Overview: A Quiet yet Severe Crisis for Uganda’s Family Firms
Uganda’s economy is heavily shaped by family-owned enterprises. From small shops to mid-sized manufacturers, these businesses are the backbone of many communities. Yet new research by EPRC highlights a troubling reality: fewer than 10% of family-owned companies in Uganda survive beyond the founder’s tenure. As the country seeks inclusive growth and job creation, understanding why these firms struggle to pass the baton is essential for policymakers, business leaders, and aspiring entrepreneurs alike.
Why the Generational Gap is Widening
Several factors contribute to the high stake of succession in Uganda’s family businesses. First, many founders operate with a “do-it-all” mindset, handling strategy, operations, and finance without formal governance structures. This can create bottlenecks when leadership passes to the next generation. Second, access to capital remains a persistent barrier. Banks and investors often demand rigorous governance and proven track records, which family firms may lack as they age. Finally, shifting cultural expectations and inadequate succession planning leave potential heirs unprepared to lead or to reinvent the business for a changing market.
Governance and Professionalization
Without formal governance—such as a board of directors, written succession plans, and clear ownership rules—families risk internal conflict that can derail strategic continuity. Professionals warn that disagreements over shareholding, nepotism, or conflicting visions can erode trust and impede timely leadership changes. Implementing advisory boards and involving non-family executives can help introduce objective decision-making, financial discipline, and external accountability.
Practical Steps for Improving Longevity
Several actionable strategies can help Uganda’s family firms increase their odds of surviving generations:
- Strategic succession planning: Start early. Define who will take over, what competencies are needed, and how ownership will transition. Documented plans reduce uncertainty and delay during leadership changes.
- Formal governance structures: Establish a board or advisory council with independent members to provide oversight and strategic direction.
- Financial literacy and access to capital: Build robust financial reporting and explore diversified financing, including local venture funds or development financial institutions that support SMEs.
- Professional management: Hire seasoned managers to complement family leadership and ensure business continuity beyond the founder’s tenure.
- Conflict resolution mechanisms: Create clear processes for resolving disputes and aligning family objectives with business priorities.
What This Means for Uganda’s Economy
When family businesses fail to transition, communities lose jobs, skills, and local investment. Conversely, well-governed succession can create durable employers that contribute to long-term economic resilience. Policymakers can support this transition by offering targeted training programs, easy access to mentoring networks, and incentives for firms that implement formal governance frameworks. Private sector champions can share best practices and build a culture where succession is seen as a growth phase rather than a disruption.
Looking Ahead
The alarming statistic—less than 10% of family-owned firms lasting beyond the founder—should not be viewed as an inevitability. With deliberate planning, professional governance, and broader access to capital, Uganda’s family businesses can pass their legacies to the next generation while sustaining momentum for jobs and local prosperity.
