Insights

Working Women in Africa

Research shows that companies with a greater share of women on their boards of directors and executive committees tend to perform better financially. African companies are no different; this report found that the earnings before interest and taxes (EBIT) margin of those with at least a quarter share of women on their boards was on average 20 percent higher than the industry average. Yet gender equality remains some way off. This report therefore examines in detail women’s representation on Africa’s corporate boards and executive committees, and in its parliaments and cabinets. And it examines the barriers that prevent greater gender diversity as well as the actions organizations can take to remove them.

There are three main findings: In the private sector, Africa has more women in executive committee, CEO, and board roles in companies than the average worldwide. Numbers vary by industry and region – not surprisingly – and are much lower in industries that traditionally rely on men for their workforce (heavy industry, for example). Yet women are still under-represented at every level of the corporate ladder – non-management and middle and senior management – and fall in number the higher they climb. Only 5 percent of women make it to the very top. In government the number of women parliamentarians has almost doubled over the past 15 years and the number of women in cabinet has grown fivefold in 35 years. Again, numbers vary considerably, this time by country and region. Southern and East Africa are ahead of the pack, but there is room for improvement even here. In global terms, Africa has more women in parliament and cabinet than the average.

Credit for this growth may go in large part to targets for women’s representation set by parliaments and political parties. Representation, however, still needs to double if Africa is to achieve gender equality. Numbers do not equal influence. Although the number of women in leadership positions may have risen, women do not necessarily have greater power. In the private sector, more than half of senior women occupy staff roles rather than the line roles2 from which promotion to CEO typically comes. In the public sector, approximately half of women cabinet ministers hold social welfare portfolios, with arguably limited political influence, that do not open doors to top leadership roles. Indeed, the increase in women’s share of cabinet roles appears to come more from the creation of new social welfare portfolios than from any real redistribution of power.

ZorbitalWorking Women in Africa
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China! Africa’s largest economic partner

In two decades, China has become Africa’s most important economic partner. Across trade, investment, infrastructure financing, and aid, no other country has such depth and breadth of engagement in Africa. Chinese “dragons”—firms of all sizes and sectors—are bringing capital investment, management know-how, and entrepreneurial energy to every corner of the continent. In doing so they are helping to accelerate the progress of Africa’s economies.

Yet to date it has been challenging to understand the true extent of the Africa–China economic relationship due to a paucity of data. A report by Mckinsey and Company” Dance of the lions and dragons: How are Africa and China engaging, and how will the partnership evolve?”, provides a comprehensive, fact-based picture of the Africa–China economic relationship based on a new large-scale data set. This includes on-site interviews with more than 100 senior African business and government leaders, as well as the owners or managers of more than 1,000 Chinese firms spread across eight African countries1 that together make up approximately two-thirds of sub-Saharan Africa’s GDP.

More than 100 senior African business and government leaders were interviewed, and nearly all of them said the Africa–China opportunity is larger than that presented by any other foreign partner—including Brazil, the European Union, India, the United Kingdom, and the United States.

But exactly how quickly will the Africa–China relationship grow in the decade ahead? We see two potential scenarios. In the first, the revenues of Chinese firms in Africa grow at a healthy clip to reach around $250 billion in 2025, from $180 billion today. This scenario would simply entail business as usual, with Chinese firms growing in line with the market, holding their current market shares steady as the African economy expands. Under this scenario, the same three industries that dominate Chinese business in Africa today—manufacturing, resources, and infrastructure—would dominate in 2025 as well.

We believe much more is possible: in a second scenario, Chinese firms in Africa could dramatically accelerate their growth. By expanding aggressively in both existing and new sectors, these firms could reach revenues of $440 billion in 2025. In this accelerated-growth scenario, not only do the three established industries of Chinese investment grow faster than the economy, but Chinese firms also make significant forays into five new sectors: agriculture, banking and insurance, housing, information communications technology and telecommunications, and transport and logistics. This expansion could start with Chinese firms moving into sectors related to the ones they currently dominate—for example, from construction into real estate and housing. Another part of this accelerated growth could come from Chinese firms more fully applying their formulas that have proved successful in China to markets in Africa, including business models in consumer technology, agriculture, and digital finance.

There is considerable upside for Africa if Chinese investment and business activity accelerate. At the macroeconomic level, African economies could gain greater capital investment to boost productivity, competitiveness, and technological readiness, and tens of millions more African workers could gain stable employment. At the microeconomic level, however, there will be winners and losers. Particularly in sectors such as manufacturing, where African firms are significantly lagging behind global productivity levels, African incumbents will need to dramatically improve their productivity and efficiency to compete—or partner effectively—with new Chinese companies on their turf.

With continued and likely growing Chinese investment, it will become ever more urgent to address the gaps in the Africa–China partnership, including by strengthening the role of African managers and partners in the growth of Chinese-owned businesses. Moreover, both Chinese and African actors will need to address three major pain points: corruption in some countries, concerns about personal safety, and language and cultural barriers. In five of the eight countries in which we conducted fieldwork, 60 to 87 percent of Chinese firms said they paid a “tip” or bribe to obtain a license. After corruption, the second-largest concern among Chinese firms is personal safety. For their part, our African interviewees described language and cultural barriers that lead to misunderstanding and ignorance of local regulations. If these problems are left unaddressed, the misunderstandings and potentially serious long-term social issues could weaken the overall sustainability of the Africa–China relationship.

ZorbitalChina! Africa’s largest economic partner
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Digital Strategy, Bring your tomorrow into today!

