The Globe

The contlnent Is home to
many QB the worLolS biggest
opportunlties. ihe trick is
deciding where and how
to seize thern, by Mutsa
Chironga, Acha Leke, Susan
Lund, and Arend van
Warnelen
year ago, when South Africa
hosted the World Cup of football,
a Tswaniail phrase, Ke Nako ("It's
Time"), reverberated across the world like
the cacophony of a million vuvuzelas, anilouncing
thatAfrica's moment had come.
Economists, consultants, and executives al1
suggested that the African economy, which
had languished during the last two decades
of the 20th ceiltury, was finally stirring.
Nevertheless, nlost companies have
been slow to enter Africa. Many assumed
that the flutter of attention was the reflection
of a global boom in commodity prices,
and therefore of relevance primarilyto oil
and mining companies. The recent political
turmoil in such countries as Algeria, Egypt,
Libya, Morocco, andTunisiaand thecivilwar
in Ivory Coast have dramatically reminded
executives of the enormous uncertainty
that businesses must cope with in Africa.
With prodemocracy movements breaking
out in some of Africa's fastest-growing
economies, multinational companies face
a doublebind: Some of the most promising
countries present the highest risks.
That's not all. In Africa the infrastructure
is still poor; talent is scarce; and poverty,
famine, and disease afflict many nations.
Most Western executives, unsure of the
size ofAfrica's consumer markets, prefer to
invest in Asia's dragon and tiger economies
rather than in Africa's economic lions. "1s it
truly Africa'stime?" they wonder.
So often were we asked the question that
last year McKinsey & Company decided to
analyze Africa's economies and conduct a
microlevel study of its consumer markets.
Our goal was to identify Africa's sources of
growth, determine if it would continue over
May 2o?1 Harvard Business Review 11
time, and size opportunities in key sectors.
(For the full analysis, see Lions onthe Move:
The Progress and Potential ofAfrican Economies
at www.mckinsey.com/mgi.)
The findings surprised us. Over the past
decade, Africa's real GDP grew by 4.7%
a year, on average-twice the pace of its
growth in the 1980s and 1990s. The surge
cut across nations and sectors. By 2009,
Africa's collective GDP of $1.6 trillion was
roughly equal to Brazil's or Russia's. The
continent is amongthe fastest-expanding
economic regions today. In fact, Africa and
Asia (excluding Japan) were the only continents
that grew during the recent global
recession. Though Africa's growth rate
slowed to 2% in 2009, it bounced back to
nearly 5% in 2010, and in 2011 it is likely to
touch 5.2%.
While political troubles, wars, natural
disasters, and poor policies could slow
Africa down, theprospects for consumerfacing
companies are bright. Africans
spent $860 billion on goods and services
in 2008-35% more than the $635 billion
that Iildians spent, and slightly more than
the $821 billion of consumer expenditures
in Russia. If Africa maintains its current
growth trajectory, consumers will buy
$1.4 trillion worth of goods and cervices iil
2020, which will be a little less thanIndia's
projected $1.7 trillion but more than Russia's
$960 billion.
As Africa's economies progress, opportunities
are opening in sectors such
as retailing, telecommunications, banking,
infrastructure-related industries,
resource-related businesses, and al1 along
the agricultura1 value chain. Consider that
telecom companies in Africa have added
316 million subscribers-more than the entireU.S. population-since 2000. According
to UN data, Africa offers a higher return on
investment than any other emerging market.
For severalreasons: Competition isless
inteilse and few foreign companies have a
presence there, and pent-up consumer demand
is strong. Companies that desire revenues
and profits, we believe, can no longer
ignore Africa.
Smart multinalional companies are
busy...