Africa’s Top 250 Companies: North Africa

Our table of the Top 25 North African firms demonstrates the biggest overall growth of any regional table. The main cause is the partial recovery in the value of Egyptian stock values, so this growth is rather more of a recovery than genuine progress.

Yet this advance is certainly obvious in the composition of our table. Last year, 20 North African companies made it into our top 100 but our entire North African Top 25 are ranked among the 100 biggest companies in Africa.

 As last year, companies from just two countries fill our North African table: 12 from Morocco and 13 from Egypt, although there are just three Egyptian firms in the top 10.

Itissalat Al Maghrib, otherwise known as Maroc Telecom, remains the biggest company in the region, with a market capitalisation of $10.8bn, although Egypt’s Orascom Construction Industries has closed the gap from $3.7bn to $2.5bn over the past 12 months. Maroc Telecom’s current value is also still well below the $13.8bn that we recorded in our 2012 survey.

The value of Telecom Egypt has increased from $3.3bn in our 2013 survey to $4.2bn this year, in the run-up to significant changes in its operations. The land-line operator currently holds a 45% stake in Vodafone Egypt but has now been instructed to sell this following the purchase of its own mobile operating licence. The company has agreed to pay $2.5bn for the licence, which will make it the fourth mobile operator in Egypt.

The biggest sign of growth in the region is the value of the 25th ranked company. Last year, Banque Maroc du Commerce et l’Industrie took the final ranking position with a value of $809m but Suez Cement needed to break the $1bn barrier to take the same spot this year.

The position of Egyptian companies in our survey is closely bound up with the security, political and economic future of the country. A stable political environment is a necessary prerequisite for strong economic growth and successful private sector companies. Egypt currently looks to be a long way from such stability but the economic potential of the country is clear for all to see.

With a huge population, globally important transport infrastructure and close ties with both the Middle East and Africa, investors would pile into the country if the political and economic situation could be settled. Rabat is currently making one of its periodic attempts to promote Moroccan companies in sub-Saharan Africa. The country’s relations with the rest of the continent have long been strained by its continued occupation of the Western Sahara and resulting exclusion from first the Organisation of African Unity and then the African Union. However, in February and March, King Mohammed VI led a delegation of Moroccan business leaders on a tour of Mali, Côte d’Ivoire, Guinea and Gabon.

This strategy has become even more urgent because of economic stagnation in Morocco’s traditional trading partners, in Southern Europe. Maroc Telecom is already active in several markets in West Africa through its subsidiaries Onatel in Burkina Faso, Mauritel in Mauritania, Gabon Telecom in Gabon and, most recently, its Sotelma offshoot in Mali. The 31m customers of these four companies generated a pre-tax profit of $347m in 2013, a 31% rise on 2012.

It remains to be seen what impact the sale of a 53% stake in Maroc Telecom to Etisalat will have on its future operations. There are particular problems in Gabon, where Etisalat already has its own mobile licence and may have to sell off one of the two operators.

The future direction of the Libyan economy remains uncertain because of political difficulties in the country. Various armed groups have refused to give up control of the oil fields, pipelines and coastal oil terminals that they seized during the civil war. Some have blockaded ports for several months and have threatened to attack any tanker that attempts to dock. Tripoli estimates that it lost about $9bn in oil revenues between the end of the civil war and the end of last year.

Africa’s Top 250 companies – new entrants

There are 17 new entrants in our Top 250 this year: a relatively small number by the standards of recent years. Looking back five years, we had a massive 91 new entrants in our Top 250. This could suggest stagnation in the African corporate world but was also the result of more regular initial public offerings in 2009. Some, such as African Petroleum and Amer Group Holding, return to our table after an absence.

Eight of the 17 new entrants this year are based in Egypt. Despite continued upheaval in Cairo, this demonstrates that there has been at least a partial recovery in investor sentiment regarding the country. Nigeria has three new entrants and Zambia two, demonstrating that even commodity-based economic growth can filter through into the rest of the economy, creating companies of continental stature.

The most highly valued new entrant in our table is Qatar National Bank Alahly. Qatar National Bank, which bought a 97% stake of the company from Société Générale in March for $2.45bn, has employed McKinsey & Co to advise on its Egyptian strategy in an effort to make the most of its new asset.

The bank’s net income increased by 16% last year, including a 9.6% rise in loan growth. Qatari investment in the company does not appear to have been affected by the fall of the Islamist Mursi government, which had been backed by Doha, to the chagrin of other Gulf states.