The survival rate of Ugandan family businesses is alarmingly low, with fewer than 10 percent continuing beyond the founding generation, according to a recent study by the Economic Policy Research Centre (EPRC).
Experts warn that without early succession planning and professionalisation, many of these businesses risk collapse, threatening both family wealth and national economic growth.
Family-owned businesses play a pivotal role in Uganda's economy, contributing over 70 percent of GDP (PwC, 2023) and forming the largest share of Micro, Small and Medium Enterprises (IFC, 2021).
Yet despite their economic importance, most remain first-generation ventures, unable to pass leadership to the next generation.
Keep up with the latest headlines on WhatsApp | LinkedIn
EPRC Research Fellow Linda Nakato, presenting findings during a high-level stakeholders' meeting last year, highlighted a striking 4:1 ratio of first-generation to multi-generational family businesses in Uganda.
"This demonstrates that the majority of family businesses are young and fragile, with only a small fraction--around 10 percent--able to survive long enough for the next generation to take over," she said.
To address this challenge, experts recommend that founders integrate interested family members into the daily operations of their businesses from an early stage and hire professional managers to ensure continuity and operational efficiency.
Clear succession plans, well-defined roles, and systematic knowledge transfer are essential to safeguard these enterprises.
Challenges Facing Family Businesses
Ugandan family businesses face a unique set of hurdles that undermine longevity, including:
- Difficulty implementing succession plans
- Limited professionalisation and institutionalisation
- Lack of interest from younger family members
- Cultural biases favoring sons over daughters
- Founder dominance and complexities in polygamous families
- Skills gaps in the labour market
- Limited formal guidance on managing family dynamics
Gaps in Government Support
Experts also point to challenges arising from the policy and regulatory environment:
- Complex taxation, including PAYE, VAT, ground tax, and signpost tax
- Unpredictable policy changes that disrupt planning
- Limited tax incentives for indigenous businesses
- Corruption in tax enforcement
- Inadequate tax education and sensitisation
- High interest rates and inconsistent regulation increasing operational costs
- Unfair competition between formal and informal actors
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
Sarah Ssewanyana, EPRC executive director, highlighted the broader implications of family business fragility.
"Despite their significance, many family businesses fail to transition beyond the founder generation," she said in a statement read by EPRC Director of Research Ibrahim Kasirye.
"Without proper succession plans, sound governance systems, and financial procedures, most family-owned businesses collapse at the first sign of crisis--whether due to market shocks or the sudden loss of a founder. This fragility is not just a business problem; it is a development concern."
Experts are urging government and development partners to design targeted training programmes for family businesses, focusing on succession planning, governance, and managing family dynamics.
Strengthening institutional capacity and encouraging professionalisation are critical to ensuring that Uganda's family businesses can survive, grow, and continue contributing to the national economy across generations.
