Large companies in Africa are growing faster than their peers in the rest of the world, raking in $1.4 trillion in annual profits and contributing to government taxes and higher wages, a new report finds.
The continent has 700 companies with annual revenue of more than $500 million, 400 of which generate more than $1 billion, says the new study from the McKinsey Global Institute (MGI). These large companies consist of both African-owned brands and foreign-based multinationals operating within the continent across a wide range of sectors.
Corporate Africa needs to step up its performance to make the most of these opportunities. The continent has 400 companies with revenue of more than $1 billion per year, and these companies are growing faster, and are more profitable in general than their global peers. Yet Africa has only 60 percent of the number of large firms one would expect if it were on a par with peer regions—and their average revenue, at $2 billion a year, is half that of large firms in Brazil, India, Mexico, and Russia, for instance.
No Africa owned company is in the Fortune 500. Companies looking to grow across the continent should develop a strong position in their home market, use that as a base for expanding into markets well beyond their immediate region, adopt a long-term perspective and build the partnerships needed to sustain success over decades, and be ready to integrate what would usually be outsourced.
They should look for opportunities in six sectors that MGI finds have “white space”— wholesale and retail, food and agri-processing, health care, financial services, light manufacturing, and construction—with high growth, high profitability, and low consolidation, and invest in building and retaining talent. ?