Multinational professional services company KPMG Private Enterprise has released its third edition of the 'African Family Business Barometer', which shows that the pandemic has had an impact on the confidence levels of respondents and that there is uncertainty concerning the economic prospects for family businesses over the next 12 months.

The barometer was undertaken in collaboration with the Nelson Mandela University Family Business Unit and the Africa CEO Forum during the Covid-19 pandemic and received responses from family businesses in nine countries across Africa.

Despite the uncertainty, these family businesses remain optimistic for the future, and in this year’s barometer, two new important topics – entrepreneurial orientation of African family businesses and the importance they place on socioemotional wealth – were assessed.

“Family businesses face many challenges, and the pandemic has tested their resilience, innovation and leadership during a difficult period. Several of these challenges have remained the same compared to the previous barometer which focused on improving turnover and profitability, accessing finance, as well as dealing with volatile currency and political uncertainties,” says KPMG South Africa partner and private enterprise head Alan Barr.

He explains that family businesses have traditionally focused on the long term and are risk-averse, but the new reality and way of conducting business as a result of Covid-19, has resulted in families reassessing their purpose as well as reaffirming their values and the role they play in the wider community.

In addition, he notes that there is an accelerated focus on succession and the role of the next generation in governance, ownership and leadership, and it is therefore critical that a detailed succession plan be put in place to ensure adequate preparation for an uncertain future.

This uncertain future is exacerbated by the technological and digital explosion and requires that families become more entrepreneurially oriented in their business operations. 

“While the immediate future is uncertain, African family businesses are well placed for the recovery of their respective economies [owing] to their natural characteristics – patient capital, a clear sense of purpose and community and a long-term focus on the future,” says Barr, who notes that a key change is that African family businesses are looking to diversify their businesses to continue growing in this rapidly changing global and African business environment.