Interesting reading! I have had the ‘Lions on the move McKinsey report’ on my to-read-list for some time now and when I finally opened the 72 pages dense report from June 2010, I simply could not let it go… I must say that McKinsey truly has added Africa onto their ‘radar of opportunities’!!
Below I will give you some highlights that fit into the MYC4 universe and that serves as foundation for the strategic choices MYC4 has taken.
“The rate of return on Foreign Investment is higher in Africa than in any other developing region. Global executives and investors must pay heed.”
Africa is among the worlds most rapidly growing economic regions (Real GDP rose by 5 percent a year since 2000. Africa’s total GDP of $1.6 trillion in 2008 is ’equal’ to Brazil’s or Russia’s; moving up to $2.6 trillion in 2020) – McKinsey even argues that companies in general must include Africa as part of their long-term planning. Additionally, stepping into the continent now gives a whole lot of upsides to be harvested in the future – such as create markets, establish brands, shape industry structures, influence customer preferences, etc, etc.
The key reasons behind Africa’s growth lies in improved political and macroeconomic stability and microeconomic reforms.
So, Africa represents an enormous untapped business potential, however; investment opportunities in Africa are hard to access due to incomplete financial markets with 80% of the African population having no access to capital, and this is particular hard in micro- and meso finance… fits perfect with MYC4’s strategic focus.
The report further concludes that Africa’s economic growth is creating substantial new business opportunities that are often overlooked by global companies. The four categories together (shown below) could be worth $2.6 trillion in annual revenue by 2020.
It is stimulating to see that McKinsey projects agriculture to be approximately 20% of future revenues, as one of MYC4’s key focus areas is to fuel ‘the green revolution’ in Africa via the corporation with FDB/Coop (supply chain project) where rural African farmers will be connected to the developed world – both in terms of getting access to fair priced capital loans but also in terms of exporting their goods outside of Africa. I will be speaking about this on TEDx Copenhagen here later this month (so coming soon to a video player near you).
To ignite ‘the green revolution’; yield per hectare land must rise! Experts agree that productivity in Africa can triple within 5-10 years if the developed world invests in this sector and particularly in knowledge sharing, consulting, and in infrastructure – IT billionaire Bill Gates acknowledges this and has changed his focus, with Bill & Melinda Gates Foundation, by giving ‘food production’ the highest priority.
All in all; the ultimate take away is that a lot of large and giant companies across the world carefully listen to what McKinsey recommends as to ‘strategic moves’!!
Sources for this post: “What’s driving Africa’s growth”, McKinsey Quarterly June 2010 – “Half the world is unbanked”, Financial Access Initiative & McKinsey, October 2009 – “Lions on the move: The progress and potential of African economies”, June 2010