Strategic investments for African family businesses in 2025
For decades, family businesses have been the bedrock of economic development across Africa. The extent of their contribution to employment and wealth creation varies depending on the country and the period since independence. However, a significant trend is emerging: these businesses, often with roots in agriculture, retail or manufacturing, are strategically diversifying their investments across a multitude of industries.
Beyond diversification, African family businesses are proactively focusing on maintaining their competitive edge within their core sectors. This involves embracing innovation, adopting cutting-edge technologies and professionalising their management structures. In this article, John Félicité, Commercial Director and Head of Africa, explores how these dynamic entities are expanding into new horizons while simultaneously ensuring their continued dominance and relevance in their original business domains.
1. What are the key drivers fuelling diversification in African family businesses?
For many African family businesses, the imperative to diversify has never been a fleeting trend but a fundamental strategy for survival and growth. Several key factors are propelling this expansion into new industries:
a) Economic volatility and risk mitigation
African economies have historically been susceptible to fluctuations stemming from commodity price swings, inflationary pressures, exchange rate instability and political uncertainties. To insulate themselves from these inherent risks, family businesses are increasingly allocating capital across diverse sectors. This strategic approach ensures that a downturn in one industry does not jeopardise the entire enterprise.
This risk mitigation strategy is often ingrained from the very inception of businesses in Africa. Aspiring and established entrepreneurs frequently launch multiple ventures concurrently to ensure a more stable and diversified income stream. This entrepreneurial reality, born out of necessity and the strong cultural imperative to support immediate and extended family, is a testament to their inherent resilience.
From small-scale initiatives to large corporations, a successful family-owned agribusiness in Kenya might strategically invest in real estate, technology solutions, or renewable energy projects to counterbalance potential losses arising from unpredictable weather patterns or fluctuating global commodity prices. They might even operate their own retail outlets to secure a direct route to market for their produce.
b) Generational transition and youth involvement
The transition of leadership to the younger generation is proving to be a significant catalyst for diversification. These emerging leaders often bring fresh perspectives, international education, and a keen understanding of modern industries such as fintech, e-commerce and renewable energy. Their exposure to global trends enables them to identify and pursue new growth opportunities that lie beyond traditional sectors.
A compelling example is Nigeria’s BUA Group, which initially concentrated on cement and sugar production. Under the vision of its second-generation leadership, the conglomerate is now strategically expanding its footprint into energy and infrastructure development.
c) Access to Capital and Strategic Partnerships:
Many established African family businesses have achieved significant financial stability over the years, providing them with the necessary capital reserves to explore new investment avenues. The increasing interest from international investors and Development Finance Institutions (DFIs) in the African market is facilitating strategic partnerships. These collaborations provide not only crucial funding but also valuable expertise for expansion into novel sectors.
Consider the South African Motsepe family, whose investment vehicle, African Rainbow Capital, has strategically diversified into sectors including finance, telecommunications, and mining, leveraging strategic alliances to fuel their expansionary ambitions.
d) Digital transformation and emerging technologies
Technology is fundamentally reshaping traditional industries across the globe, and African family businesses are acutely aware of the opportunities this presents. Diversifying into technology-driven sectors such as e-commerce, fintech, and agritech allows these businesses to remain competitive in an evolving landscape and tap into new and rapidly growing revenue streams.
The Chandaria family in Kenya, renowned for their manufacturing prowess, exemplifies this trend through their strategic investments in tech startups and digital payment solutions, ensuring their continued relevance in the digital age.
Which sectors are attracting diversification efforts from African family businesses?
African family businesses are increasingly directing their focus towards industries that exhibit strong potential for long-term growth and resilience. The most prominent areas of diversification include:
a) Real estate and infrastructure
Real estate remains a highly attractive sector for family businesses seeking stable, long-term returns. Driven by Africa’s rapid urbanisation, with projections indicating an additional 500 million urban dwellers by 2040, investments in residential, commercial, and industrial properties are proving to be particularly lucrative.
