A recent report by the Boston Consulting Group (BCG) has identified the pioneering initiatives of African corporate leaders to increase economic integration of businesses in Africa rather than its fragmentation, as the solution to the malaise bedeviling the continent.
The report said the corporations are overcoming longstanding geographic, geopolitical, transportation, and infrastructure barriers to drive the economic integration of the continent which has between 2006–2007 and 2015–2016, seen 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.
It also revealed that the average number of intra-regional mergers and acquisitions (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; 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 as African tourists made up more than half of all tourists on the continent in 2015–2016.
The report identified 150 companies which consisted of 75 Africa-based companies – amongst which are six Nigerian companies namely Dangote Group, Globacom, Guaranty Trust Bank, Jumia, Nigerian Breweries and United Bank for Africa – and an equal number of Multinational Corporations (MNCs) that have established impressive track records in Africa as it 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.
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 highlighted eight factors that explain how these companies are making an impact, which include, that 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 and they build strong African brands.
Others are, that they innovate locally to adapt to the African consumer; they invest in local talent and develop a people advantage; they build local ecosystems and they connect Africa by facilitating the movement of people, goods, data, and information.
Patrick Dupoux, BCG senior partner and co-author of the report said:“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 averred that: “If the past decade has demonstrated anything, it’s that these companies are masterful at overcoming adversity. They have 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.”
BCG is a global management consulting firm and one of the world’s leading advisor on business strategy with more than 90 offices in 50 countries and partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises.