African firms expand abroad at slow pace

African family businesses are transitioning from local operations to pan-African or global financial empires, but this shift is intentional and doesn’t happen by accident. According to Sandeep Main, KPMG One Africa head of private enterprise, there are key steps that families consistently follow to achieve this transition.

Transitioning to Global Empires

First, these families establish governance frameworks that include boards with clear mandates, defined roles for family and non-family executives, and documented decision processes. This helps them move from highly centralized, founder-driven decision-making to a more robust governance structure.

Second, they focus on legal and organizational structuring, establishing a holding company at the top with subsidiaries in each country or business line. This allows the group to grow, raise capital, and manage risk in a more coordinated way.

Key Steps to Success

Third, accessing syndicated bank funding, development finance, and sometimes capital markets, and partnering with global brands or investors, helps them accelerate expansion while sharing risk and know-how. Finally, there is a mindset shift from “we run a business” to “we steward a portfolio,” which is typically when family offices or dedicated investment vehicles emerge.

Groups such as Bakhresa and MeTL in Tanzania and Bidco in Kenya show aspects of this journey, from single-country operations to multi-country, multi-sector groups. On a continental level, Dangote in Nigeria is another example of progression from trading to industrial and now broader investment influence.

These large family businesses face operational and structural challenges when rapidly scaling, including growth outpacing the organization’s systems and processes, and weaknesses in financial reporting, risk management, IT infrastructure, and data becoming more apparent.

Cross-border expansion adds regulatory, tax, currency, and logistics complexity, requiring capabilities that may not yet be fully developed. Structurally, ownership and governance can become sources of tension if not clarified early, with shares held in individual names across several branches of the family without a coherent shareholder agreement or succession plan.

A younger, highly tech-savvy demographic has built wealth in sectors like software.

As these family businesses continue to grow and expand globally, they must balance their desire for control and stability with the need for professional management and formal governance. This will be critical to their long-term success and ability to handle the complex global business environment, which involves a strong ability to manage and adapt to new situations.

For example, a family business may need to establish a strong governance framework to ensure that decision-making is clear and transparent, and that all family members are aligned with the company’s overall strategy. This can involve establishing a board of directors with independent members, as well as clear roles and responsibilities for family and non-family executives.

Establishing a strong governance framework can help family businesses create a lasting legacy for their families and communities, and it is essential to their ability to thrive in a rapidly changing global business environment. By prioritizing governance, professional management, and institutionalized solutions, they can ensure that their businesses continue to grow and expand globally.

In the end, the key to success for African family businesses will be their ability to adapt and evolve in a rapidly changing global business environment, which is closely tied to their ability to manage complex global business situations. By focusing on governance, professional management, and institutionalized solutions, they can create a strong foundation for long-term success and growth.

Family businesses can learn from the experiences of other companies, such as those involved in Africa and Caribbean ties, which can provide valuable insights into the importance of governance and professional management in a global business environment.

As they continue to grow and expand, African family businesses will face new challenges and opportunities, and they must be able to handle these complexities in order to achieve long-term success.

Success.