By 2030, the largest consumer markets will include Nigeria, Egypt and South Africa. There will also be lucrative opportunities in Algeria, Angola, Ethiopia, Ghana, Kenya, Morocco, Sudan, Tunisia, and Tanzania, according to Brookings. PHOTO | SHUTTERSTOCK
Africa has at least 345 companies with revenues of $1 billion or more per annum of which 3 percent (11) of the firms are located in East Africa (EA) underlining the
region’s growing consumer market for various goods and services, according to a report by global consultancy firm McKinsey Global Institute.Kenya tops its EA counterparts by hosting the highest number of companies (six) that produce $1 billion in revenues per year, followed by the Democratic Republic of Congo (DRC) with four and Tanzania with one company.
Uganda, Rwanda, Burundi, South Sudan and Somalia missed out on the list, according to the report, ‘Reimagining economic growth in Africa; Turning diversity into opportunity,’ which did not disclose the identity of the companies under review.
According to the report dated June 2023, a bulk (40 percent) of the African companies with $1 billion in revenues per year are located in South Africa.
Read: Tax exemptions, incentives rob Kenya of growth in revenues
Consumer expenditure on the continent has grown at a compound annual rate of 3.9 per cent since 2010 and reached $1.4 trillion in 2015, and this figure is expected to reach $2.1 trillion by 2025, and $2.5 trillion by 2030, presenting an exciting opportunity for expansion in retail and distribution, according to an American research firm Brookings.
By 2030, the largest consumer markets will include Nigeria, Egypt and South Africa. There will also be lucrative opportunities in Algeria, Angola, Ethiopia, Ghana, Kenya, Morocco, Sudan, Tunisia, and Tanzania, according to Brookings.
Africa is one of the fastest-growing consumer markets in the world, with household consumption increasing even faster than its Gross Domestic Product (GDP) in recent years.
According to McKinsey, large private companies have an important role to play in rekindling economic progress in the continent because they contribute disproportionately to growth, innovation, employment, exports, productivity, and taxes.
Research shows that emerging economies with consistently high growth rates had twice as many large companies as other economies.
Large companies, too, have grown revenues faster than continent-wide GDP growth since 2015 to 2021.
"Africa’s big companies have proven resilient in the face of challenges over the past decade and now are well positioned to grow," says report.
Read: How economic disparities undermine East Africa’s growth
"Their success and growth will have positive knock-on effects among the myriad small and medium-size enterprises that participate in their supply chains and support the vast majority of jobs on the continent."
About 230 of these 345 companies are homegrown, meaning they were started in an African country, often by a local entrepreneur while 52 per cent of the continent’s $1 billion–plus companies are State-owned enterprises, according to the report.
These large companies operate in all major sectors on the continent, but 70 per cent of the revenues they generate come from just six subsectors— oil and gas, mining, retail and consumer goods, financial services, manufacturing, and telecommunications.
According to the report about 50 percent of large homegrown companies are publicly traded, 30 percent are privately owned and the remainder are State-owned enterprises.
The rest of the large companies operating in Africa are subsidiaries of foreign firms, roughly 37 percent of which are publicly traded and the remainder private, including a few state-owned enterprises primarily from China.
Compared with other markets, foreign-owned companies have a disproportionately significant role in African countries by accounting for one-third of all large companies in Africa and about one-third of corporate revenues as well.
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