African businesses are key to transforming the continent

I “officially” joined IC Publications 20 years ago in March. I say “officially” because from a young age I had been exposed to the group’s activities, to what was happening in Africa – and it was never in doubt in my mind that I would join the family business.

After a few months understanding the business, my first assignment was to go to Maputo, Mozambique in July 2003 to cover the launch of the African Union as a new continental organisation to build on the work of the Organisation of African Unity. 

One tends to have romantic, nostalgic views of the past – but with hindsight these were formidably progressive years for the African continent, giving rise to the “Africa Rising” narrative. The first 15 years of the millennium coincided with numerous events that led to rapid growth and renewed optimism.

At that point, China’s economy had been consistently growing at double-digit rates, driving a commodities boom; and technology and telecoms were starting to connect people and processes in all kinds of different ways, unleashing a new dynamism.

The tide of globalisation had lifted all boats, and international trade volumes were booming. Africa, as a result, was riding high on the back of this, with a rapidly-rising consumer class emerging. The macro fundamentals were becoming stronger as a result of prudent policy and decision-making from leaders and regulators.

The continent’s leaders had big ambitions, both for their countries and for the continent. They understood and believed that they were intertwined and interdependent. Tacticians such as Algeria’s Abdelaziz Bouteflika, pragmatists such as Ethiopia’s Meles Zenawi and conciliators such as Mozambique’s Joaquim Chissano and Botswana’s Festus Mogae rubbed shoulders with the more ideologically-minded Thabo Mbeki of South Africa and Muammar Gaddafi of Libya.

All of this brought an energy and dynamism on a continental level. Sadly, a barren period followed the 2012 death of Meles, with only Rwanda’s Paul Kagame still truly flying the banner for a continental agenda. Fortunately, it  is now beginning to gather pace again thanks to the African Continental Free Trade Area (AfCFTA).

Taking stock

Our group is all in on Africa. We don’t have an Africa strategy because Africa is our strategy, to paraphrase former Ecobank CEO Arnold Ekpe.

As long-standing observers, reporters and commentators of the continent we have a good grasp of what works and what doesn’t. Despite the constant headwinds the continent routinely faces, a lot does happen and does work, even if things should be moving at a much faster pace.

Being asked to reflect on these 20 years is interesting because it allows me to take stock. And the numbers tell a story of their own. National income (or GDP) in Africa, for all its flaws as a metric, has increased threefold in the last 20 years, from $804bn back in 2003 to $2,810bn in 2021, according to World Bank data and our own calculations. To put things into perspective, for just over two decades preceding this, between 1981 and 2003, Africa’s GDP had risen only from $406bn to $804bn.

Over the “Africa Rising” period we have seen the sometimes astonishing ascent of African companies that evolved into global giants: companies such as Dangote, MTN, Naspers, the Groupe Chakira in Tunisia and Orascom and El Sewedi in Egypt.

Institutions such as the Afreximbank, the Trade and Development Bank (TDB) and the African Development Bank (AfDB) have also grown in stature and have a fundamentally critical impact. “African solutions to African problems” is no longer just a rhetorical motto but has become a motto we own and live.

Too little, too slowly?

But we do not exist in isolation – and when compared to other emerging markets, the numbers are not so rosy. China grew nearly tenfold between 1981 ($196bn) and 2003 ($1,660bn) then leaped another tenfold to a GDP of $17.7 trillion by 2021.

For the last 15 years, African Business has been publishing its annual ranking of the top 100 banks and the top 250 listed companies. Reviewing these, I was surprised by the numbers. I anticipated that there would have been faster growth. In the last decade, the total assets of the top banks in dollar terms have grown from $1.2 trillion to only $1.6 trillion.

Looking at the biggest listed companies, when I compare last year’s ranking with 2012, I find a marginal increase in the market capitalisation of our Top 250 companies, from $654bn to $702bn. But that represented a fall from $848bn (2011) and the peak of $948bn reached in 2015.