Tanzania’s Karimjee family, traditionally known for their automotive business, has successfully expanded into real estate development, capitalising on the country’s burgeoning urban population and the escalating demand for commercial spaces.
b) Financial services and fintech
The financial services sector, particularly the burgeoning fintech space, has experienced exponential growth across Africa. Family businesses are strategically leveraging their existing networks and capital to invest in banking, insurance, and innovative digital payment solutions. Notably, fintech-focused companies attracted nearly half of all startup investment in Africa in 2024, highlighting the sector's dynamism.
Ghana’s Databank Group provides a compelling example, having diversified into asset management and microfinance to cater to the increasing demand for financial inclusion across the continent.
c) Renewable energy
With Africa’s energy demands steadily rising, many family businesses are proactively investing in sustainable renewable energy solutions such as solar and wind power. Countries like South Africa, Kenya, and Nigeria are witnessing a surge in private sector investment in this critical area. Energy-focused companies also accounted for a significant 20% of startup investment in 2024, underscoring the sector's importance.
The Dangote Group, initially concentrated on cement and commodities, has strategically ventured into solar power projects to contribute to sustainable energy provision.
d) Healthcare and pharmaceuticals
The COVID-19 pandemic starkly highlighted the urgent need for increased investment in Africa’s healthcare infrastructure and pharmaceutical industries. Consequently, family businesses are increasingly entering sectors such as pharmaceutical manufacturing, hospital development, and medical technology.
Morocco’s Akwa Group, with its origins in oil and gas, has strategically diversified into healthcare through significant investments in pharmaceutical manufacturing.
e) Agriculture and agribusiness
While some family businesses have their roots in agriculture, they are now modernising their operations through the integration of advanced technologies and expanding into value-added activities such as food processing and international exports.
Nigeria’s Olam Group, which began as a commodity trading enterprise, has evolved into a large-scale agribusiness, encompassing rice milling and dairy farming, demonstrating the potential for growth within the agricultural value chain.
3. What key strategies are African family businesses employing to modernise their operations and maintain a competitive edge?
While diversification is crucial for risk mitigation and future growth, African family businesses are also strategically investing in innovation and modernisation to maintain their competitive advantage within their original industries. Their strategies for staying ahead include:
a) Professionalising management structures
A common challenge for family businesses is the potential for informal management practices. To enhance competitiveness and ensure long-term sustainability, many are actively recruiting professional executives and implementing a clear separation between ownership and daily operational management.
Kenya’s Bidco Africa exemplifies this trend, having brought in experienced professional managers to enhance efficiency and maintain their competitive edge in the dynamic fast-moving consumer goods (FMCG) sector.
b) Digital transformation and automation
The adoption of digital tools, artificial intelligence, and automation technologies is enabling family businesses to significantly improve operational efficiency, enhance customer engagement, and unlock new levels of productivity.
South Africa’s Shoprite Group, a prominent family-owned retail giant, has embraced e-commerce platforms and digital payment systems to enhance the overall shopping experience for their customers.
c) Expanding regional and global footprint
Rather than solely relying on domestic markets, many ambitious African family businesses are strategically expanding their operations into regional and international markets to tap into new customer bases and diversify their revenue streams.
Ethiopia’s MIDROC Group, owned by the Al-Amoudi family, has successfully expanded its diverse operations across Africa and into Europe, ensuring continuous growth and resilience.
d) Investing in sustainability and ESG initiatives
With the increasing global focus on environmental, social, and governance (ESG) principles, African family businesses are proactively adopting sustainable practices to ensure long-term viability and appeal to increasingly conscious consumers and investors.
Nigeria’s Flour Mills has integrated sustainable farming practices throughout its agricultural operations to ensure the long-term success and environmental responsibility of its agribusiness.
e) Developing the next generation of leaders
Recognising the importance of smooth transitions and future leadership, many family businesses are actively investing in developing the next generation through mentorship programmes, specialised education initiatives, and the implementation of structured succession planning frameworks.
This often involves establishing robust governance frameworks to ensure seamless transitions between generations while simultaneously fostering a culture of innovation and maintaining a strong competitive edge.
How can Ocorian help?
At Ocorian, we are committed to supporting our clients as they navigate the complexities and opportunities within the African market. Leveraging our extensive local expertise and global network, we provide tailored solutions designed to safeguard and enhance your wealth and business interests. With our global reach and deep understanding of international business, we are the ideal partner to guide you towards success in Africa.
Related Items
View all
