Lions On the Move

Business Prospects in Africa

Once considered a magnet for foreign aid dollars, Africa is now attracting investment capital. With a growing GDP and an expanding consumer market, the continent has attracted investors from Beijing to Wall Street. Recognizing these trends as an opportunity, some of the world’s top consulting firms are drawing attention to the Africa marketplace. Here are some highlights from their reports:

McKinsey Global Institute Lions on the Move: The Progress and Potential of African Economies

• With a sustained growth rate around 5 percent, Africa is one of the fastest growing economic regions in the world.

• African governments have instituted responsible policies that have improved economic and political stability on the continent.

• Current growth trends will continue to be supported by Africa’s wealth of natural resources, urbanization, and a growing middle class.

• Africa offers a $2.6 trillion business opportunity comprised of consumer industries, infrastructure, agriculture, and resources.

• African countries will experience various growth paths according to the type of economy they have now. These include: diversified economies, oil exporters, transition economies, and pre-transition economies.

Read the full report.

Accenture Expansion into Africa: Challenges and Success Factors Revealed

• South African businesses have an advantage in navigating into the sub-Saharan market.

• Africa’s growing market sectors include resources, telecommunications, financial services, and retail.

• Growth fueled by consumer demand, intraregional trade, a growing labor force, developing infrastructure, and a rise in foreign direct investment.

• Challenges include: understanding the local consumer, developing skilled labor, lack of infrastructure, and thick bureaucracy.

• Success strategies: Optimize local resources and partnerships, tailor business to be local, and develop networks across the continent.

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Boston Consulting Group The African Challengers

• The top African economies are emerging as global competitors. These include: Algeria, Botswana, Egypt, Libya, Mauritius, Morocco, South Africa, and Tunisia.

• Between 2000 and 2008, most Africa equity markets outperformed global indexes.

• Foreign Direct Investment by African companies has risen by 81 percent annually since 2002.

• By drawing out 40 noteworthy African companies, the report discerned critical strategies and practices for doing business on the continent. These include: Optimizing the native advantage in resources, labor, and knowledge; Functioning in a business climate ripe for growth; Operating with the boldness to use the economic climate as an opportunity for innovation and growth.

• To become competitive globally African companies must: Manage volatility, raise productivity, expand outside Africa, boost human capital, create global brands, and benefit from state support.

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Ernst and Young It’s Time for Africa

• Africa is only second in investor perceptions to China.

• Capital investments are forecasted to reach $150 billion by 2015 creating 350,000 jobs per year.

• Africans are leading investment growth—21 percent compound growth rate in Africans investing in other African countries from 2003-2010.

• Investors from developed markets represent the largest portion of investment, though emerging market investors are gaining strength.

• Foreign investors, African governments, and domestic companies hold the keys to unlocking Africa’s investment potential.

Read full report.