Africa's collective GDP, at $1.6 trillion in 2008, is now roughly equal to
Brazil's or Russia's. While Africa's increased economic momentum is widely
recognized, less known are its sources and likely staying power. Among the key
findings:
Africa's growth acceleration was widespread, with 27 of its
30 largest economies expanding more rapidly after 2000. All sectors contributed,
including resources, finance, retail, agriculture, transportation and
telecommunications. Natural resources directly accounted for just 24 percent of
the continent's GDP growth from 2000 through 2008. Key to Africa's growth surge
were improved political and macroeconomic stability and microeconomic
reforms.
Future economic growth will be supported by Africa's increasing ties
to the global economy. Rising demand for commodities is driving buyers
around the world to pay dearly for Africa's natural riches and to forge new
types of partnerships with producers. And Africa is gaining greater access to
international capital; total foreign capital flows into Africa rose from $15
billion in 2000 to a peak of $87 billion in 2007.
Africa's economic growth is creating substantial new business
opportunities that are often overlooked by global companies RMGI
projects that at least four groups of industries-consumer-facing industries,
agriculture, resources, and infrastructure-together could generate as much as
$2.6 trillion in revenue annually by 2020, or $1 trillion more than today.
Today the rate of return on foreign investment in Africa is higher
than in any other developing region. Early entry into African economies
provides opportunities to create markets, establish brands, shape industry
structure, influence customer preferences, and establish long-term
relationships. Business can help build the Africa of the future.
The rise of the African urban consumer also will fuel long-term
growth. Today, 40 percent of Africans live in urban areas, a portion
close to China's and continuing to expand. The number of households with
discretionary income is projected to rise by 50 percent over the next 10 years,
reaching 128 million. By 2030, the continents' top 18 cities could have a
combined spending power of $1.3 trillion.
To understand the growth opportunities and challenges of individual
economies, MGI developed a framework that groups them in four broad clusters:
diversified economies, oil exporters, transition economies, and pre-transition
economies. Though imperfect, this framework can guide business leaders and
investors developing strategies for the continent and policy makers working to
sustain growth.
Foreseeing the potential rise of Africa's economic lions McKinsey Global Institute London-based director Charles Roxburgh and South Africa-based Principal Arend Van Wamelen discuss the sources and staying power of Africa's economic growth, the continent's compelling business opportunities, and the rise of the African urban consumer.
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