New BCG report shows, the economic integration of Africa is underway, with African and multinational companies that see their future in a more coordinated continent
MON, APRIL 9 2018-theG&BJOURNAL-The Boston Consulting Group (BCG), global management consulting firm and the world’s leading advisor on business strategy. Wednesday, 4 April, 2018, launched a new report titled “Pioneering One Africa: African Corporations Trail-Blazing Across the Continent” which argues that while fragmentation in many forms remains a major problem for businesses in Africa, economic integration is not only taking place, but also gathering speed; an improvement that is primarily driven from within the continent and led by African corporate entrepreneurs.
The report identifies 150 companies which consist of 75 Africa-based companies and an equal number of Multinational Corporations (MNCs) that have established impressive track records in Africa and are contributing to a more integrated Africa. They are overcoming longstanding geographic, geopolitical, transportation, and infrastructure barriers to drive the economic integration of the continent. This list includes 6 companies based in Nigeria namely Dangote Group, Globacom, Guaranty Trust Bank, Jumia, Nigerian Breweries and United Bank for Africa. The MNCs are a global group, with France, the United Kingdom, and the United States most strongly represented as well as a dozen MNCs from China, India, Indonesia, Qatar, and the UAE.
It also highlights eight factors that explain how these companies are making an impact which include the following:
- They actively expand their footprint across several African countries.
- They dare to make significant greenfield investments.
- They use Mergers and Acquisitions (M&A) as a way to accelerate their expansion.
- They build strong African brands.
- They innovate locally to adapt to the African consumer.
- They invest in local talent and develop a people advantage.
- They build local ecosystems.
- They connect Africa by facilitating the movement of people, goods, data, and information.
Commenting on the report, Patrick Dupoux, BCG Senior Partner and co-author of the report stated, “Fragmentation in Africa is much greater than anywhere else in the world, and it adds significantly to the economic challenges facing countries that typically lack the critical mass to compete globally. Despite these barriers, we see more signs of economic integration with each passing month, quarter, and year. The primary drivers come from within the continent, led by African business. Africa invests more in Africa, Africa trades more with Africa, and Africans travel more to Africa.”
Lisa Ivers, BCG Partner and co-author of the report also stated, “If the past decade has demonstrated anything, it’s that these companies are masterful at overcoming adversity. They’ve built impressive track records of creating value for themselves and advancing the development of the continent—and its many economies. They know that continuing to drive the integration of the African markets where they do business is one key way to pave the road to greater success.”
Additional findings from the reports show that between 2006–2007 and 2015–2016, the average annual amount of African foreign direct investment—money that African companies invested in African countries—nearly tripled, from $3.7 billion to $10 billion. The average number of intraregional M&A deals each year also jumped (from 238 to 418), with African-led transactions representing more than half of all African deals in 2015. Meanwhile, average annual intra-African exports increased from $41 billion to $65 billion, and the average annual number of African tourists (Africans traveling in Africa) rose from 19 million to 30 million. African tourists made up more than half of all tourists on the continent in 2015–2016.
This report gives credit to African corporate entrepreneurs who, by investing early in building a footprint on the continent, are giving a sense of reality to the integration of the continent.
