Africa’s growth in domestic and corporate spending is expected to hit $5.6 trillion by the year 2025 with its industrial production estimated to top $93 billion, according to a new report by McKinsey & Company.
According to the report, entitled “Lions on the Move II: Realizing the Potential of Africa’s Economies,” the rapid technological advancement in Africa coupled with the continent’s abundant resources is helping to create new opportunities for businesses and consumers.
The International Monetary Fund (IMF) further estimates that Africa will be the second fastest-growing region after Asia by the year 2020.
“Future growth is likely to be underpinned by factors, including the most rapid urbanization rate in the world and, by 2034, a larger working-age population than either China or India,” McKinsey reports
Hopeful Future Despite Shocks
The management consulting firm projects that spending by African consumers and businesses is set to rise steadily, with household spending expected to hit $2.1 trillion by the year 2025.
Business spending, which was at $2.6 trillion in 2015, is also expected to grow exponentially to $3.5 trillion by 2025.
Manufacturing in Africa has been sluggish for many years, but according to the report, Africa’s industrial production is estimated to grow from $500 billion today to $930 billion in 2025.
“The rewards of accelerated industrialization would include a step change in productivity and the creation of up to 14 million stable jobs over the next decade,” the report indicates.
More Work To Be Done
However, African governments must take conclusive steps and provide a favorable environment to manufacturers, the consulting firm suggests.
“While the potential that Africa offers is undoubted, the question remains: will it be achieved?” the company asks.
Although Africa is currently hosting 700 companies with an annual revenue of more than $500 million, the number of large companies on the continent remain significantly low, leaving much room for improvement.
According to the report, the top 100 companies in Africa have achieved success by building a strong position locally, developing a long-term perspective, sourcing locally, targeting high-potential sectors, and focusing on developing and retaining talent.
