McKinsey Global Institute

Article| Harvard Business Review

Cracking the next growth market: Africa

May 2011 | byMutsa Chironga, Acha Leke, Susan Lund, and Arend van Wamelen

A year ago, when South Africa hosted the World Cup of football, a Tswanian phrase, Ke Nako (“It’s Time”), reverberated across the world like the cacophony of a million vuvuzelas, announcing that Africa’s moment had come. Economists, consultants, and executives all suggested that the African economy, which had languished during the last two decades of the 20th century, was finally stirring.

Nevertheless, most 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 primarily to oil and mining companies. The recent political turmoil in such countries as Algeria, Egypt, Libya, Morocco, and Tunisia and the civil war 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 double bind: 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 of Africa’s consumer markets, prefer to invest in Asia’s dragon and tiger economies rather than in Africa’s economic lions. “Is it truly Africa’s time?” they wonder.