A survey report indicates that high optimism for Africa’s long term growth is not due to the availability or lack of resources, but in the proliferation of innovative concepts that the continent has witnessed in recent years, driven by technology.
The survey report from McKinsey on African business opportunities has shown that an increase in urbanization, high infrastructural demand, and technological development, are fueling high hopes, concerning the economic prospects of Africa.
Respondents on the continent and other regions have a strong belief that, in two decades from now, Africa would rank tops among the continents with the fastest growing GDP.
With specifics to countries, where the market opportunities lie, the report also mentioned the relevance of “on-the-ground knowledge, as a vital factor in unleashing these business potentials.
We cannot, however, shy away from challenges that confront the ease of carrying out business on the continent.
Corruption and political instability are two common ones that change the dynamics of a well-structured business.
There can, however, be some approaches to these effects, such as developing talents with embracing digital technologies, to support the strategy.
The number of respondents on the survey, who agreed that Africa’s combined GDP will top the world rankings in 20 years, trumps the number that does not.
Yes, the optimism of the long-term project in Africa is high.
Most respondents also believed that the acceptance of digital technology and a high demand for basic services in infrastructure indicates the continents biggest chances.
One would have thought that the respondents would have indicated the presence of mineral resources as a major factor for growth opportunities, but more references were given to urbanization.
The advantages (and optimism) of being local
Some results also suggest that the participants of the survey responded to business opportunities in Africa according to the comprehension of their locality.
Respondents who were not based on the continent did not quite give many reports on better performance.
Responses from the local business operators indicated that profitability from their market has increased compared to revenue growth.
More reports have come from profitability growth, than revenue growth in the past half of the decade.
The percentage of respondents that favored the continent as an attraction for their business was on the high, compared to those who did not.
This indicates a big expectation for revenue growth for their companies on the African continent.
Nigeria and South Africa got cited the most, by the respondents, as the countries where the best opportunities lie, based on, on-the-ground knowledge, however, there are economies that are fast growing, like Ethiopia, Senegal, and Ghana.
How the best performers are winning in Africa
Let us take a closer look at the approach that tends to place companies in the best position to have a rethink about African business.
Political issue was a major factor identified as a barrier; however, this challenge and many more can be met.
For instance, some of these companies integrated their supply chains, provided finances to their suppliers and had local representation among the shareholders. Investment in the local community was also put into action.
Another approach is to invest in existing talents through training programs, while also offering programs for interns. Other talent-development practice should also be encouraged.
These would ensure an increase in the number of workforces, which is another reason one should rethink the opportunities in African business.
On a final note, the response from the survey shows that companies looking at future prospects in African business are investing in new technologies, operations, and business models.
Though the continent is plagued with complexities, indications from the survey show that the continent offers great opportunities for local and foreign companies who wish to explore the space of Africa’s long-term growth and development.