 

This article originally appeared on the World Economic Forum Global Agenda.

“Digital will be like air.” This statement came from one executive at a recent workshop on digital strategy organized by the World Economic Forum, but it could have been said by almost anyone there that day.
In November, approximately 20 global executives from across industries met in London to discuss how to become a digital enterprise, as well as the challenges faced and lessons learned along the way.
The group agreed that Step 1 on that journey is establishing a digital strategy. This requires understanding your point of departure, the direction your industry is headed in and the role your company should play in that digital future, and then articulating the path forward for the organization.
Yes, these are challenges executives have faced for decades, but getting to the right answer feels harder today, the group agreed. The pace of change is faster and more relentless, the level of uncertainty higher and the degree of complexity greater than it has ever been. In addition, digital natives appear to be playing by different rules—and winning.

What does my industry look like in 5, 10, 20 years?
Imagining the future is not straightforward. Customers can’t tell you what they want when the technology hasn’t been invented yet. Global footprints create vastly different starting points and trajectories. Can there be one industry direction when part of the business is in a Western market with near universal high-speed Internet access and another part is in a developing market with daily power outages? Further, digital natives tend to disregard traditional business boundaries, making it extraordinarily hard to know who your future competitors will be and what will be required to win. Today Amazon, for example, has extended from dozens of retail markets to media, cloud storage and business-to-business services.
Yet, after discussion, the group agreed that the future is more knowable than it might seem. A general sense of direction is discernible if you ask the right questions. For example:
• If you had a movie of your customers purchasing and interacting with your products and services in 10 years, what would you see?
• What are the most hated parts of your industry, and how could they be disrupted?
• Who are your partners today, and which of them could be competitors in the future?
• How could someone take out 50% of the costs in your industry using digital technologies?

leslyicdigitalDigital Strategy, Bring your tomorrow into today!
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Africa’s Multi-billion Dollar Potential

We believe Africa has the space—and need—not just for the hundreds of billion-dollar companies that are thriving across the continent today but also for many more.Did you know there are approximately 400 companies earning revenues of $1 billion or more and nearly 700 companies with revenue greater than $500 million in Africa? These companies are increasingly regional or pan-African. They have grown faster than their peers in the rest of the world in local currency terms, and they are also more profitable than their global peers in most sectors. Between them, they boasted $1.4 trillion in revenues in 2015. Around two-fifths of them are publicly listed, and the remainder are privately held. Just over half are owned by Africa-based private shareholders, while 27 percent are foreign-based multinationals and 17 percent are state-owned enterprises.

One of those big firms is Nigeria-based Dangote Industries, which manufactures commodities, including cement, sugar, and flour, in massive volumes. By 2017, the Dangote Group’s annual revenues exceeded $4 billion, and founder Aliko Dangote had become Africa’s richest person and the world’s richest black man. Yet he continued to aim high. His new growth projects include the world’s largest single-train petroleum refinery, scheduled to open at the end of 2019. It is being built near Lagos, Nigeria’s bustling commercial capital, at a cost of $12 billion. Dangote’s philosophy is: “Think big, dream big, and do big things.”
Another example is South Africa–based MTN, the mobile-phone company with more than 200 million subscribers in 22 nations in Africa and the Middle East. Yet another is Ethiopian Airlines, which has driven an aggressive expansion strategy that nearly tripled its passenger numbers from 3.1 million in 2010 to 8.8 million in 2017. In the year to June 2017, the airline recorded a full-year profit of $232.0 million on revenues of $2.7 billion—more than many global airlines.

Despite some notable corporate success stories, however, Africa lags behind other emerging regions in hosting large companies. Excluding South Africa, it has just 60 percent of the number one would expect if it were on a par with peer regions. In fact, nearly half of Africa’s big firms are based in South Africa. Moreover, Africa’s big companies are smaller, on average, than those in other emerging economies. Because of these twin issues—too few large firms and too little scale among those that do exist—the total revenue pool of large companies in Africa (excluding South Africa) is about a third of what it could be.
Not every company will succeed in translating the potential we’ve just described into growth that is rapid, consistent, and profitable. In a marketplace that is both complex and increasingly competitive, there are huge differences in performance between the most successful companies and the rest. Some companies are the lions of African business, standing head and shoulders above the rest. Others risk becoming the lions’ prey.

What does it take to win in Africa? As in any market, deciding where and how to compete is critical. Companies with exposure to high-growth cities, countries, and regions improve their odds. Likewise, companies that ride strong industry trends, such as rapid adoption of mobile and digital technology, have much better odds of outperforming. Sometimes those are “trends with a twist,” such as Africa’s large unserved markets or infrastructure gaps: to benefit from such trends, companies need the imagination to see unmet demand or unsolved problems as opportunities
But good strategic choices are just one piece of the puzzle for companies seeking to prosper in Africa. A smart approach to geographic expansion should go hand in hand with much more: a plan for innovating your business model. Operational solutions that will help you manage risk and boost your company’s resilience to Africa’s inevitable shocks. Fresh approaches to unleash Africa’s talent, including nurturing vocational and managerial skills at scale and fostering a new kind of business leader for the African century ahead—and a plan for doing good while doing well. These priorities are being powerfully illustrated right now by many local leaders who are pursuing them. In “Leadership lessons from Africa’s trailblazers” (to be published next month), we’ll introduce you to five such leaders, and in Africa’s Business Revolution, you’ll meet many more.

leslyicdigitalAfrica’s Multi-billion Dollar Potential
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