Nigeria’s NextGeners say driving family business growth by adopting technologies and upskilling is a top priority post the pandemic.
These findings emerged from the recent PwC’s Global NextGen Survey 2022. The survey results are from the responses of over 1000 NextGen members, in family businesses, across 68 countries globally.
PwC Nigeria organised an event to launch the report. Some of Nigeria’s NextGeners attended the event and were panellists. They include Seun Jolayemi, Executive Director, Special Projects, Daily Need Group; OluRanti Bankole, Head of School – Greensprings School, Ikoyi Campus; Tomi Otudeko, Head, Corporate Services, Honeywell Group; and Cosmas Junior. Maduka, Executive Director – After Sales / Special Duties, Coscharis Motors Plc. Other panellists included Guy Vande Vyvere, Managing Partner VYBROS Invest BV, Esiri Agbeyi, Partner and Family Business Leader and Ade Ogunsanya, Associate Director, PwC Nigeria.
The survey findings identified focus areas that family businesses need to pay attention to if they must succeed today and beyond. Some of these are business growth and expansion beyond borders, sustainability focusing on climate change, wealth management through family offices, succession planning and nextgen education through responsible stewardship. Over half however highlighted the gender gap that continues to exist in Nigerian family businesses.
Business growth through digital is a top priority
Over half of Nigerian NextGeners see business growth and expansion as a key priority over the next two years. This is followed by expanding into new sectors or markets (43%) and adopting new technologies (43%). Digital upskilling ranked higher as a priority in Nigeria (42%) over the global statistics (39%), highlighting the digitalisation gap to be bridged post the pandemic.
Sharing insights on the survey report, Esiri Agbeyi, Partner and Family Business Leader, noted that:
“Family businesses are unique as they have to deal with the financial elements of growth and emotional elements which can be tough but also be their leverage. Nigeria’s NextGens are keen to play their part but cite resistance from the current generation to hand over. Regardless, the families agree that growth is a priority to create value for future generations. The NextGens also recognize that it will take new approaches and skills after the pandemic and with the threat of climate change. NextGens will have to develop their blueprint for success and push boundaries to challenge years of established thinking.
Nigeria’s NextGeners also reported an increased need for financial education over
leadership. This is interesting because findings show that 74% of them already have education in Business and Finance-related areas. Therefore, not prioritising the need for training in responsible leadership and other areas may be a blind spot that NextGeners need to look out for.”
Sustainability – a fresh perspective from NextGens
Both generations are focused on growth, but only half of the current generation believe their business has a responsibility to fight climate change and its consequences, compared to the nearly three-quarters of NextGens.
NextGeners see the vital link between environmental, social, and governance (ESG) concerns and growth. 69% of Nigeria’s NextGeners say climate change and sustainability are at the heart of what they do. NextGeners say they expect to be involved in increasing the business’ focus on investments for sustainability in the future, but only 40% are doing this now.
Esiri Agbeyi said:
“Family businesses need to leverage their knowledge of how ESG dimensions of performance may create or erode enterprise value. We’re seeing investors reward companies that prioritise ESG, and slow action on ESG can cost family businesses their trust premium. NextGens leading on ESG with upskilling and digital innovation will enable them to take their companies forward.
Managing wealth should not be ignored
Success for family businesses is multidimensional hovering around the family, the business and wealth as distinct units. These three must interact with healthy boundaries to form a strong system. Effectively managing the family’s wealth ensures that the family’s economic status is maintained or improved. Family businesses can achieve this by protecting or diversifying assets in readiness for future needs. Therefore, having a family office is vital. But 60% (52% globally) of Nigerian family businesses do not have a family office as a separate business vehicle for family investments and services.
Esiri Agbeyi said: Adequate wealth reserves ensures that the family maintains or enhances its position. If you consider the high risk faced with the devaluation of the Naira, a billionaire in Naira can very easily see his wealth halved in Dollars in a year. Dealing with lifestyle expenses in foreign currencies means matching assets and liabilities are critical to preserving wealth accumulated from the business. A future focus for family businesses it to have family offices that can strengthen their business prospects and foster asset diversification.
The pandemic united leaders across generations
The COVID-19 pandemic was a boon to some NextGeners. Fifteen percent of Nigerian NextGeners believe COVID-19 led to them being asked to lead specific projects. Taking on these projects also resulted in a more robust communication between NextGeners and the current generation. The pandemic helped to increase their commitment to the family businesses but there are gaps still. Fifty percent of Nigerian family businesses do not have succession plans which could create unintended conflicts between employees. 52% of them believe the ability or readiness of the current generation to retire poses a succession challenge. This is no different from the finding in the 2019 NextGen Survey that shows how the current generation is reluctant towards succession planning. Further, 39% of the NextGens say there is resistance within the business to embrace change.
Peter Englisch, Global Family Business Leader, PwC Germany said: Peter Englisch said: “Robust succession planning is essential for the family business. NextGen leaders have become more engaged and committed to the business – the challenge is to build confidence between the current and next generation. Our survey shows communication has increased and this is a good basis for a new generational contract. This is the time to flesh out succession plans and to define the leadership skills required to deliver growth in the future, the key benchmarks on the route to succession, and what NextGens must do to demonstrate they are ready to take the reins. That way the current generation can transition to a supporting role with greater confidence,
Bridging the gender gap
Over half of NextGeners, 54% (vs 39% global), believe that males are more likely than females to be expected to run the family business. This shows there is still much to be done concerning bridging the gender gap. The survey also shows that many family businesses could gain from bringing greater attention to the relative roles of their male and female NextGen members. The panellists at the launch emphasised the need for bridging the family gender gap. The consensus was that while both genders are different, each person’s merit should be equally rewarded.
Speaking on the need for NextGeners to demonstrate their commitment, Seun Jolayemi noted that it was important for NextGeners to earn their flowers. NextGeners will require patience before their innovative ideas take flight.
For Tomi Otudeko, NextGeners have to understand their values and live it. She highlighted the need to respect the formality within the context of the business despite familial relationships. Being professional in the work environment helps stakeholders stay confident that the business values are not compromised.
OluRanti Bankole noted that there is value in maximising views from newcomers and finding mentors who you trust to hold your hands in the business. This does not have to be your parent. She matched the rising need for finance education in Nigeria as highlighted in the survey to the local business environment and stages in the business life cycle
Cosmas Junior Maduka noted that NextGens should always work to create value and make the best of every opportunity or situation they find themselves in. Guy Vande Vyvere shared his unique experience and perspective from a third-generation family business. He also emphasised the need for structure using family offices.
Nigerian NextGens are ready to learn, adapt and play a larger role in shaping the future for the business and the family. The commitment we see from NextGen gives us optimism for a future built on sustainable growth.
About the PwC Global NextGen Survey 2022
The NextGen Survey is a global market survey among next generation members in family businesses across 68 territories. The goal of the survey is to better understand what the NextGen are thinking about key issues and the role they are playing, and think they should be playing, in the family business. The survey was conducted online between 8 October and 12 December 2021.
PHOTO CAPTION: From L – R: Seun Jolayemi (Executive Director, Special Projects, Daily Need Group); OluRanti Bankole (Head of School – Greensprings School, Ikoyi Campus); Esiri Agbeyi ( Partner & Family Business Leader, PwC Nigeria); Tomi Otudeko (Head, Corporate Services, Honeywell Group); Cosmas Junior. Maduka (“Executive Director – After Sales / Special Duties, Coscharis Motors Plc); Ade Ogunsanya, Associate Director, PwC Nigeria.