With the 2010 FIFA World Cup well over, the international sports spotlight has moved on, from South Africa to other tournaments in other lands. Still, European companies and investors should keep their eyes on Africa because competition in commerce is heating up across the continent.
A new report from the McKinsey Global Institute shows that Africa is now among the fastest-growing economic regions in the world, creating significant business opportunities in a wide range of industries. Early entrants onto the field can seize the advantage.
Africa’s collective gross domestic product rose at a 4.9 percent annual rate from 2000 through 2008, twice the pace of the preceding two decades. In our report, Lions on the Move: The Progress and Potential of African Economies, we show that this growth surge was broadly based, with roots extending far beyond the global commodities boom.
Looking ahead, we project that at least four groups of industries on the continent could together generate as much as $2.6 trillion in annual revenue by 2020, or $1 trillion more than today, measured in 2010 dollars. The biggest business opportunity of the four lies in consumer goods and services, followed by natural resources, agriculture, and infrastructure.
These projections reflect Africa’s recent economic advances and strong long-term prospects. The continent’s combined economic output, valued at $1.6 trillion in 2008, is now roughly equal to Brazil’s or Russia’s. Several factors suggest that this economic momentum can be sustained.
A Surge of Peace and Economic Reform
To start, Africa’s growth acceleration was widespread, with GDP rising more rapidly in 27 of its 30 largest economies — both in countries with significant resource exports and those without. Rising revenues from oil, minerals, and other natural resources accounted for just 24 percent of growth from 2000 through 2008. All the other sectors contributed as well, including finance, retail, agriculture,…