In its new study released on Tuesday, November 20, 2018, Mckinsey said global companies that get in early and join the African champions shaping the right strategies, can sustain double-digit profit growth over the next few decades.
The study captured a survey of 3,000 McKinsey client engagements, in-depth proprietary research and interviews with 40 of Africa’s most prominent business and development leaders.
Major trends for Africa's explosive growth
While examining several examples of African businesses that have transformed opportunities into business value, Mckinsey revealed how companies can better under the African potential market.
“Africa has a fast-growing, rapidly urbanizing population with big unmet needs.
“This means there is a trillion-dollar opportunity to industrialize Africa, to meet rising domestic demand and create a bridgehead in global export markets, the report states.
According to the report, there has been a big push by governments and the private sector to close infrastructure gaps. “There is a continued resource abundance in agriculture, mining, and oil and gas, with innovation and investment in these sectors unlocking new production on the continent. The rapid adoption of mobile and digital technologies could leapfrog Africa past many obstacles to growth.”
“With over 400 African companies earning annual revenues of 1 billion dollars or more, we can identify what works,’’ the report said.
Acha Leke and Georges Desvaux, Senior McKinsey Partners and Mutsa Chironga, an executive at Nedbank, one of South Africa’s largest banking groups, says, “With over 400 African companies earning annual revenues of $1 billion or more, we can identify what works. The highly successful businesses are often African companies, but many are entrepreneurial firms with Western, Indian, or Chinese founders.”
According to the three authors, the most consistently profitable businesses demonstrate a higher tolerance for risk, are eager to adapt their products, production and distribution for African consumers, and commit to investing and building their businesses for the long-term.
Mckinsey, however, pointed out that building a successful business in Africa requires a long-term approach.
The four essential practices are mapping an Africa strategy, innovating business models and building resilience for the long-term and unleashing talent.