Africa, another major global market, according to McKinsey

Eight years after his report on "Lions in motion, progress and potential of African economies, "McKinsey and his star economist Acha Lake, will return with a new study on Africa's" Outstanding Growth Potential ".

Africa is on its way to an unprecedented acceleration of its economic growth, just like in Asian markets. This is the main conviction of the new McKinsey book on the African economy.

Global companies entering these markets soon with a perfectly targeted strategy could, as well as rising African champions, benefit from double-digit revenue growth over the coming decades.

In the " African Business Revolution: How to Succeed on the Next Big Growth Market in the World » (published 20 November 2018 Harvard Business Review Press), Acha Leke, Mutsa Chironga and Georges Desvaux present their analyzes and insights into Africa's future growth.

The book's conclusions include more than 3,000 McKinsey projects with clients, company research, and interviews with 40 executives of African firms and economic institutions. The three authors highlight factors that enable companies to better understand the challenges faced by African markets and take the opportunity to create activities that combine profitability and sustainability.

Some basic trends suggest that Africa is on the brink of exponential growth

Africa has a rapidly growing population that is rapidly urbanizing, with significant needs not yet largely being met. There is, therefore, a historical opportunity with an economic potential of $ 1.6 trillion to accelerate the industrialization of Africa, to respond to growing domestic demand and become more open to global markets. global exports. In addition, Africa will have to reduce its infrastructure deficit, in particular by intensifying the efforts of government and private sector co-operation. It can also rely on the abundance of its agricultural, oil, mining and gas resources, while technological innovation and recent investments in these sectors open new prospects for production on the continent. Finally, the swift adoption of disruptive mobile or digital technologies should allow Africa to overcome a number of obstacles to growth through the timely and timely dissemination of good practice worldwide.

Acha Leke and Georges Desvaux, seniors of McKinsey and Mutsa Chirong, head of Nedbank, one of the leading banking groups in South Africa, say:

" By analyzing more than 400 African companies with annual sales of $ 1 billion or more, we were able to identify key performance players for African players. The most successful companies are often African societies, although their founders are sometimes Western, Indian or Chinese. The most profitable organizations in the long run are also those who have shown higher tolerance to risk for those who are ready to adapt their products but also their production and distribution methods to African consumers and ultimately to those who invest. and to develop its activities in the long run. "

" success stories "Africa

This book reviews several examples of African firms that transform opportunities for sustainable added value. It turns out, for example, that Nigerian conglomerate Dangote Industries has been able to modernize its industrial tool, serving regional markets by offering a competitive alternative to imported products and improving its margins through a competitive approach. vertical integration. Jumia, an e-commerce pioneer founded by two French CEOs with 400,000 partner companies, has adapted todaySupply Chain and its distribution centers with local logistical constraints and innovated in the training of local managers. SABMiller has developed tailor-made products to better suit local tastes and make huge investments with the transfer of skills. In Kenya, M-Kopa started to invest in both technology and financial innovation by offering solar power kits that are funded by mobile money transfers (" mobile money "). The authors of the book also deal with large multinational companies that have been successful in Africa for decades, such as Coca-Cola, GE and Total.

Four prerequisites for long-term growth

Acha Leke, Georges Desvaux and Mutsa Chironga believe that a long-term approach to building the foundations for successful settlement and development in Africa is essential. In particular, they emphasize four conditions for success:

  1. Make a definite African strategy – show clear ambitions, map the African markets on which to invest, determine the appropriateness of approaches to the deployment of activities across the continent, and create a fertile ecosystem that will drive growth.
  2. Build business models innovative – create a real dialogue with consumers, develop products and services that meet unsatisfactory needs, create operational models thin reduce the cost base and reduce prices and take full advantage of the technology.
  3. Ensuring resilience of activities – avoid short-term volatility, diversify supply, vertically integrate the value chain before and after, understand local contexts, and work with public authorities.
  4. Bet on talent – Strengthen staff skills, create effective processes for human capital development and exploit the economic potential of women's progress within organizations.

"The heart of these four imperatives is a strong social commitment," says Acha Leke, "We have been able to meet and cooperate with outstanding business leaders from around the world: what has hit us is that many of them are driven by ambitions that go beyond the limits of their own economic activities." Everyone is well aware of the still high levels of poverty in Africa , the need for infrastructure, education or health, and governance instability. "Georges Desvaux adds," leaders in Africa are not happy with the brink of their business development – they are attacking the human challenges they want to help. They show us that participation in the social and economic development of the countries in which they operate creates value for shareholders and all stakeholders. "

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