Poor succession planning, weak financial management and the failure of business owners to prepare the next generation are among the major factors threatening the survival of family businesses in Uganda, according to a new study by the Economic Policy Research Centre (EPRC).
The findings were presented during a community baraza organised by the Economic Policy Research Centre with support from the Ministry of Finance, Planning and Economic Development at Amach Town Council in Lira District.
Presenting the research findings, Pauline Nakitende, a Research Analyst at EPRC, said family businesses contribute about 70 percent of Uganda’s Gross Domestic Product (GDP) and employ the largest share of the country’s workforce. However, she noted that despite their enormous contribution to the economy, their survival rate remains alarmingly low.
“Our research found that only one out of every five family businesses is successfully transferred to the founders’ children, (next generation) while the remaining four collapse after the founders’ demise,” Nakitende said.
She attributed the high failure rate to poor succession planning, lack of interest among children in taking over family businesses, poor financial management, mixing family and business finances, employing relatives without considering competence, cultural biases that favour sons over daughters, and excessive dependence on founders.
Elizabeth Birabwa Aliro, the Manager for Strategic Engagement and Communication at EPRC, said the research was conducted in the districts of Lira, Gulu, Mukono, Kampala and Mbarara to understand how family businesses are transferred from one generation to another and identify the factors affecting their continuity.
Aliro explained that EPRC is an independent research institution established through a partnership between the Ministry of Finance, Planning and Economic Development and Makerere University. She said the Centre conducts evidence-based research to inform government policies, legislation, programmes and national development planning.
She also commended residents of Amach Town Council for their impressive agricultural productivity, noting that the area produces bananas, coffee, matooke, soybeans, simsim and other crops that not only feed local communities but also supply markets and processing industries across Uganda and beyond.
Elizabeth Birabwa Aliro highlighting why Amach was chosen among other rural places
During the dialogue, several residents shared testimonies on how farming, entrepreneurship and government interventions had transformed their livelihoods.
Loyce Ayo Etwop recounted how a small loan from a village savings group became the foundation of her financial independence. She said she borrowed Shs1.5 million, which she invested in buying and selling goats adding that the business enabled her to pay her son’s school fees and gradually save enough money to improve her family’s livelihood.
Ayo Etwop added that she had been saving consistently in a personal savings box since 2010. When she finally opened it in 2021, she discovered she had accumulated Shs8 million, which she injected in building parmanent house and buying other things for family welfare.
“The small savings and the goat business completely changed my life. I can now educate my child and own a decent home,” she said.
Elvis Atyang said his entrepreneurial journey began in 2009 when his grandmother gave him a cow as his inheritance to support his future. Instead of keeping it, he sold the cow for Shs500,000 and invested the money in a shoe business.
After growing his capital to about Shs1 million, he shifted into produce trading, a venture he says has significantly improved his income. He credited his success to the opportunity his grandmother gave him.
He noted that although his wife is not yet actively involved in the business, he plans to bring her on board so they can grow the enterprise together.
Vicky Apio said she invested Shs1 million received under the Parish Development Model (PDM) in maize farming, earning about Shs2.5 million before expanding into sheep rearing. She said the income has enabled her to educate her children and improve her family’s welfare.
“The PDM money has transformed my life. Today, my family is living a better life and we no longer lack basic necessities,” she said.
Vicky Apio giving testimonies on how PDM changed her life
Lira District Commercial Officer Winifred Achan urged business owners to involve their family members in managing businesses while they are still alive to ensure smooth succession.
“Many businesses collapse because founders do not expose their children or relatives to business operations. When they pass away, family members struggle to sustain what was built because they were never prepared,” she said.
Lira District Agricultural Officer Dorcus Alum encouraged residents to invest in agriculture, describing it as one of the most rewarding enterprises due to its relatively low tax burden compared to many urban businesses.
Residents who attended the community baraza also highlighted key challenges affecting businesses, including theft, high transport costs, unreliable electricity, climate change, expensive farm inputs, limited markets for agricultural produce and inadequate business knowledge.
One of the community memeber presenting problem encounter while doing business