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J U LY 2 0 10

m c k i n s e y g l o b a l i n s t i t u t e

Sizing Africa’s business opportunities

Strong prospects await global companies that invest in the

continent’s consumer, agricultural, natural-resource, and
infrastructure sectors.
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Africa’s economic growth is creating substantial new business opportunities that

multinational companies often overlook. New projections from the McKinsey Global
Institute (MGI) show at least four categories that together could be worth $2.6 trillion
in annual revenues by 2020 (exhibit). In Lions on the move: The progress and potential
of African economies, MGI reviews the prospects of the continent’s consumer-facing
sectors (retailing, telecommunications, and banking, among others), agriculture, natural
resources, and infrastructure.

Consumer sectors—the largest opportunity—are already growing two to three times as fast
as those in the countries belonging to the Organisation for Economic Co-operation and
Development (OECD). This growth will create more consumer markets large enough to
attract multinational companies.

Africa’s agriculture holds enormous potential for companies across the value chain. With
60 percent of the world’s uncultivated arable land and low crop yields, Africa is ripe for a
“green revolution” like those that transformed agriculture in Asia and Brazil. The barriers
to raising production in Africa are well-known and complex, but if they could be overcome,
MGI estimates that the continent’s agricultural output could increase from $280 billion
a year today to $500 billion by 2020 and as much as $880 billion by 2030.

Web MGIgrowth in Africa’s resource sectors is likely. MGI analysis suggests that the
Further
Africa teaser
continent’s production of oil, gas, and most minerals, measured by volumes, may continue
Exhibit 1 of 1
to expand steadily by 2 to 4 percent a year. At current prices, this growth would raise the
value of resources produced in Africa from $430 billion annually now to $540 billion
by 2020.

Exhibit Africa’s consumer goods and services present the largest

of the four business opportunities the McKinsey Global
Institute identified

Estimated annual revenues, 2020 Projected growth, CAGR,2

$ billion 2008–20, $ billion 2008–20, %

Consumer goods and services 1,380 520 4

Resources 540 110 2
Agriculture 500 220 5
Infrastructure1 200 130 9

Total ~2,620 ~980 4

1Revenuesfrom investments in infrastructure; assumes need for infrastructure will continue to represent same share of GDP
through 2020.
2Compound annual growth rate.
Source: McKinsey Global Institute analysis
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Related thinking Finally, MGI sees large opportunities for companies that help build Africa’s infrastructure.
Currently, African governments and private sources combined are investing about
“What’s driving Africa’s
$72 billion a year to do so. The continent, however, still faces huge unmet needs, which
growth”
will require at least an additional $46 billion a year in spending. This goal, we calculate,
“Africa’s path to growth:
could be met through a combination of higher outlays by African governments, private
Sector by sector” companies, and non-OECD investors, along with regulatory reforms to boost operational
efficiency.
“Fulfilling the promise of
sub-Saharan Africa”
Read an executive summary or download the full report at mckinsey.com/mgi.
“The case for investing in
Africa”
Copyright © 2010 McKinsey & Company. All rights reserved.
“Capturing Africa’s business
opportunity”