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2
Africas economic growth is creating substantial new business
opportunities thatmultinational companies often overlook. New
projections from the McKinsey GlobalInstitute (MGI) show at least
four categories that together could be worth $2.6 trillionin annual
revenues by 2020 (exhibit). In Lions on the move: The progress and
potential of African economies , MGI reviews the prospects of the
continents consumer-facingsectors (retailing, telecommunications,
and banking, among others), agriculture, naturalresources, and
infrastructure.
Consumer sectorsthe largest opportunityare already growing two
to three times as fastas those in the countries belonging to the
Organisation for Economic Co-operation andDevelopment (OECD). This
growth will create more consumer markets large enough toattract
multinational companies.
Africas agriculture holds enormous potential for companies
across the value chain. With60 percent of the worlds uncultivated
arable land and low crop yields, Africa is ripe for a
green revolution like those that transformed agriculture in Asia
and Brazil. The barriersto raising production in Africa are
well-known and complex, but if they could be overcome,MGI estimates
that the continents agricultural output could increase from $280
billiona year today to $500 billion by 2020 and as much as $880
billion by 2030.
Further growth in Africas resource sectors is likely. MGI
analysis suggests that thecontinents production of oil, gas, and
most minerals, measured by volumes, may continueto expand steadily
by 2 to 4 percent a year. At current prices, this growth would
raise the
value of resources produced in Africa from $430 billion annually
now to $540 billion by 2020.
Exhibit
Estimated annual revenues, 2020
$ billion
Total
Projected growth,
200820, $ billion
CAGR, 2
200820, %
Africas consumer goods and services present the largestof the
four business opportunities the McKinsey GlobalInstitute
identied
1Revenues from investments in infrastructure; assumes need for
infrastructure will continue to represent same share of GDPthrough
2020.
2Compound annual growth rate.
Source: McKinsey Global Institute analysis
Consumer goods and services 1,380
Resources 540
Agriculture 500
520
220
Infrastructure1 200
110
130
4
~2,620 ~980 4
5
2
9
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Finally, MGI sees large opportunities for companies that help
build Africas infrastructure.Currently, African governments and
private sources combined are investing about$72 billion a year to
do so. The continent, however, still faces huge unmet needs, which
will require at least an additional $46 billion a year in spending.
This goal, we calculate,could be met through a combination of
higher outlays by African governments, privatecompanies, and
non-OECD investors, along with regulatory reforms to boost
operationalef ciency.
Read an executive summary or download the full report at
mckinsey.com/mgi.
Copyright 2010 McKinsey & Company. All rights reserved.
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