Tuesday, July 15, 2025
24.3 C
Lagos

McKinsey Report: Africa Targets $5.6tr Consumer, Business Spending by 2025

Although Africa’s growth has slowed, the long-term fundamentals are strong, big business opportunities lie ahead and the overall outlook is positive.

These facts are contained in the latest McKinsey Global Institute Report titled: ‘Lions On The Move II: Realising The Potentials of Africa’s Economy.’  

According to the MGI’S new report, four fundamentals are likely to underpin Africa’s economic growth.

Firstly, Aftica has the fastest urbanisation rate in the world. Over the next ten years, 187 million more Africans will live in cities—equivalent to half the US population today.

Secondly, it has the biggest working-age population in the world of 1.1 billion in 2034—larger than in either China or India.

Thirdly, it has the  largest reserves in the world of many key natural resources (e.g., 60 percent of the world’s unutilised but potentially available cropland, and the largest global reserves of vanadium, manganese, and many others).

Additionally, Africa has the chance to leapfrog old technologies using mobile and digital (e.g., penetration of smartphones expected to hit 50 percent in 2020 vs. 18 percent in 2015).

The new MGI report confirmed that spending by consumers and businesses in Aftica today totals $4 trillion.

By 2025, the total could be $5.6 trillion. Household consumption is expected to grow by 3.3% a year and reach $2.1trillion by 2025. The total could be $5.6 trillion, reflecting an expanding African consuming class.

Business spending is expected to grow from $2.6 trillion in 2015 to $3.5 trillion by 2025, and Africa has an opportunity to nearly double manufacturing output from $500 billion today to $930 billion in 2025. AFRICA’S economies are no longer a story about exporting commodities- but about tapping into vibrant domestic demand.

Accelerated industrialisation could lead to a steep change in productivity and the creation of 6-14 million stable jobs over the next 10 years.

Acha Leke, a McKinsey Senior Partner and Report Co-author, said:

“Our new research shows how in coming years Africa will benefit from strong fundamentals including a young and growing population, the world’s fastest urbanisation rate, and accelerating technological change. These will help drive rapid growth in consumer markets and business supply chains, and will offer opportunities to build large, profitable industrial and services companies.

“Tapping Africa’s consumer markets will require companies to have a detailed understanding of income, demographic, and category trends. Thriving in business markets will require businesses to offer products and develop sales forces able to target the relatively fragmented private sector. But what our research also shows is how much work needs to be done both by companies themselves and by Africa’s governments to translate opportunity into tangible economic benefits.”

To make the most of the opportunities, Aftica needs more large companies. MGI’S  new database of Corporate Africa, shows that the continent has 700 companies with revenues of more than $500 million, of which 400 companies have revenues of more than $1 Billion. AFRICA’S companies are growing faster and are generally more profitable than their global peers.

“Africa’s top 100 companies have achieved success by developing strong positions at home, staying the course to build their businesses over decades, integrating what other companies would usually outsource, and investing in building and retaining talent. Further success is possible in six high-potential sectors with high growth, high profitability, and low consolidation. These are: wholesale and retail, food and agri-processing, health care, financial services, light manufacturing, and construction.”

Governments need to play a stronger role in unleashing renewed dynamism. Six priorities emerge from this research.

Firstly, mobilise more domestic resources, taking bold steps to mobilise more of its own funding to finance development

Secondly, aggressively diversify economies, encouraging growth in high-potential sectors in close cooperation with business, based on a clear understanding of their countries’ comparative advantages. Then accelerate infrastructure development and deepen regional integration

Additionally, create tomorrow’s talent, ensuring that educational and training systems build work-relevant skills, and that students are aware of, and encouraged to enter, these vocations and that the private sector builds on best practice.

Finally, ensure “healthy” urbanization, so that cities grow with the infrastructure required to make the biggest positive economic and social impact possible

Delivering on these six priorities will require the vision and determination to drive far-reaching reforms in many areas of public life—and capable public administration with the skill and commitment to implement such reforms.

 

 

ABOUT MCKINSEY GLOBAL INSTITUTE

The McKinsey Global Institute (MGI), the business and economics research arm of McKinsey & Company, was established in 1990 to develop a deeper understanding of the evolving global economy. Our goal is to provide leaders in the commercial, public, and social sectors with the facts and insights on which to base management and policy decisions

The partners of McKinsey & Company fund MGI’s research; it is never commissioned by any business, government, or other institution.

The Lauder Institute at the University of Pennsylvania ranked MGI the Number One private sector think tank in the world in its 2015 Global Go To Think Tank Index.

McKinsey has offices in Ethiopia, Kenya, Morocco, Nigeria, South Africa and Angola. The Johannesburg office opened in 1995, soon after the dawn of South Africa’s new democracy. We have played an active role in the country’s transformation and development—helping top companies win on the world stage, supporting the upgrade of key institutions and infrastructure, building leadership and capabilities.

In South Africa and over 40 other countries in Africa, we shape strategy and strengthen operations for players in major industries, and help deliver better outcomes in education and health care. We have over 300 people based in Johannesburg and have delivered over 1000 projects, with 1400 more across Africa.

spot_img
spot_img
spot_img

Hot this week

NAICOM, Insurance Industry Mourn Buhari

It is with profound sadness that we received the...

Polaris Bank Partners Woodhall Capital, UK, Lagos State in ₦1.5bn Creative Economy Fund

L-R- Abimbola Ozomah, Executive Director, Polaris Bank; Mojisola Hunponu-Wusu,...

Heirs Insurance Group Reports N61bn GWP in 2024, an Increase of 70%

Heirs Insurance Group (HIG), Nigeria’s fastest-growing insurance group, has...

Stanbic IBTC Holdings Meets CBN’s N200bn Recapitalisation Policy

In a landmark achievement that highlights the steadfast confidence...

SanlamAllianz Partners NCRIB on 2025 Empowerment Series

Dr. Abosede Adegbite, Consultant, Family Physician; Tope Adaramola, Executive...

Topics

Global Airlines Financial Monitor: May 2O16

Key Points: · Global airline share prices fell by 3.0%...

Prof. Uchenna Uwaleke to Keynote GOCOP 2023 Conference

The first Nigerian Professor of Capital Market, Prof. Uchenna...

NETCO Posts 137% Increase in Operating Profit for 2023

The NNPC Engineering and Technical Company (NETCO), a subsidiary...

Miss Insurance 2017 Visits Law Union & Rock Insurance

L-R: Chief Marketing Officer, Mr. Steve Ajudua; Head, Human...

Emirates, Air Canada Form First-Ever Strategic Partnership

Emirates and Air Canada today announced the signing of...

Continuous Dialogue Critical to Tackling Telecoms Industry Challenges – Danbatta

  L- R: Engr. Bako Wakil, Director, Technical Standards and...

NSML Launches Clean Waterways Initiative to Tackle Plastic Pollution

NLNG Shipping and Marine Services Limited (NSML) has launched...
spot_img

Related Articles

Popular Categories

spot_imgspot_img