- Tax challenges growing for African family businesses as governments tighten revenue collection
- Most African family businesses are still growing despite inflation and economic uncertainty
- Strong family values support flexibility, but many companies underutilize them to build trust and growth
Nearly six in 10 African family businesses reported tax-related challenges last year, according to a PwC survey published on Tuesday, as governments across the continent pursued fiscal reforms to boost revenues.
Topic PwC Africa Family Business Survey 2025The report is based on a survey of 79 family-owned businesses operating across the continent. This is Africa's version of global Global Family Business SurveyWhich covered 1,325 companies from 62 countries and regions.
The share of African family businesses reporting increasing tax challenges during the last financial year was well above the global average of 35%. The report said this reflects increasing pressure on African governments to increase domestic revenues as financing gaps widen, debt service costs rise and traditional external funding sources become less reliable.
In response, the tax system is becoming more dynamic, with reforms focused on broadening the tax base, strengthening enforcement, improving compliance, and digitalizing tax collection. The report said this trend is evident in African markets, where tax reforms are underway in various forms.
Nigeria recently implemented a major tax reform that encourages voluntary tax compliance and simplifies tax rules. South Africa and Kenya have introduced measures aimed at increasing revenues and improving tax compliance, while Ghana has reduced some taxes. Although policy approaches differ, taxation has clearly become a strategic issue for businesses across the region. The report says the implications go beyond immediate cost pressures.
Changes in the tax environment can impact how companies invest, how quickly they act and how confidently they plan their operations. As an example, the report notes that tax reforms recently introduced by the Nigerian government mandate that undistributed profits can be treated as distributed and taxed, which directly impacts corporate earnings and future investment.
Beyond taxation, the report notes that African family businesses are operating in an increasingly demanding environment. Two-thirds of respondents, or 66%, said inflation and supply chain disruptions had a significant impact on their business in the past year, compared to the global average of 58%.
Resilient business despite adverse conditions
Changing consumer expectations cited by 53% of respondents, geopolitical risks at 47%, skilled labor shortages at 38%, and climate and sustainability issues at 31% added further complexity to the operating environment.
Despite these challenges, trade growth remained strong. Nearly 66% of respondents reported single-digit or double-digit revenue growth during the last fiscal year, higher than the global average of 57%. The report said this performance is remarkable given the headwinds facing African family businesses, including economic instability, regulatory reforms, macroeconomic uncertainty and technological disruption.
Looking ahead to the next two years, 53% of respondents said their priority is to achieve steady, measured growth to strengthen their operational foundation, while only 27% are aiming for faster growth.
The report also notes that the most obvious competitive advantage of African family businesses is their agility. About 52% of executives surveyed described their businesses as more active or very active, compared to the global average of 45%.
Agility is most evident in making faster decisions at 67% of respondents, product and service innovation at 66%, adjusting operations at 66% and adopting new technologies at 66%. The report said these are encouraging signs that businesses are able to respond in practical ways as conditions change.
The report also found that 87% of African family businesses said they have a clear purpose rooted in family values that can be summarized in a simple sentence and used to shape the products and services they offer. However, only 43% have communicated that purpose externally, and even fewer, 40%, have highlighted it on their websites.
The report says there is a clear opportunity to strengthen how that purpose is communicated externally. It says companies with a clear and well-defined purpose are twice as likely to pursue ambitious growth, at 18% compared to 9%, and are significantly more likely to prioritize innovation, at 23% versus 16%, and long-term objectives, at 35% compared to 26%.
In another finding, the PwC survey showed that 91% of African family businesses consider protecting their corporate reputation important to their long-term success. However, 32% of respondents said their corporate reputation has become increasingly vulnerable. The main reputational risks identified were negative media coverage and public scrutiny, cited by 37% of respondents, 33% cited employee activism or corporate culture issues, and 25% cited negative consumer perceptions about sustainability efforts.
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