Africa: Family Businesses Under Tax Pressure

The results of the latest survey conducted by PricewaterhouseCoopers (PwC) reveal that approximately 58% of African family businesses are facing major tax constraints, a level much higher than the global average of 35%.

This situation stems from a general tightening of tax authorities, which are massively resorting to digitization of collections, expansion of the tax base, and increased control of tax returns. Although approaches vary by country, the overall trend remains constraining. In Nigeria, for example, regulatory reforms simplify some procedures but introduce taxation of undistributed profits, directly reducing the self-financing capacities of family structures. In Kenya and South Africa, government efforts focus on strengthening compliance control, while Ghana opts for targeted relief. These diverse approaches confirm that tax management is now the pivot of corporate strategic choices, in an environment where two-thirds of leaders (66%) are already facing strong inflationary and logistical pressures.

In the face of these headwinds, the family business model is showing notable resilience. Nearly 66% of the entities surveyed report growth in their turnover over the last financial year, outperforming their international counterparts by nine points. This robustness is largely explained by a high level of operational flexibility, claimed by 52% of managers, which translates into shorter decision-making circuits and rapid integration of technologies.

For the next two years, caution dictates the agendas: 53% of leaders prioritize stabilizing their gains, far ahead of rapid deployment strategies. Moreover, the sustainability of these structures remains linked to the protection of their reputation. If 91% of business leaders consider this intangible asset to be the guarantee of their long-term viability, one-third of them believe it is now more exposed to public criticism and environmental requirements.

BCN