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1、June 2023Reimagining economic growth in AfricaTurning diversity into opportunityAuthorsMayowa KuyoroAcha LekeOlivia WhiteJonathan WoetzelKartik JayaramKendyll HicksEditorStephanie StromThe McKinsey Global Institute was established in 1990.Our mission is to provide a fact base to aid decision making
2、on the economic and business issues most critical to the worlds companies and policy leaders.We benefit from the full range of McKinseys regional,sectoral,and functional knowledge,skills,and expertise,but editorial direction and decisions are solely the responsibility of MGI directors and partners.O
3、ur research is currently grouped into five major themes:Productivity and prosperity:Creating and harnessing the worlds assets most productively Resources of the world:Building,powering,and feeding the world sustainably Human potential:Maximizing and achieving the potential of human talent Global con
4、nections:Exploring how flows of goods,people,and ideas shape economies Technologies and markets of the future:Discussing the next big arenas of value and competitionWe aim for independent and fact-based research.None of our work is commissioned or funded by any business,government,or other instituti
5、on;we share our results publicly free of charge;and we are entirely funded by the partners of McKinsey.While we engage multiple distinguished external advisers to contribute to our work,the analyses presented in our publications are MGIs alone,and any errors are our own.You can find out more about M
6、GI and our research at Global InstituteMGI DirectorsSven Smit(chair)Chris BradleyKweilin EllingrudMarco PiccittoOlivia WhiteJonathan WoetzelMGI PartnersMichael ChuiMekala KrishnanAnu MadgavkarJan MischkeJeongmin SeongTilman TackeiMcKinsey Global Institute|Reimagining economic growth in Africa:Turnin
7、g diversity into opportunityContentsAt a glance iiiAfricas growth has downshifted since 2010,after a promising opening to the millennium 2There is no one Africathe continents recent slowdown masks divergence across countries 8Africa is the worlds fastest-urbanizing region but depends too heavily on
8、its primary cities 27Africas large companies have proven resilientand most have considerable unmet potential for growth 37Fostering productive growth in Africa:Opportunities for African businesses and governments 47Acknowledgments 51Bibliography 53iiMcKinsey Global Institute|Reimagining economic gro
9、wth in Africa:Turning diversity into opportunity Despite a promising start to the millennium,Africas long-term economic growth has been slow.The continent is home to the worlds youngest and fastest-growing population,but its economic performance has lagged behind.Since 1990,its GDP per capita has gr
10、own just 1 percent annually,compared with 5 percent in India and 8 percent in China.The 200010 decade saw an acceleration across much of the continent,but growth retreated in 201019.Productivity across all sectors of the African economy is lower than in comparable regions of the world.Despite a fund
11、amental shift to services,Africa could add$1.4 trillion to its economy,almost doubling the value added by services today,were it to match the productivity growth of Asias strongest services.Rekindling industrialization and increasing intracontinental trade will be crucial complements,together with b
12、oosting agricultural productivity to ensure the livelihoods of hundreds of millions of African farmers.Yet there is no“one Africa”nearly half of its people live in countries where economies have grown consistently over the past 20 years.Annual GDP growth in these primarily midsize economies in East
13、and West Africa has averaged more than 4 percent.The rest of the population lives in countries with slower growth,including the continents three largest economies,Egypt,Nigeria,and South Africa.Africa is the fastest-urbanizing place on earth,with more than 500 million people likely to leave the coun
14、tryside between now and 2040.Most will move to the continents largest cities,increasing the need for better infrastructure and more productive jobs to enable these migrants to thrive.Similar investment in smaller second cities could take the pressure off their larger cousins,spreading rising product
15、ivity and incomes more broadly.In Africa today,at least 345 companies have annual revenues of more than$1 billion.Their growth and performance are mixed,with some fast-growing stars and some shrinking laggards.By 2030,more than half of these companies could increase their collective annual revenues
16、of$1 trillion by more than$550 billion by accessing new markets and increasing productivity.Africa can reignite growth through improved productivity,drawing on insights from existing successes across its diverse countries,cities,and companies.Accelerating digitization,developing the continents talen
17、t,collaborating more regionally,investing in urban infrastructure,and growing more business champions are some of the ways Africa can increase productivity to support strong and sustainable growth.At a glanceiiiMcKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into op
18、portunityAfrica is home to the worlds youngest and fastest-growing population,burgeoning cities,and bold innovations in everything from fintech to clean energy.With its population expected to nearly double to 2.5 billion by 2050,the continent has myriad opportunities to harness its rich natural reso
19、urces and abundant human potential to increase economic growth and prosperity not only in Africa but around the globe.As the fastest-urbanizing region on the planet,it is an exciting new market for many companies.In an aging world,the continents young and fast-growing workforce represents a rich sou
