Did you know that a staggering 20% of Tanzania’s businesses exceeding $15 million began as family ventures? These are not just corner shops; they are the beating heart of our economy. From neighbourhood staples to established national players, family-owned businesses form the very foundation upon which our economic future rests. Yet, a hidden challenge threatens their continued success: ensuring a smooth transition to the next generation.
Family-owned businesses often face significant challenges in ensuring continuity and sustainability beyond the second generation. Historically, these businesses have struggled with succession planning, as leadership transitions pose substantial risks to their stability and long-term viability. Recognising the urgent need to address this issue, the CEO Roundtable of Tanzania (CEOrt) held a symposium to explore succession strategies aimed at supporting the growth and sustainability of family-owned businesses. Leveraging the CEOrt’s extensive network, this engagement provided a platform for sharing experiences, practical strategies, and best practices to navigate succession planning challenges and transform governance structures effectively.
Many founders make the natural assumption that their children will take the reins. However, without a formal succession plan, this can lead to a critical leadership vacuum if the next generation pursues different paths. Imagine the potential lost – a thriving family business faltering because the future wasn’t planned for. The story of Tanzania’s economic development is intricately woven with the narratives of these family-owned businesses. Their success stories are our success stories, and their struggles mirror our own aspirations for growth and prosperity.
The good news is that there is a roadmap to success for family-owned businesses. Mr. Samuel Nganga, Manager for Upstream and Advisory Manufacturing, Agribusiness, and Services for Eastern and Southern Africa at the International Finance Corporation (IFC), and an expert speaker at the CEOrt symposium, shared that by embracing professional expertise, charting a course for growth through strategic expansion, and fostering open communication within the family unit, these businesses can not only survive but also become a driving force behind Tanzania’s economic future.
Family doesn’t have to run every aspect of the business. As Jayesh Shah, Managing Director of Sumaria Group, emphasizes, “Integrating external expertise is paramount.” The ideal scenario is one where the family’s deep understanding of the local market is complemented by the strategic vision and operational efficiency of qualified professionals. Mr. Shah underscores the importance of delegating day-to-day operations to qualified professionals, allowing the family to focus on long-term strategic direction. This strategic partnership ensures that the business benefits from both the passion and inherent understanding of the family, and the fresh perspectives and best practices brought in by external experts.
The world is a vast marketplace, and Tanzania is no exception. Looking beyond familiar borders, as Rishit Shah of PwC Tanzania advises, ensures long-term viability in the global marketplace. “Expansion into East Africa is a critical step for long-term viability,” he states. This doesn’t just mean replicating existing models; it means embracing innovation, adapting to new markets, and capitalizing on emerging opportunities. Family businesses, with their agility and deep understanding of the local context, are perfectly positioned to become pioneers in regional expansion. There is a significant opportunity for Tanzanian family-owned businesses to become household names across East Africa, not just for their legacy but for their ability to adapt and thrive in a globalized economy.
Succession is an inevitability, not a choice. The key lies in navigating transitions with a clear plan. Successful exits like that of Mr. Hussein Azizudin Jamal of Kansai Plascon Tanzania demonstrate how family businesses can flourish even after a leadership shift. His experience highlights the importance of planning for a smooth handover, ensuring the business retains its core values and continues to contribute to Tanzania’s economic landscape. Seeking expert guidance from legal and financial professionals, as Ambassador Mwanaidi Sinare Maajar suggests, can help establish robust conflict resolution mechanisms and ensure a smooth handover. Leadership changes within family businesses do not have to be seen as disruptions, but as opportunities for growth and fresh perspectives.
By prioritizing succession planning, these businesses can become the engines of economic growth, creating more jobs, widening the tax base, and solidifying Tanzania’s economic future for generations to come. The potential is undeniable, and the power to unlock it lies in the hands of those who actively plan for tomorrow. As highlighted during the CEOrt engagement, equipping family-owned businesses with the tools and strategies for successful succession planning is an investment not only in their future but also in the future of Tanzania as a whole.
Like all endeavors aimed at sustainable growth, this necessitates a collective effort. The government can play a role by creating policies that incentivise and support family businesses. Educational institutions can offer courses and programs specifically designed to equip the next generation of family business leaders with the necessary skills. Financial institutions can develop tailored loan and investment products that cater to the unique needs of these businesses.
Standing alongside these family businesses on their path to success is the CEO Roundtable of Tanzania (CEOrt). Recognizing the crucial role of succession planning, the CEOrt, through its prosperity pillar, has established the CEO Apprenticeship Programme (CAP). This innovative programme specifically targets the next generation of leaders, including those from family-owned businesses. The imagined impact is that CAP is not just grooming future leaders; it’s fostering a culture of forward-thinking within these businesses, ensuring a smooth transition of knowledge and expertise from one generation to the next.
A future where Tanzania’s family businesses not only endure but thrive, guided by a clear vision for the future, supported by a network of experts, and empowered by a commitment to growth and sustainability, is within reach. This is the future we can create, together, by recognizing the power of succession planning and unlocking the immense potential of Tanzania’s family-owned businesses.