The consistent increase of GDP per capita that occurred over the last decade in Africa paved the way for the rise of local companies now at various stages of the globalization process.
The Boston Consulting group – a strategy consulting firm – recently drew up a list of 40 African companies it dubbed the “Challengers”. While hailing from diverse industries or countries, these national or regional champions share a lot of common characteristics. Often active in the mining or financial industry, they harness Africa’s comparative advantages to generate both high growth rates and strong profitability.
These “Challenger” come – for 67% of them, from three countries, South Africa, Egypt and Morocco. Barring Ecobank, which arguably belongs more to the English speaking part of the continent, it is striking that French-speaking Africa has failed, so far, to produce a single challenger when Nigeria and Angola can boast two each.
This missing link is a bit of a mystery. How is it that, 50 years after independence, the French speaking part of Africa –including former Belgian colonies- has proven unable to nurture corporate champions when the area is home to 25 % of the continent’s population and 11% of its GDP?
Rounding up the usual suspects is easy: tiny domestic markets, slow regional economic integration, a long history of state dominated economies, an awkward and repressive monetary regime in the so-called Franc zone, chronic political instability in the Congo basin, weak domestic capital markets and a relative lack of a business friendly culture. While these are clearly serious constraints, they do not fully explain the conspicuous absence of Francophone Africa from the continent’s league tables.
There is obviously no curse but changing this situation will require that:
- companies’ owners –including governments- take the risk of dreaming big dreams and play for the long term.
- domestic investors –both private and public- work to set up new and appropriate financing mechanisms to complement the limited bank financing available.
- governments recognize the need to support the growth of national champions through a long term partnership with a handful of strong local companies.
Groups such as NSIA and BGFI in the financial sector, show the potential to become “Challengers” in the near to medium term. It’s still unclear, however, who the next “Challengers” will be in manufacturing, agri-business, timber, construction and mining even though the French speaking Africa is richly endowed in these resources.