The survival rate of Ugandan family businesses is alarmingly low, with fewer than 10 percent continuing beyond the founding generation, according to a recent study by the Economic Policy Research Centre (EPRC). Experts are concerned that without early succession planning and professionalisation, many family-owned businesses risk collapse, threatening both family wealth and national economic growth.
Family-owned businesses contribute over 70 percent of Uganda’s GDP (PwC, 2023) and form the largest share of Micro, Small, and Medium Enterprises (MSMEs) in the country (IFC, 2021). Despite their significant role in the economy, most remain first-generation ventures, unable to successfully pass leadership to the next generation.
Challenges in Succession Planning
EPRC Research Fellow Linda Nakato, presenting findings during a high-level stakeholders’ meeting last year, noted a striking 4:1 ratio of first-generation to multi-generational family businesses in Uganda. “This demonstrates that the majority of family businesses are young and fragile, with only a small fraction—around 10 percent—able to survive long enough for the next generation to take over,” she said.
Experts agree that founders need to involve interested family members in the daily operations of their businesses early on. Hiring professional managers can also ensure operational efficiency and business continuity. Clear succession plans, well-defined roles, and structured knowledge transfer are essential to safeguard these enterprises for future generations.
Challenges Facing Ugandan Family Businesses
Ugandan family businesses face several unique hurdles that hinder their longevity:
- Difficulty in implementing succession plans
- Limited professionalisation and institutionalisation
- Lack of interest from younger family members
- Cultural biases favoring sons over daughters
- Founder dominance and complexities in polygamous families
- Skills gaps in the labour market
- Limited formal guidance on managing family dynamics
Policy and Regulatory Challenges
Experts also point to issues in the policy and regulatory environment that complicate the survival of family businesses:
- Complex taxation, including PAYE, VAT, ground tax, and signpost tax
- Unpredictable policy changes disrupting business planning
- Limited tax incentives for indigenous businesses
- Corruption in tax enforcement
- Inadequate tax education and sensitisation
- High interest rates and inconsistent regulation raising operational costs
- Unfair competition between formal and informal actors
Broader Implications for Uganda’s Economy
Sarah Ssewanyana, EPRC executive director, highlighted the broader implications of family business fragility. “Despite their significance, many family businesses fail to transition beyond the founder generation,” she said in a statement read by EPRC Director of Research Ibrahim Kasirye. “Without proper succession plans, sound governance systems, and financial procedures, most family-owned businesses collapse at the first sign of crisis—whether due to market shocks or the sudden loss of a founder. This fragility is not just a business problem; it is a development concern.”
The Way Forward
Experts urge government and development partners to design targeted training programmes focused on succession planning, governance, and managing family dynamics. Strengthening institutional capacity and encouraging professionalisation are crucial to ensuring that Uganda’s family businesses can survive, grow, and continue contributing to the national economy for generations to come.
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Looking Ahead
The future of Ugandan family businesses depends on their ability to plan for succession and professionalise their operations. By addressing the gaps in governance and management, Uganda can strengthen its family-owned businesses and secure their long-term success. This will not only protect family wealth but also contribute to the broader economic growth of the nation.
