A recent study by the Economic Policy Research Centre (EPRC) highlights a concerning trend: fewer than 10% of family-owned businesses in Uganda survive beyond the founding generation. This alarmingly low survival rate threatens not only family wealth but also national economic growth, as family businesses contribute significantly to Uganda’s economy, comprising over 70% of the country’s GDP (PwC, 2023) and forming the largest share of Micro, Small, and Medium Enterprises (IFC, 2021).
Despite their importance, most family businesses in Uganda remain first-generation ventures, unable to pass leadership to the next generation. EPRC Research Fellow Linda Nakato emphasized this point during a high-level stakeholders’ meeting, noting 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,” she stated, “with only a small fraction—around 10 percent—able to survive long enough for the next generation to take over.”
Key Challenges Facing Ugandan Family Businesses
Experts warn that the fragility of family-owned businesses in Uganda is due to several key challenges, including:
- Difficulty Implementing Succession Plans: Many businesses fail to prepare for leadership transitions, leaving them vulnerable to collapse.
- Limited Professionalisation: A lack of institutionalisation and professional management hampers the long-term sustainability of these businesses.
- Limited Interest from Younger Generations: Many young family members are not interested in taking over the family business, further complicating succession planning.
- Cultural and Family Dynamics: Cultural biases favoring sons over daughters and the complexities of polygamous families can create challenges in leadership succession.
- Skills Gaps: The labour market in Uganda often lacks the necessary skills to support the growth and professionalisation of family businesses.
The Need for Succession Planning and Professionalisation
Experts suggest that to address these challenges, founders should integrate interested family members into daily business operations early and hire professional managers to ensure continuity and efficiency. A clear succession plan, well-defined roles, and systematic knowledge transfer are essential for safeguarding the future of family businesses in Uganda.
“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,” said Sarah Ssewanyana, EPRC executive director. “This fragility is not just a business problem; it is a development concern.”
Policy and Regulatory Challenges
The policy and regulatory environment also plays a role in the challenges faced by Ugandan family businesses. Issues such as complex taxation, unpredictable policy changes, limited tax incentives, and corruption in tax enforcement create an unstable environment for businesses to thrive. High interest rates, inconsistent regulation, and unfair competition from informal sectors further increase operational costs, making it even harder for family businesses to survive and grow.
Call for Government and Development Partner Support
Experts are urging the government and development partners to design targeted training programs for family businesses, focusing on succession planning, governance, and managing family dynamics. Strengthening institutional capacity and encouraging professionalisation are critical steps in ensuring that Uganda’s family businesses can survive, grow, and continue contributing to the national economy across generations.
