Why the Heirs of Africa's Greatest Merchants Can't Keep a Business Alive?

Apr 10 , 2026
By Yohannes T. Arega

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With two-thirds of Ethiopians outside the formal banking system and a sovereign debt default weighing on confidence, the goal of 90 listings in a decade is ambitious. Despite these, the ESX represents the institutional architecture that can match the ancient Aksumite understanding of commerce as a system. Just as ports and currencies outlasted individual merchants in antiquity, capital markets provide the memory and scrutiny required for modern business longevity, writes Yohannes T. Arega (yarega83@gmail.com), a capital markets specialist with more than 16 years of experience in financial markets, compliance, and institutional development across advanced and frontier economies.

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In the third century, while much of Europe bartered with grain, the Kingdom of Aksum was minting gold coins bearing the faces of its kings.

Aksumite merchants sailed from Adulis on the Red Sea, trading ivory, frankincense and emeralds with Rome, Persia, India and China. The Persian prophet Mani listed Aksum alongside Rome, Persia and China as one of the four great powers of the ancient world. Far from being a country participating in global commerce, Ethiopia was helping shape it.

Two millennia later, the contrast could not have been more ironic. Japan is home to more than 33,000 companies that are over a century old. The construction firm Kongo Gumi, founded in the year 578, lasted nearly 1,500 years. The Japanese even have a word for such companies. Shinise, translated as "old shop," is a label that carries trust and prestige.

Ethiopia cannot point to a single privately owned company that has survived 100 years. Its oldest institutions are state-owned enterprises. In the private sector, companies often rise with their founders and weaken when they leave. The pattern is familiar in that a charismatic entrepreneur builds a strong business, practising a tightly centralised decision-making process. The founder’s instincts, contacts and relationships become the firm’s operating system. Then the founder exits, and the business falters.

The 2024 Ethiopian Family Business Survey by HST Consulting found that 81pc of family businesses lack a formal CEO succession plan. Half have no board of directors, while 85pc lack a family council. Boston Consulting Group has found that businesses with succession plans record market-cap growth that is 28 percentage points higher. Ethiopian businesses are largely operating without that safeguard.

Culture deepens the problem as Ethiopians' respect for elders, admirable in society, can become paralysing in business. Founders resist giving up control, and their heirs hesitate to challenge them. Distrust of outsiders keeps professional managers away, even though some of the world’s most durable family enterprises, including the Tata Group, the Wallenbergs and Hermès, have learned to separate ownership from management. The Derg’s nationalisation of private enterprise in 1974 left another lasting scar.

Why build something to endure, many business owners still seem to ask, if the state can seize it overnight?

Japanese shinise firms rest on a different idea of what a “family business” is. At the centre is the household line, where the enterprise's survival takes precedence over any individual family member. If the eldest son lacks the skill to lead, the family does not hand the company over to him out of a sense of duty. It adopts a capable outsider as heir, acknowledging that talent prevails over bloodline. Panasonic, Toyota and Suzuki all passed leadership through adopted successors.

These firms also resist the pursuit of growth at any cost. They follow kakun, or family precepts, which emphasise continuity, cash reserves and restraint rather than profit maximisation. When Kikkoman developed a better fermentation method, it shared the technique with rivals to stabilise the soy sauce industry. Its horizon extended beyond the firm to the ecosystem around it.

The business culture in Ethiopia often rewards rapid expansion into unrelated fields such as construction, hotels and import-export, stretching management capacity and making succession much harder. This helps explain why the opening of the Ethiopian Securities Exchange (ESX) matters.

On January 10, 2025, Ethiopia rang the bell on the ESX, with Wegagen Bank as its first listing. A stock exchange may seem distant from the question of whether a family business reaches its 100th year. In practice, it is central because capital markets impose governance. Listing requires transparent reporting, independent boards and external audits, the disciplines that distinguish durable institutions from one-person shows. Preparing for an initial public offering (IPO) also forces founders to separate personal finances from company accounts and build systems that outlast any individual.

Capital markets also make succession less destructive. Without a market, succession can become a zero-sum choice of handing the company to family, selling it to an associate, or watching it collapse. A public listing allows founders to sell partial stakes while keeping control. Heirs can realise value without breaking up the firm. The company’s identity becomes less hostage to the family’s internal tensions.

Markets create institutional memory where analyst coverage, regulatory filings and investor scrutiny produce a public record that does not disappear when leadership changes. The market can punish weak management in real time. The ESX is helping create brokers, asset managers, advisers and analysts, the professional infrastructure Ethiopia has long lacked and that business longevity requires from the outside in.

The ESX, however, is not enough on its own. Financial literacy remains low, with two-thirds of Ethiopians outside the formal banking system. The pipeline of listable companies is small. Inflation, conflicts and the recent sovereign debt default are weighing on confidence, making the goal of 90 listings in a decade ambitious.

However, for the first time in Ethiopian history, the structural conditions for business longevity are beginning to take shape. The ancient Aksumites understood that commerce is not about the individual trader but about the system. Ports, currencies and trade routes outlasted any one merchant. They built Adulis, minted coins and forged alliances that supported trade for centuries.

Japan’s shinise firms show that longevity is neither luck nor cultural destiny. It is a choice, built through governance, succession and restraint. Ethiopian businesses still carry the historical DNA of great traders. What they now need is the institutional architecture to match. It would be no exaggeration to claim the ESX can be this generation’s Adulis.

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PUBLISHED ON Apr 10,2026 [ VOL 27 , NO 1354]

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