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Africa will become the world’s next big growth market, akin to the Asian boom, McKinsey, a management consulting firm said on Tuesday.
“While other geographies are seeing incremental growth, 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,’’ it noted.
The report drew the conclusions from 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.
The report, examining several examples of African businesses that have translated opportunities into enduring business value, revealed how companies can better understand the African market.
It also seized the opportunities for building profitable, sustainable businesses.
“Africa has a fast-growing, rapidly urbanizing population with big unmet needs.
“It means that there is a trillion-dollar opportunity to industrialize Africa, to meet rising domestic demand and create a bridgehead in global export markets,’’ the report said.
According to the report, there has been a big push by governments and the private sector to close infrastructure gaps.
The report pointed to 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.
According to the report, the highly successful businesses are often African companies, but many are entrepreneurial firms with Western, Indian, or Chinese founders.
The report, 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.
“At the heart of these four imperatives is a commitment to doing well by doing good,’’ said Acha Leke, senior partner and chairman of McKinsey’s Africa Office and co-author of the report.