GRAFT

Corruption slowing growth of family businesses in Kenya, report

In Summary

In 2014, corruption was a distant third among factors slowing growth.

•It has since maintained the lead in the country.

PriceWaterhouse Coopers managers (From L) Michael Mugasa, Peter Ngahu and Sunny Vikram during the PWC 2018 family business survey press conference.
PriceWaterhouse Coopers managers (From L) Michael Mugasa, Peter Ngahu and Sunny Vikram during the PWC 2018 family business survey press conference.
Image: Photo/Courtesy

Corruption is slowing growth of family businesses in Kenya, the latest survey by PriceWaterhouse Coopers has revealed.

The PwC 2018 Family Business Survey sampled 46 top family owned businesses in diverse sectors shows that 72 per cent of respondents have been forced to either shelve a transaction, are denied a license or asked for a favour so as to obtain services from government officers.

"Corruption has increased the cost of doing business in the country over past five years since 2014 when we first conducted this survey. Businesses have to juggle stiff neck bureaucracy in order to obtain basic services from both national and county governments," the report said.

Speaking during the survey launch yesterday, PWC Kenya country senior partner Peter Ngahu said corruption has overtaken other factors to stay at the top position since 2016.

"In 2014, corruption was a distant third among factors slowing growth. It has since maintained the lead in the country despite being among factor globally. The vice affected only 23 percent of 2953 business sampled in the world."

The study further revealed access to skills, costs of energy, raw materials and international competition impeded business by more than half.

 The 2018 PWC’s Family business Survey 2018 (Kenya) reinforces the results of the 2016 survey finding on the “missing middle” with regard to strategy at family businesses over the medium term.

However, the report advises that a strong values-led culture can help to bridge that gap further.

 “Our research globally and in Kenya highlights the benefits of a values-led approach that can focus a family business on the continuity planning they need to do, and how that approach can help attract and equip the next generation with the skills needed to thrive in a digital age,” Michael Mugasa, PWC Kenya leader for Private Company and Family Business Services said.

The number of Kenyan family businesses exporting goods and services to other countries dropped slightly to 74 per cent last year compared to 77 in 2016. However, Kenyan figure is higher than the global average which stagnated at 70 percent.

Of the 46 Kenyan family businesses surveyed 83 per cent expect to grow over the next two years, which is almost similar to the global average of 84 per cent.

The future of local family businesses is however uncertain, with only 17 per cent having a clear succession structure.