Contrary to conventional wisdom, Africa has a corporate sector. A new report by McKinsey counts 400 companies on the continent with annual revenue of more than $1 billion, and notes they are growing faster, and are more profitable, than their global peers. Half of these companies are African-owned, 40% are publicly-traded, and between 10% and 20% are family-owned.
As the CEO of a firm based in Africa, I can speak from experience that African chief executives face a variety of challenges. But in my view, a set of challenges also presents a host of opportunities. Here are three challenges most African executives will face along with some thoughts on solutions.
Lack of a skilled workforce. By 2034, Africa will have the world’s largest labor force, surpassing that of India and China. Yet Africa tends to experience a “brain drain,” with the best and brightest young people leaving for schools abroad. African education needs more of everything –more schools, more trained teachers, more investment. For example, the Africa-America Institute notes there are 50% more students per professor at African universities compared to the global average.
In my experience, African workers are dedicated and hardworking. To build the workforce of tomorrow, there is a clear opportunity for African companies to partner with local schools and universities. African CEOs can take the lead by offering talent and collaborating on curricula, courses and training that will develop needed skills.
Infrastructure. The lack of reliable energy, roads and railroads can cut productivity by African companies by as much as 40%, according to the World Bank as referenced by the site African Renewal. To meet this challenge, African CEOs can look for and support “disruptive” technologies to enhance or potentially serve as an alternative to existing resources.
For example, Deloitte says the growth of mobile technology has allowed Africans to “leapfrog” poor landline infrastructure. Uber has delivered a million rides on the continent, with growth potential prompted by minimal public transportation and the difficulties of car ownership and financing. The gaps in traditional infrastructure provide real opportunities for African chief executives to support innovation in multiple sectors, including energy, transportation and technology, as well as agriculture, healthcare and finance.
Impact of the oil and commodity economy. When you look at the continent as whole, the economic picture is multi-faceted. While growth has slowed among oil exporters, the rest of Africa has posted accelerating growth. In terms of natural resources, Africa exports 10% of the world’s oil and gas, 9% of copper and 5% of iron ore. Even with today’s low commodity prices, much of Africa’s production continues to be cost-competitive, so the resources sector is positioned strongly for when demand recovers.
Yet there is no doubt that Africa needs better insulation to absorb oil and commodity price shocks. The answer lies in diversification. Agriculture, tourism, healthcare, all of the myriad sectors previously mentioned offer opportunities for Africa’s chief executives of tomorrow.
They say when one door closes, another one opens. As an African CEO, every day of doing business means a multitude of open doors. These vast opportunities present African companies and chief executives with unlimited potential to build Africa’s future.
Zandre Campos is chairman and CEO of ABO Capital, an international investment firm that invests in companies in the healthcare, energy, transportation, hospitality, technology and real estate sectors throughout Africa. ABO’s mission is to create global value for developing countries in Africa, while contributing to their economic development.