetuate heritage

Family governance: an existential challenge for African groups

Family businesses represent a considerable share of GDP and employment in sub-Saharan Africa. Yet they face a major structural challenge: intergenerational transmission. Global statistics are alarming — only 30% of family businesses successfully pass to the second generation, and fewer than 12% to the third.

In Africa, this challenge is amplified by specific cultural factors: the frequent confusion between personal and business assets, extended family solidarity obligations, difficulties separating the roles of owner, manager and employee. These factors, if not managed proactively, can threaten the survival of the business at the time of transmission.

Family governance tools

Robust family governance rests on a set of complementary instruments:

• The family charter: founding document that defines the values, vision and rules of the game between family members who own the business
• The shareholder agreement: legal agreement governing the rights and obligations of family shareholders, share transfer rules and conflict resolution mechanisms
• The family council: governance body dedicated to the family, distinct from the board of directors, to manage family matters without disrupting corporate governance
• The succession plan: structured process for identifying, preparing and designating the successor to the company's leadership