20、rce of talent:some 796 million people will join the working population by 2050,and Africas workforce will soon be larger than Chinas or Indias.These strengths and assets present an opportunity for the continent to vastly improve its productivity and reverse the marked economic deceleration that it e
21、ndured between 2010 and 2019.GDP growth fell 35 percent over that periodand then the COVID-19 pandemic took hold.Today,60 percent of Africas population lives in poverty,the result of per capita income growth that has averaged just 1.1 percent a year since 1960.Yet the continent-wide statistics obscu
22、re successes in many of its constituent countries that,while uneven,can serve as models to establish productivity as the foundation of Africas economic growth,rather than the volatile commodities that have historically played that role.Over the past decade,certain countries,cities,and companies have
23、 been beacons of innovation,productivity,and growth.Their successes offer models and innovations that can reinvigorate economies in other African countries that have lacked sufficient growth to propel the 400 million Africans living in extreme poverty,as well as others who are less impoverished but
24、remain vulnerable,across the empowerment line.1Geographically,Africa is as large as China,Europe,India,and the United States combined,and its 54 countries vary dramatically in population,income level,and governance.Africa is also the most economically fragmented region in the world,and the divergent
25、 paths of development in each of its countries reflect this.2 Understanding and attending to that diversity of qualities and outcomes among its constituent countries are critical to any effort to rekindle productivity and growth across the continentthere is no“one Africa.”Mindful of the diversity of
26、 Africas economic challenges,this report takes a granular approach in its analysis of Africas countries,cities,and companies from 2000 to 2019.Each African nation can deploy its particular strengths and capabilities in ways that promote productivity-led growth and improve lives across the continent
27、at large.Reimagining Africas growth is achievable and,more than ever,vital for the welfare of the world.1 The empowerment line is an MGI estimate of the means required for every individual to achieve sufficiency in basic needs(for example,nutrition,energy,housing,healthcare,education,and other essen
28、tials)along with economic security,enabling them to cross the hurdle of mere subsistence and be empowered to realize their potential.2 Acha Leke,Mutsa Chironga,and Georges Desvaux,Africas business revolution:How to succeed in the worlds next big growth market,Harvard Business Review Press,2018.1McKi
29、nsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityIntroduction Africas growth has downshifted since 2010,after a promising opening to the millennium Thirteen years ago,MGI published its first report on Africas economies,Lions on the move:The progress and p
30、otential of African economies,a title that reflected the dynamism and power we saw radiating from a newly thriving continent.That publication,our subsequent perspectives,and work by others contributed to the worlds rising expectations of Africas growth and economic potential.3However,when it comes t
31、o Africas economic performance,not all decades are alike.This report focuses on the decade from 2010 to 2019,before COVID-19 swept the world.Its findings are drawn from our yearlong study that analyzed the economic performance and potential of African countries,cities,and companies,enriched by conve
32、rsations with many of the continents leading thinkers and business leaders.Looking at this and the two decades before this periodthe burst of high growth at the start of the century that followed the sluggish 1990sputs the economic acceleration from 2000 to 2010 into context.Over the 30-year period
33、from 1990 through 2019,Africas real GDP grew at a 3 Lions on the move:The progress and potential of African economies,McKinsey Global Institute,June 2020;Acha Leke and Saf Yeboah-Amankwah,“Africa:a crucible for creativity,”Harvard Business Review,NovemberDecember 2018;see Simon London,“How to win in
34、 Africa:An interview with Acha Leke and Georges Devaux,”McKinsey Quarterly,November 2018.2McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityrate of 3.7 percent annually,compared with Indias 6.2 percent and Chinas 9.1 percent.Given the continents rapidl
35、y expanding population,the contrast between these three regions is even more stark on a per capita basis:GDP per capita in Africa grew by only 1 percent per year,compared with 5 percent in India and 8 percent in China(Exhibit 1).Exhibit 1Includes 47 African countries with consistent data for 1990201
36、9,excluding Djibouti,Eritrea,Liberia,Libya,Sao Tome and Principe,Somalia,and South Sudan.Source:World Bank;UN Department of Economic and Social Afairs,population division;McKinsey Global Institute analysisAfricas real GDP per capita has grown only 1.1%annually since 1990.McKinsey&CompanyReal gross d
37、omestic product per capita,2015$thousandCAGR 020108642AfricaIndiaChina1.1%4.6%8.4%Over the past 30 years,GDP per capitaincreased more than 10 times in China and four times in India,while Africas has not yet doubled.GDP CAGR,%010201019Africa 19902019average:3.7%Popula
38、tion CAGR,%9.85.62.510.26.75.17.26.43.30.91.92.60.61.62.50.51.12.6Africa 19902019average:2.6%ChinaIndiaAfrica3McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityAfrica did not benefit from the tailwinds that propelled many emerging economies into the ne
39、w millennium.In the decade between 1990 and 2000,Africas GDP grew by only 2.5 percent a year,or a bit slower than its population growth rate.Unlike China,India,and other regions,the continent was not among the first places to benefit from broad corporate moves to offshore operations to lower-cost ma
