Jan/Feb 19 - ChannelVision Magazine

That’s not to suggest company’s seeking to build or grow a business in Africa should misunderstand or underestimate the continent’s bewildering scale and complexity. After all, Africa’s land area exceeds that of China, Europe and the United States combined. Its 54 coun- tries have a collective population of 1.2 billion, said McKinsey researchers. The country has more than a thousand languages and huge diversity in income lev- els, resource endowment, infrastructure development, educational attainment and business sophistication. It’s just that, “In our experience,” argues Acha Leke, chairman of McKinsey’s Africa offices, “the instinct of most businesspeople is to underestimate Africa’s size and potential as a market and overestimate the chal- lenges of doing business there.” Illustrating that very point, McKinsey surveyed more than a thousand business executives across Africa and the world, asking them how many companies in Africa they thought earned annual revenues of $1 bil- lion or more. The maximum number chosen by most respondents was 50. Several said “zero.” When the same question was asked at events such as the World Economic Forum, participants were only slightly more optimistic: most put the number of billion-dollar firms at between 50 and 100, said the research firm. McKinsey’s database of large companies with busi- ness in Africa, however, includes as many as 400 com- panies earning revenues of $1 billion or more and nearly 700 companies with revenue greater than $500 million. “These companies are increasingly regional or pan- African,” explained Leke. “They have grown faster than their peers in the rest of the world in local currency terms, and they are also more profitable than their global peers in most sectors.” Those companies combined accounted for $1.4 tril- lion in revenues in 2015, and around two-fifths of them are publicly listed, and the remainder are privately held, Leke continued. Just more than half are owned by Africa-based private shareholders, while 27 percent are foreign-based multinationals and 17 percent are state- owned enterprises. Optimism likewise is high among African executives. They predicted that most African households will join the consumer class in the next 20 years and expect that rising investment in both digital technologies and natural resources – the new and old economies – will boost development, show McKinsey surveys. Nearly 90 percent of African-based companies, and 58 percent of those based in other regions, expect their revenues in Africa to grow during the next five years, and most plan to expand their African footprint to additional countries. Africa’s Overlooked Opportunities G lobal business leaders who misunderstand or underestimate Africa run the risk of missing out on one of the 21st century’s great growth opportunities, argue analysts at McKinsey & Company. Explosive growth abounds in this not-so-dark-anymore continent By Martin Vilaboy international Agents 44 Channel Vision | January - February, 2019