Moniepoint advocates digital adoption among Nigerian family businesses to promote sustainability

Onome Amuge

Nigeria’s family businesses face a number of obstacles when it comes to growth and development, but one of the most critical is the lack of digital sophistication. Despite the proliferation of digital technology, only a fraction of family businesses have prioritised their digital capabilities, with the majority still relying on outdated and inefficient systems, a study by Moniepoint recently stated.

A new case study by Moniepoint Inc., Africa’s premier digital financial services provider, sheds light on the unique challenges and opportunities facing family businesses in Nigeria. Titled “A deep dive into Nigeria’s family-owned businesses – A Monie Story,” the report found that while family businesses contribute significantly to the nation’s economy, many are yet to take full advantage of digital technology and modern business practices. The study, a reflective chronicle of Nigeria’s rich history of family businesses, explores the resilience and adaptability of these businesses, despite the many challenges they face.

According to Moniepoint’s study, Nigeria’s future is filled with both promise and risk, and family businesses will play a pivotal role in determining the direction the country takes. It noted that the government’s efforts to drive economic development will be heavily reliant on the success of these businesses, which have long been the backbone of the nation’s economy.

Jumoke Oduwole, the Special Adviser to the President on the Presidential Enabling Business Environment Council (PEBEC) and Investment, recently revealed new data about the prevalence and importance of family businesses in Nigeria. According to Oduwole, there are an estimated 23.8 million family businesses in the country, accounting for a significant portion of the economy and providing millions of jobs. These businesses contribute approximately $200 billion annually to the economy, underscoring their critical role in driving economic growth and prosperity.

The figures speak volumes about the contribution of family businesses to the Nigerian economy. With over 40 million MSMEs contributing nearly half of the country’s GDP and employing the vast majority of the workforce, it is clear that these businesses are a vital component of the economy. In addition, the fact that 96% of businesses in Nigeria are family-owned indicates the critical role that these businesses play in the country’s economic fabric. 

However, Oluwatoyin David, a Big 4 consulting executive, pointed out that many family-owned businesses in Nigeria are informal and are founded and managed by the founder or founders. These businesses, he noted, tend to operate with an entrepreneurial mindset and do not have a clearly defined management structure or formalised business practices.

He stated further: “Once the owner passes, if there’s no governance structure in place, the business tends to die gradually. That’s where we speak to businesses on the importance of professionalising their businesses while preserving the owner’s legacy. 

“Interestingly, some of them report building their businesses on intuition, or a supernatural leading.

“By the time you start talking to them about structure, it makes no sense to them. Because they’ve built this massive business based on their gut feeling. The good news is the current generation seems more open to building this structure.” 

According to the Moniepoint study, many Nigerian family businesses are missing out on the benefits of digitalisation, with less than half having adequate digital capabilities, noting that very few family businesses see digitalisation as a priority. The study also highlighted that a lack of formal governance and business management structures is another key challenge facing family businesses in Nigeria.

Despite the challenges faced by family businesses in Nigeria, the Moniepoint study also highlighted a number of key drivers that underpin the success of these businesses. It noted that strong cash flow and profitability are essential for the success of any family business. The study also found that high levels of trust within family businesses, driven by a shared vision and business objectives, are also crucial for success. It also highlighted cohesive cultural bonds as a key driver of success for family businesses. 

The study offers a nuanced and complex portrait of the landscape of Nigerian family businesses, pointing out their resilience and adaptability. It highlights the enduring legacy of these businesses, many of which have survived and thrived through multiple generations. The study also predicted a promising future for family businesses in Nigeria, as long as they continue to adapt and innovate. This includes partnering with solution providers that can offer the latest digital tools and strategies to help family businesses stay ahead of the curve.

According to the study, family businesses will continue to play a central role in Nigeria’s economic and cultural identity, driving growth and innovation. As they evolve, family businesses will also be key drivers of sustainability and global competitiveness, leading the way for future generations.

Edidiong Didi Uwemakpan, vice president of communications and public relations at Moniepoint,explained that the company’s focus on family businesses was driven by a desire to highlight their important contributions to the Nigerian economy.  Uwemakpan noted that despite the diverse sizes and sectors represented by these businesses, they have a significant and often overlooked impact on the country’s economic growth.

“At Moniepoint, we pride ourselves on being more than just a financial services provider; we are an astute partner to business owners, helping them to be financially happy while ensuring that our innovative solutions power the dreams of these enterprises. We believe that the growth of family businesses directly supports the entire economy, which in turn essentially extends our ability to positively impact everyone else which aligns with our brand’s mission,” she said.

According to Uwemakpan, Moniepoint’s services have had a positive impact on family businesses, helping them to streamline their operations and improve their financial management through simplified payment collection, cash flow management, and access to capital. 

Uwemakpan added that the company’s recent partnership with the  Corporate Affairs Commission (CAC) will further catalyse technology adoption for these businesses while providing a foundation for them to adopt better record keeping, financial reporting and governance practices which are pivotal for their efficiency, productivity and long-term viability, and also drive market access and trade facilitation into regional and global value chains for them.