70% of wealth creation driven by family businesses – PwC

Sam Abu, Country and Regional Senior Partner, West Africa at PricewaterhouseCoopers (PwC) Nigeria has revealed that a staggering 70 percent of global wealth creation can be attributed to family businesses.

At the Family Business Summit 2024, themed ‘Family Business Legacy: Strategies for building and maintaining multigenerational wealth’, Abu said analysed data from a wide range of industries and regions, underscoring the pivotal role of family-owned enterprises in driving economic growth and innovation.

“Over 70% of wealth creation is generated from family business; In Nigeria, over 70 percent of small and medium scale enterprises are family businesses and these SMEs contribute close to 50 percent of Nigeria’s GDP,” Abu said.

A family business is a commercial organisation in which decision-making is influenced by multiple generations of a family, related by blood, marriage, or adoption, who has both the ability to influence the vision of the business and the willingness to use this ability to pursue distinctive goals.

Read also: Generational wealth: The story of Nigeria’s family businesses

Abu said that despite preserving family wealth, building structures, and mechanisms that ensure sustainability across generations, significant global disruptions affect businesses.

“Technological advancements such as Artificial Intelligence and digital transformations create challenges for business operations and transformation; Sustainability and ESG integrate major principles for businesses and Globalisation in new markets creates competition and vulnerability,” he said.

Abu added that the African economy faces unique challenges like fluctuating naira, inflation, exchange rate volatility, and high exchange rates but remains one of the fastest-growing regions in the world.

“Despite the challenging business environment, Africa has immense potential for investment and expansion. Family businesses in Nigeria struggle with balancing family values with governance and professionalism, family traditions with technology innovations, transitioning from owners to successors,” he said.

He concluded that the best way to overcome these challenges is to focus on strategies and innovations to build a better family business, and embrace technology and new mechanisms for generational wealth.