In Brief
The Problem
We’ve long heard that Africa is poised to be the next boom continent. But Western multinationals have repeatedly failed to thrive there, and many have abandoned the region altogether.
The Reasons
Four barriers stand in the way of success: pervasive corruption, unreliable infrastructure, a shortage of skills, and the mistaken belief that Africa’s emerging middle class provides the most promising market.
The Answer
The innovators who are succeeding in Africa flout the conventional wisdom—by building franchises to serve poorer segments of the population; internalizing risk to create strong, self-sufficient, low-cost enterprises; and integrating operations to avoid external corruption.
For years now, business leaders and investors from around the world have waited for the Africa Rising narrative to shift from promise to reality. The continent has understandably been the focus of increasing investment and attention since the turn of this century. With a young, urbanizing population; abundant natural resources; and a growing middle class, Africa seems to have all the ingredients necessary for breakaway growth—perhaps even outstripping the so-called tiger economies of East Asia a generation ago. Indeed, a 2010 report by the McKinsey Global Institute titled “Lions on the Move” expressly made this comparison, forecasting that consumer spending on the continent would grow by 40%, and GDP by $1 trillion, from 2008 to 2020.
