How AI, innovation are reshaping East Africa’s family business landscape

KAMPALA — Family-owned businesses across East Africa are increasingly investing in artificial intelligence (AI), digital technologies and innovation as they seek to remain competitive amid changing consumer demands, economic uncertainty and rising business costs, a new PwC survey shows.

The PwC Africa Family Business Survey 2025 says businesses are shifting from traditional growth models towards technology-driven strategies, taking advantage of expanding digital infrastructure and innovation ecosystems across the region.

The report comes as family-owned enterprises continue to dominate East Africa’s private sector, accounting for a significant share of small and medium-sized businesses and employment.

“With the rapid advancement of AI and digital technologies, many family business start-ups in East Africa are increasingly rethinking their growth strategies—leveraging innovation to enhance service delivery, improve operational efficiency and build more resilient, competitive business models for the long term,” said Sunny Vikram, PwC’s Family Business Leader for the East Market.

Although the survey does not provide country-specific data for East Africa, it identifies trends likely to influence businesses across Uganda, Kenya, Tanzania and neighbouring markets.

The survey found that 66 percent of African family businesses recorded sales growth during their most recent financial year, outperforming the global average of 57 percent.

More than a quarter (26 percent) achieved double-digit sales growth, while another 40 percent reported moderate growth of between three and nine percent.

The strong performance is encouraging more businesses to invest in technology as they pursue future expansion.

According to the report, 58 percent of respondents identified technological advancement as a strategic priority, while 57 percent cited AI tools among their top investment areas over the next two years.

At the same time, business owners remain cautious about expansion, with 53 percent preferring steady growth over rapid scaling.

However, the proportion of businesses planning aggressive growth has increased to 27 percent from 16 percent in PwC’s previous survey, suggesting rising confidence despite persistent economic challenges.

The report also highlights Africa’s family businesses as becoming more agile than many of their global counterparts.

More than half (52 percent) described themselves as agile or highly agile, compared with a global average of 45 percent.

Businesses attributed this flexibility to faster decision-making, greater innovation, operational improvements and quicker adoption of technology.

PwC says the continent’s strongest-performing family businesses are combining long-term investment strategies with innovation, reputation management and clearer governance structures to sustain growth.

Despite embracing digital transformation, many businesses continue to rely on traditional financing.

About 82 percent fund innovation through retained earnings rather than external borrowing, while only one-third use bank loans or private equity.

The survey also found that 30 percent are using strategic partnerships and joint ventures to finance expansion, significantly above the global average.

Investment priorities remain focused on expanding core businesses, entering new markets and adopting digital technologies.

Nearly two-thirds of respondents said they are diversifying into new industries or markets, while more than one-third are investing directly in digital transformation and AI.

However, businesses continue to face significant headwinds.

Economic volatility—including inflation, supply chain disruptions and weakening consumer purchasing power—was identified as the leading challenge, affecting 66 percent of respondents.

Tax-related issues were the second biggest concern, cited by 58 percent of businesses, well above the global average of 35 percent.

Changing consumer expectations, geopolitical risks and sustainability pressures also featured prominently among the challenges expected to shape business performance over the coming years.

PwC argues that tax planning should increasingly become a boardroom issue rather than remain solely within finance departments, as tax reforms can influence investment decisions, ownership structures, succession planning and long-term business sustainability.

The report also urges family businesses to strengthen governance, clarify decision-making structures and modernise ownership arrangements to support long-term growth.

For East African businesses, PwC says the region’s growing digital economy presents a significant opportunity, but sustained success will depend on how effectively firms adopt technology, improve productivity and build businesses capable of competing across regional markets.