Supporting family businesses for the future: Succession and governance in East Africa’s SMEs

Family-owned businesses are central to East Africa’s economy, accounting for 60–90% of private enterprises and contributing an estimated 30–50% of GDP. Yet fewer than 20% survive beyond the second generation, often due to inadequate succession planning. For impact investors, this represents a serious risk.

To address it, the Oikocredit Capacity Building department launched a technical assistance initiative focused on improving governance and succession planning in family-owned small and medium enterprises (SMEs) across East Africa.

A strategic partnership for change

In March 2024, the Family Business Executive Programme delivered by Strathmore University Business School brought together 17 family-owned SMEs in Kenya, the majority of which were agricultural businesses. The programme received financial support from the Oikocredit International Foundation, the Smallholder SustaiNability Upscaling Programme (SSNUP) and the African Guarantee Fund (AGF).

One of the programme’s key partners was Kenya Women Microfinance Bank (KWFT). As a long-standing Oikocredit partner, KWFT were invited to take part in the initiative and nominated a number of their clients to participate in the programme.

Challenges for family businesses

Family-owned SMEs in Kenya often face governance challenges such as informal decision-making, founder dependence and lack of succession planning. The Family Business Executive Programme was designed to provide support in crafting a succession plan, building formal governance systems and developing family constitutions to ensure long-term continuity.

“Family businesses need both practical tools and a shift in mindset to move from day-to-day operations to long-term sustainability,” said Carlijn Speelman, Global Capacity Building Specialist at Oikocredit. “This programme helped participants shape the future of their businesses with the next generation in mind.”

From training to transformation

The course participants were family-owned SME partners of Oikocredit and clients of KWFT. The programme consisted of a five-day executive course at Strathmore Business School in Nairobi and six on-site mentor sessions. This blend of classroom training, on-site coaching and continuous mentorship was designed to help families understand personal and governance dynamics, formalise internal processes, improve legal compliance and adopt governance frameworks and strategic planning tools.

• 17 family-owned SMEs (>75% women led) enrolled in Strathmore’s Family Business Executive Programme.
• 43 family members (including 21 women) attended the five-day executive course in Nairobi.
• A total of 90 on-site coaching sessions were delivered to 57 participants, with 15 businesses completing all six planned sessions.
• 9 businesses established formal family constitutions, and several others began the process with active support.

Conversations that matter

One of the programme’s biggest achievements was creating space for open, honest family discussions. Facilitators guided participants through difficult and often taboo topics such as leadership transition and future ownership structures.

Inclusive leadership was a major theme. The programme promoted more inclusive leadership by encouraging more women and younger family members to step into governance roles. This shift supported generational planning and helped reduce conflict. Next-generation leaders and women play crucial roles in broadening family involvement in decision-making and laying the groundwork for generational continuity.

“Succession planning gives comfort not only to the family but also to financial institutions,” said Mr Raymond Mutura, Academic Director of the Family Business Executive Programme at Strathmore University Business School. “It helps them see that the business can continue smoothly in the event of leadership change.”

Building resilient foundations

The results are already visible. Participating SMEs are building stronger governance frameworks, identifying future leaders and addressing the complex interpersonal dynamics that often hinder succession discussions. The share of companies with formal family constitutions rose from 18% to 63%.

Progress wasn’t uniform and some families faced resistance to change, internal conflict or logistical issues. Others struggled to move from awareness to action. But the programme’s culturally sensitive approach and tailored mentorship helped many overcome these obstacles.

While governance and succession planning were the programme’s core objectives, a range of broader benefits also emerged. Participants reported improved financial practices, streamlined operations and stronger supply chains. Women-led businesses showed increased confidence and leadership involvement.

A spillover effect has also emerged, fostering a culture of peer mentoring and continuous learning that extends the impact well beyond the direct participants.

The transformation extended to strategic planning capabilities too. The number of businesses using formal planning processes rose from 47% to 63%, with nearly half revising business plans biannually using tools like the business model canvas. This marks a shift from reactive management to proactive growth.

Together, these ripple effects indicate more than just progress at the business level, they reflect a broader cultural shift towards long-term resilience, collaboration, and a stronger, more connected business ecosystem.

Preparing for tomorrow

The programme underscores the importance of long-term support. While many businesses made strong initial progress, ongoing mentorship and follow-up will be crucial to embedding governance structures and succession plans.

“We’re not just supporting these businesses to improve how they operate today,” notes Speelman. “We’re ensuring they have the governance structures and succession plans needed to serve their communities for generations to come.”

As the programme concludes, participating businesses are emerging as models for other family-owned enterprises across the region. The shift from informal, founder-dependent operations to professionally governed, succession-ready businesses represents a crucial step toward securing East Africa’s economic future.

In the words of one participant: “This programme didn’t just teach us how to run a business… it helped us understand how to pass it on.”