SUCCESSION PLANNING AS A STRATEGY FOR SUSTAINING FAMILY BUSINESSES IN NIGERIA
BY
CHIEF EMEKA P. EZEKWE
08037111737
Abstract
This study investigates succession planning as a key strategy for sustaining family businesses in Nigeria. Family-owned enterprises contribute significantly to economic development and job creation in the Nigerian economy. However, the lack of succession planning in family-owned businesses is a major cause of their short lifespan beyond the first or second generation. As we may be aware already, small and medium enterprises, SMEs, a category to which a lot of family businesses fall into, remain the catalyst for economic growth in developing countries, especially in Africa. In Nigeria, small businesses create jobs and contribute to economic growth by spreading jobs and higher living standard all over the country-ranging from rural to urban areas alike and to both skilled and unskilled workers. They also account for a very large percentage of people in formal employment. By offering a variety of products and services, family businesses like other SMEs make Nigeria’s economy more resilient and less vulnerable to downturns.
However, for family businesses to continue to contribute to economic development, they must continue to exist and pass from one generation to another. In Nigeria as in most African countries, succession in business implies a relative or family member taking over a business from a retiring, incapacitated or dead relative. In reality, most businesses do not survive the owner because there is always no succession or transition plan. Also, the idea of ‘partnership’ is not a common or popular practice as most people in Nigeria would prefer to assume total control of their business and in most cases little attention is given to sustainability when the founding owner is no more.
If it is true that the SMEs in the private sector is the engine room of growth of any national economy and also that the private sector is significantly dependent on family-owned businesses, then there is therefore a real challenge of how to encourage the survival and growth of the family businesses beyond the generation of their founders.
This paper explores the challenges, benefits, and practices surrounding succession planning in Nigerian family businesses. It adopts a qualitative approach, drawing from relevant literature and theoretical models such as agency theory and stewardship theory. The findings reveal that poor governance, cultural attitudes, and lack of formalized structures hinder succession planning. Recommendations include early succession planning, leadership development, and institutionalization of family governance mechanisms.
Keywords: succession planning, family businesses, sustainability, Nigeria, generational transfer
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