Long-Term Economic Opportunity in Africa: McKinsey

Africa is the world’s second largest continent and it has the second largest population after Asia. The African continent covers an area of 30.2 million square km which is equivalent to almost 20.4% of the total land area. Africa is surrounded by Mediterranean Sea, Suez Canal and the Red Sea, Indian Ocean, Atlantic Ocean and Sinai Peninsula. Africa has 54 states, including Madagascar and various island groups such as ‘Sahrawi’

The Africa economy is as diverse as the region. The southern parts are prosperous whereas the other parts struggle for stability. African economy is an extreme one, however, due to the presence of natural resources, has the potential to grow at a fast pace.

The Africa economy requires an industrial impetus to bring it out of poverty as it is the store of some of the rarest metals and precious stones. Africa has almost 90% of the world’s cobalt, 50% of gold 90% of platinum, 70% of tantalite, 98% of chromium, 64% of manganese and 33% of uranium.

Strong prospects await global companies that invest in Africa's consumer, agricultural, natural-resource, and infrastructure sectors.
At least four categories together could be worth $2.6 trillion in annual revenues by 2020: consumer-facing sectors - retailing, telecommunications, and banking, among others - agriculture, natural resources, and infrastructure,

according to Lions on the move: The progress and potential of African economies.

New projections from the McKinsey Global Institute (MGI) show consumer sectors—the largest opportunity—are already growing two to three times as fast as those in the countries belonging to the Organisation for Economic Co-operation and Development, or OECD.

This growth will create more consumer markets large enough to attract multinational companies.

Africa’s agriculture holds enormous potential for companies across the value chain.
With 60 percent of the world’s uncultivated arable land and low crop yields,

Africa is ripe for a “green revolution” like those that transformed agriculture in Asia and Brazil.

The barriers to raising production in Africa are well-known and complex, but if they could be overcome, MGI estimates that the continent’s agricultural output could increase from $280 billion a year today to $500 billion by 2020 and as much as $880 billion by 2030.

Further growth in Africa’s resource sectors is likely.

MGI analysis suggests that the continent’s production of oil, gas, and most minerals, measured by volumes, may continue to expand steadily by 2 to 4 percent a year.
At current prices, this growth would raise the value of resources produced in Africa from $430 billion annually now to $540 billion by 2020
Finally, MGI sees large opportunities for companies that help build Africa’s infrastructure.

Currently, African governments and private sources combined are investing about $72 billion a year to do so.

The continent, however, still faces huge unmet needs, which will require at least an additional $46 billion a year in spending.

This goal could be met through a combination of higher outlays by African governments, private companies, and non-OECD investors, along with regulatory reforms to boost operational efficiency.

Read More here: - http://www.economywatch.com/in-the-news/long-term-economic-opportunity-in-africa-mckinsey/


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