Family Businesses Urged to Scale for the Growth of Nigeria's SMEs

In Nigeria, the growth potential of Small and Medium-sized Enterprises (SMEs) is at risk due to the stagnation of larger family-owned businesses. This critical issue was highlighted during the recent Family Business Summit 2026, organized by BusinessDay, which focused on the theme “Beyond the Founder: Scaling Family Businesses Across Generations.”

Business leaders and industry experts gathered to discuss the pressing need for family businesses to adopt professional management practices, enhance governance structures, and invest in their supply chains. These changes are essential for creating jobs and fostering economic growth in a country where over 40 million SMEs and Micro, Small, and Medium Enterprises (MSMEs) rely on the expansion of larger businesses for their own success.

Bolaji Balogun, CEO of Chapel Hill Denham, delivered a keynote address emphasizing the pivotal role family businesses play in Nigeria's economy. He stated that these enterprises must evolve beyond their founders to unlock opportunities that benefit not just their families but the broader business ecosystem. “You hold the key to Nigeria’s collective success,” Balogun remarked, underscoring the interconnectedness of larger businesses and smaller enterprises.

He pointed out that when family businesses scale, they can create significant employment opportunities, benefiting distributors, transporters, and other smaller enterprises. However, Balogun cautioned against a narrow focus on personal wealth, which could hinder broader economic contributions. He illustrated this with an example from his own firm, which, despite having fewer than 200 employees, supports nearly 7,000 individuals through its operations.

To facilitate growth, Balogun urged family businesses to explore capital markets for long-term funding, rather than relying solely on traditional bank financing. He suggested that issuing bonds or selling minority stakes could be viable options for raising capital while maintaining control. This approach, he argued, would allow businesses to reinvest earnings and strengthen their operations, ultimately preserving value for future generations.

Succession planning emerged as another critical topic during the summit. Balogun stressed the importance of preparing the next generation to take over leadership roles based on competence and experience, rather than simply placing family members in positions of authority. He advocated for a structured approach that ensures successors are well-equipped to manage the business effectively.

The challenges of financing and succession were further examined in a panel discussion titled “Family Office Playbook.” Zipo Lai, head of family office at Invest Hong Kong, highlighted the potential of family offices to act as strategic partners for operating businesses. These entities can provide essential funding, invest alongside external investors, and enhance credibility when seeking additional capital.

However, establishing a family office requires careful consideration of priorities, whether it be wealth preservation, supporting existing businesses, or diversifying investments. Jeremy Cheng, a principal at Lansberg Gersick Advisors, emphasized the need for clear decision-making structures as family businesses transition from founder-led management to collective ownership. He warned that without defined roles and responsibilities, tensions could arise among family members, potentially impacting business operations.

The summit also addressed the importance of understanding family dynamics, asset ownership, and legal arrangements before implementing governance structures, especially for businesses with international interests. Engaging younger family members early in the succession process was deemed vital for ensuring they grasp their future responsibilities.

The overarching message from the summit was clear: the success of Nigeria's economy is intertwined with the ability of family businesses to scale and innovate. Balogun urged business owners to recognize their broader economic responsibilities by creating jobs, expanding opportunities for youth and women, and developing enterprises capable of driving growth across their value chains.

As Nigeria navigates its economic landscape, the call for family businesses to evolve and embrace professional management practices has never been more urgent. The future of SMEs and the overall economic health of the nation depend on these larger entities stepping up to the challenge.