Informal trading thrive across Africa due to stringent inter border trade policies. Informal trading thrive across Africa due to stringent inter border trade policies.

Economic integration of Africa is underway, thanks to African and multinational companies

Apr 10, 2018

A new report by The Boston Consulting Group, Pioneering One Africa: African Corporations Trail-Blazing Across the Continent, 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.Africas Fragmented Trade Zone

The primary drivers come from within the continent, led by African corporate entrepreneurs. The report identifies 150 companies that are blazing the trail toward a more integrated Africa and the eight factors that explain how these companies are making an impact.

“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,” said Patrick Dupoux, BCG Senior Partner and co-author of the report. “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.”

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. Over the same period, the average number of intraregional M&A deals each year 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.

BCG identified 150 companies that are blazing a trail toward a more integrated Africa. They consist of 75 Africa-based companies and an equal number of MNCs that have established impressive track records in Africa and are contributing to further integration.

The African pioneers come from 18 countries on the continent: 32 are based in South Africa; 10 in Morocco; Kenya and Nigeria are each home to 6, 4 are from Egypt, and 2 each come from Côte d’Ivoire, Mauritius, Tanzania, and Tunisia. The MNCs are a global group, with France, the United Kingdom, and the United States most strongly represented. At the same time, a dozen MNCs from China, India, Indonesia, Qatar, and the UAE are active across Africa.

These African pioneers do eight things that are integral to their success:

  •  They actively expand their footprint across several African countries.
  •  They dare to make significant greenfield investments.
  •  They use 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 talents and develop a people advantage.
  •  They build local ecosystems.
  •  They connect Africa by facilitating the movement of people, goods, data, and information.

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 Africa.

For example, more than 80 companies, 45 of which are African, have a large African footprint, defined generally as having operations in at least ten countries. Nine African pioneers and 11 MNCs are making significant greenfield investments in manufacturing facilities and other business infrastructures—and are reaping attractive returns.

Both African companies and MNCs are making acquisitions in Africa, giving them quick access to new assets, markets, and customers. And African pioneers and experienced MNCs alike have learned that it often takes an ecosystem to build a business, and that investing in a good ecosystem can be a source of competitive advantage. By extending a pan-African company’s impact through local organizations and institutions, a local ecosystem also promotes growth and social development.

“If the past decade has demonstrated anything, it’s that these companies are masterful at overcoming adversity,” said Lisa Ivers, BCG Partner and co-author of the report. “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.”
  1. Opinions and Analysis


« February 2019 »
Mon Tue Wed Thu Fri Sat Sun
        1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28