Africa’s businesses drive economic integration despite huge fragmentation – BCG

by | April 19, 2018 1:25 am



Despite the huge geographical, geo-political, transportation and infrastructural barriers on the continent, Africa’s businesses are still further driving economic integration in Africa.

According to a recent report by the Boston Consulting Group, while fragmentation in many forms remains a major problem for businesses in Africa, economic integration is still taken place at a faster pace.

“Fragmentation in Africa is much greater than anywhere else in the world, and it adds significantly to the economic challenges facing countries that typically lack the critical mass to compete globally,” Patrick Dupoux, senior partner and co-author of the report, Boston Consulting Group (BCG) said.

“Despite these barriers, we see more signs of economic integration with each passing month, quarter, and year. The primary drivers come from within the continent, led by African business. Africa invests more in Africa, Africa trades more with Africa, and Africans travel more to Africa,” Dupoux said.

The report stated that the primary drivers of the economic integration on the continent are led by African corporate entrepreneurs. It identifies 150 companies which consist of 75 Africa-based companies and an equal number of Multinational Corporations (MNCs) that have established impressive track records in Africa and are contributing to a more integrated Africa.

“Between 2006–2007 and 2015–2016, the average annual amount of African foreign direct investment nearly tripled, from $3.7 billion to $10 billion. Over the same period, the average number of intraregional M&A deals each year jumped from 238 to 418, with African-led transactions representing more than halfof all African deals in 2015,” the report states.

“Meanwhile, average annual intra-African exports increased from $41billion to $65 billion, and the average annual number of African tourists rose from 19 million to 30 million. African tourists made up more than half of all tourists on the continent in 2015–2016,” the report added.

The BCG report identified 150 companies that are blazing a trail toward a more integrated Africa, adding that it consists of 75 Africa based companies and 75 based Multinational Companies that have established impressive track records on the continent.

  “If the past decade has demonstrated anything, it’s that these companies are masterful at overcoming adversity,” Lisa Ivers, partner and report co-author, BCG said.

  “They have built impressive track records of creating value for themselves and advancing the development of the continent—and its many economies. They know that continuing to drive the integration of the African markets where they do business is one key way to pave the road to greater success,” Ivers said.

Josephine Okojie