Why many African family businesses hardly survive after founders’ deaths

As a result, once that individual dies or becomes incapacitated, the business struggles to survive and, in many cases, collapses entirely.

Unlike in parts of Asia, where businesses are deliberately structured as enduring institutions meant to serve multiple generations, many African enterprises remain personality-driven.

Decision-making power, financial control and strategic direction are concentrated in one person, leaving the organisation exposed when that central figure is no longer present.

Speaking to The Citizen, a trainer in Entrepreneurial and Investment Skills at Mzumbe University, Dr Daudi Ndaki, said cultural and structural factors compound the challenge, particularly in family-run enterprises.

“In many cases, governance mechanisms are either very weak or do not exist at all. There are no clear boards, no separation between ownership and management, and no documented systems. When the owner dies, the organisation itself collapses instead of continuing to grow,” he said.

Dr Ndaki noted that Tanzania and other African countries are littered with examples of once-thriving enterprises that disappeared shortly after the death of their founders.

In many instances, he said, internal conflicts emerged, leading to the dismissal or marginalisation of capable managers due to gossip, family pressure or power struggles among heirs.

“These businesses often fail not because they are unprofitable, but because of disputes. Family members fight over control, assets or influence, and in the process, professionals who could have kept the business running are pushed out,” he explained.

He contrasted this with Asian family businesses, which are frequently designed with long-term continuity in mind. Founders, he said, tend to prepare their children and successors early, introduce clear management systems and prioritise the survival of the enterprise over short-term personal gain.

“In many Asian contexts, the business is viewed as a legacy for future generations. Children are introduced to operations at a young age, trained gradually and mentored to understand both the risks and responsibilities involved. This makes leadership transitions smoother,” Dr Ndaki said.

By contrast, he added, many African businesses are established primarily as vehicles for wealth accumulation by the founder, with limited attention paid to sustainability beyond their lifetime.

“This approach makes enterprises extremely fragile. Once the original leader departs, there is no shared vision, no clear leadership structure and no agreed rules of engagement,” he said.

Experts advise that family businesses should assign distinct roles and responsibilities to family members, limit overlaps that can fuel conflict and protect professional managers from arbitrary removal.

They also stress the importance of transparency and early, open discussions about succession to prevent disputes over inheritance, ownership and asset distribution.

Economist James Marandu warned that the consequences of poor succession planning extend beyond individual families, affecting employees and the wider economy.

“Lack of structured succession does not only threaten the long-term viability of a business, it also affects employment and overall economic stability. When a family business collapses, workers lose jobs, suppliers lose markets and communities suffer,” he said.

Mr Marandu noted that over-centralisation, where one person controls all decisions and information, leaves potential heirs ill-prepared to take over.

In many cases, financial records are poorly kept or deliberately hidden, and key relationships with customers, banks and suppliers exist only in the founder’s personal network.

“There is also a culture of secrecy around finances and operations. Even close family members may not know how the business actually works. When the founder dies, successors are left guessing, and this undermines continuity,” he said.

He added that introducing successors gradually into management allows them to understand operations, build confidence and gain practical experience.

“Waiting until children are adults, or until the founder is no longer able to run the business, often results in poor preparedness and unrealistic expectations. Succession should be a process, not an event,” Mr Marandu said.

An economics lecturer at the University of Dodoma, Dr Lutengani Mwinuka, emphasised that small-scale family businesses play a critical role in the socio-economic life of many communities, particularly in rural and peri-urban areas.

Traditionally, he said, parents involve their children in business activities during school holidays or peak seasons as a way of passing on skills, work ethics and financial discipline.

“These practices help children understand trade processes, basic accounting and the value of family resources. They also instill a sense of responsibility and ownership,” Dr Mwinuka said.

However, he observed that in recent years, many children show limited interest in family enterprises, often lacking curiosity or motivation to engage meaningfully in business activities.

“Sustaining a business requires strategic approaches that foster participation and long-term commitment. When children are actively involved and can see the relevance of these businesses to their own futures, they are more likely to develop a positive orientation towards entrepreneurship,” he said.

Dr Mwinuka added that many parents avoid disclosing sources of income or the true scale of their operations, sometimes out of fear, mistrust or a desire to maintain control. In some cases, business partners also prefer to keep operations private, further limiting transparency.

“This lack of openness reduces children’s understanding of the full business cycle and its economic significance. Without that understanding, it is difficult for them to feel connected to the enterprise or motivated to sustain it,” he said.

By comparison, Dr Mwinuka noted, in some Asian communities, children are encouraged to collaborate, learn collectively and grow together within family businesses, reinforcing a sense of shared destiny and mutual accountability.

Experts agree that without deliberate reforms in governance, leadership development and succession planning, many family enterprises across Africa risk disappearing within a generation.

The loss, they warn, will not only be measured in failed businesses, but also in lost jobs, weakened local economies and missed opportunities for sustainable wealth creation.

As Tanzania continues to promote entrepreneurship and private sector-led growth, analysts say strengthening the resilience of family-owned businesses should be a priority—starting with a shift from personality-driven enterprises to well-governed institutions built to endure beyond their founders.