There are numerous reasons behind this, not least the large currency devaluations over this last decade in some of our biggest economies. Angola has seen its currency lose 81% of its value between 2013 and 2022; over that same period, the Egyptian pound has fallen 74%; Nigeria’s naira has fallen 65% and the South African rand approximately 50%. 

These four economies alone account for some 50% of Africa’s total GDP, and these devaluations reflect structural problems including our dependency on commodities.

In my opinion, the numbers don’t tell the full story. The banking industry, like the telecoms sector for that matter, has been a bright spot. Many banks have reached a critical mass where they can be forces for good and able to fund transformative projects and support local businesses. 

This wasn’t the case for most countries 20 years ago. Banks in Nigeria, Kenya and South Africa, as well as in Morocco and Egypt, have been the standout performers.

As publishers, our remit has been to help tell the full African story, and it has been one of many corporate successes. CEOs I speak to continue to be upbeat despite a challenging context. As Africans, we have no alternative but to make our continent succeed.

What the private sector would like, I was told at the Davos World Economic Forum meeting in January, is greater involvement in national and continental decision-making, and less of the knee-jerk policies that lead to unintended consequences. Some CEOs were worried that with governments being financially constrained, the private sector will be penalised through direct or indirect taxes. Signs of this are being seen in Ghana and Tunisia.

More worrying were the latest findings from the 2022 Ibrahim Index of African Governance, which described a worsening environment in terms of security and the rule of law in 2021 compared to a decade earlier. Anyone who follows the continent knows this is real – many countries have regressed across important metrics. Getting these two right is fundamental to progress.

Agency and execution

So what about the future? Agency and execution are key. We need to be even more impatient. Agriculture, green minerals and the energy transition are massive opportunities. It’s imperative we don’t outsource these, as we have in the past.

Technology has been transformational: now it’s about scaling it and multiplying these successes in other sectors. We are seeing interesting developments in areas such as logistics, nearshoring and manufacturing. Getting it right will create thriving new trade corridors.

But our leaders need to get it and acknowledge the need to move fast. When you look at the ages at which some of our leaders came to power in the era of independence – for instance Habib Bourguiba (52), Kwame Nkrumah (47), Julius Nyerere (38), Patrice Lumumba (34), Gamal Abdel Nasser (33), Thomas Sankara (34) – you find that the average is a mere 41. The average age of current heads of state on the continent is 64.

At Davos, I attended an interesting presentation by a team from consultants McKinsey who also looked back and looked ahead at the next 25 years. 

A few numbers stand out in a report that the global consultancy will be releasing in February. The first was how the continent, between 2000 and 2019, has seen a fundamental structural shift, away from agriculture into services. Respectively, their share of gross value added (GVA) has fallen from 58% to 49% and risen from 30% to 39%.

Another data set relates to shifts in the world’s working population. By 2050 Africa will add 595m people to the global workforce and be home to the largest and youngest population globally. 

By contrast China will shed 158m people from its workforce and Europe 70m. India, on a similar trend to Africa, will add 217m people. The rising population will support local value addition. At Davos, I heard that it is unlikely the world will want to switch rapidly to consuming chocolate made in Africa – to which a CEO replied: “that’s OK, as long as the two billion Africans consume African chocolate.”

Realising the trading opportunities presented by the AfCFTA, I was told, will require some 2m trucks. Let us manufacture these in Africa to create a virtuous circle. By 2030, spending power on the continent is estimated to be $6 trillion, rising to $16 trillion by 2050. All of this gives us food for thought; and the ideas and motive to act.

Thanks to our peers

Many of you will recall a time when the Economist labelled Africa “the hopeless continent”. Given the situation, some thought that publishing exclusively on Africa was a foolish thing to do. 

Maybe, but we do it because we care. Africa has over the years repaid our trust and I can only be positive about the continent’s prospects.

As I write this reflection, I would like to conclude by giving a mention to our peers and competitors, the likes of Stears, TechCabal, CNBC Africa, Jeune Afrique and the many others out there in the “grey matter” business. 

The more quality media groups there are on the continent the better. It spurs one to do new things and not rest on our laurels. I also know the terrain is not easy – but all who set out on the journey are playing a profound role in the progress of Africa. A luta continua!