Winning in Africa

Surging economies, rising incomes, and expanding urbanization are creating a new consumer class in Africa. Buying power on the continent is growing, and there’s a hunger for products and services. With a population topping 1 billion that speaks more than 2,100 languages, the continent is tough to categorize. But a vast amount of untapped potential awaits.

The Key Drivers of Growth in Africa

Private sector investment has grown significantly since the late 1990s.

The total population earning more than $2,700 annually is expected to reach 341 million by 2024.

Energy prices and GDP have enjoyed a steady growth rate over the past decade. However, there is some concern for the coming years as commodity prices drop and have less influence on growth.

More people are gaining access to mobile phones and Internet services.

Literacy rates have now exceeded 60%.

There’s more money to invest, while a demographic dividend is supplying Africa with a youthful, better-educated workforce.

Rising democratization across the continent is creating growth in many sectors.

Awareness of the Africa opportunity is one thing. Winning in Africa is another. Many companies that have operated there for decades have learned the hard lessons that await newcomers, who do not necessarily know how much to expect, where to start, or how to succeed. Implementing the right plan now to build their Africa capabilities by 2020 will help companies achieve success on the continent.

Companies that want to win need to address at least five realities:

Despite the operational challenges, the time to enter is now. But to succeed, companies will need to bring Africa into the boardroom.
The continent is a collection of different markets, cultures, borders, and trade and financial agreements, but they all require vastly different approaches to strategy and organization. Companies need to address Africa’s diversity.
More than in most other emerging markets, talent and market knowledge are in short supply, and political, economic, and governance risks remain. Companies must build 2020 Africa capabilities now.
An African consumer class is emerging and starting to reach critical mass. Companies must understand these consumers and develop products, services, and brands that resonate with them.
African leaders are working to improve their nations’ economic and social infrastructure. Companies should determine how they can help countries achieve their development goals while also making a profit. They need to commit to Africa.

The Private Equity Opportunity in Africa

Private equity is growing significantly in Africa. To be successful, firms need to adopt new investment strategies.