40、nufacturing bases.Gaps in infrastructure and skills,along with relatively high hurdles to conducting business,low levels of intracontinental trade,and dependence on natural resources,were obstacles to Africas growth.In the first decade of the 21st century,however,African economies experienced a broa
41、d-based economic acceleration.Between 2000 and 2010,the continents real GDP grew 5.1 percent a year,roughly twice the rate of the 1990s.More than two-thirds of the 30 largest economies in Africa accelerated their growth during this decade relative to the previous one.4 The continent attracted increa
42、sing investment and experienced a rise in consumer spending.It also benefited from improved political stability,productivity,and business growth.A strong global commodity cycle set off a boom in African mining from 2002 to 2007,as metal and oil prices almost tripled and foreign investors looked to A
43、frica to help meet growing demand driven by the rapid growth of emerging economies elsewhere.5 While many Africans remained poor,the proportion of the continents population living in extreme poverty fell by ten percentage points.There was widespread optimism that,after a long period of stagnation,Af
44、rica was rising.After 2010,however,Africas economic progress slowed due to a confluence of factors ranging from waning demand for commodities to deteriorating economic fundamentals in the continents largest economies.The decade got off to a rocky start,as demand for commodities waned.Steep price dec
45、lines hit oil exporters in particular just as the Arab Spring in 2011 and subsequent conflicts and institutional instability slowed economic activity across North Africa.Together,countries affected by these trends account for almost three-fifths of the continents combined GDP.Oil price shocks presag
46、ed a longer-term decline in other commodities that affected additional African countries such as South Africa.The value of African commodity exports fell from$256 billion in 2010 to$147 billion in 2019,and the continents share of global commodity exports declined from 7 percent to 4 percent.6 Crude
47、oil and natural gas accounted for the lions share of this decline,but exports of more buoyant commodities such as copper ore and coffee also stagnated.Political instability also increased across the continent and continues,even in countries with faster-growing economies.We found that 30 percent of A
48、fricas population was affected by unstable political events such as coups that brought instability in the 201019 decade,compared with 4 percent in the preceding decade.Declining foreign direct investment(FDI)added to economic deceleration on the continent.After quintupling to peak in 2008,FDI flows
49、into Africa declined in 31 of Africas 54 countries,falling fastest in in Nigeria and South Africa,the two largest economies.7 4 Previous MGI research reported economic acceleration in 27 African countries based on World Bank data for the period 2000 to 2008.The update in this report reflects a diffe
50、rence of time period(2000 to 2010)and a restatement of the World Banks GDP estimates,which brought to 30 the number of African countries experiencing accelerated growth in real GDP from 2000 to 2010.Due to a lack of data,we have excluded Djibouti,Eritrea,Liberia,Libya,Sao Tome and Principe,Somalia,a
51、nd South Sudan.5 Previous MGI research has found that such commodity-cycle benefits rarely translate into sustainable growth unless the gains are invested for the long term.For more information,see Reverse the curse:Maximizing the potential of resource-rich economies,McKinsey Global Institute,Decemb
52、er 2013.6 Includes Africas five most valuable commodity exports:crude oil,natural gas,gold,platinum,and iron ore.7 In 2018,South Africas president announced a program to recruit$100 billion in foreign direct investment over the following five years.By 2022,net inflows of FDI reached 10 percent of GD
53、P,compared with about 1 percent in years prior.4McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityFinally,Africas net external debt,while low by global standards,increased by 24 percentage points to 57 percent of GDP by 2019,signaling deteriorating mac
54、roeconomic fundamentals.Debt-servicing costs doubled,and current-account balances halved,making it harder for African governments to invest in growth.Just three years later,in 2022,the regions average debt-to-GDP ratio stood at 67 percent,a further deterioration triggered by increased government spe
55、nding during the pandemic,weak management of public finance,and high inflation.All of these developments coincided with and contributed to a steep decline in Africas annual productivity growth,which fell from 2.2 percent in the 200010 decade to 0.8 percent in 201019.Productivity declined sharply in
56、the extractive industries as well as in the services sector,which increased output but not enough to keep up with the rapid growth of the sectors workforce as millions of people left work in agriculture and moved to cities(Exhibit 2).Exhibit 2McKinsey&CompanyThe 19902000 period is based on Conferenc
57、e Board data set and covers 33 African countries.The 20002019 period is based on the MGI Africa Productivity Model and covers 44 African countries.Note:Figures may not sum to 100%because of rounding.Source:The Conference Board,2022;MGI Africa Productivity Model,2022Economic growth increased in Afric
58、a from 2000 to 2010 but has since fallen to near 1990s levels.Africa real GDP growth decomposition,%EmploymentCAGR,%90%10%58%42%86%X%14%199020001 ProductivityCAGR,%Real GDP CAGR,%2.40.32.70.82.53.32010192 2.95.12000102 2.2Share of growth5McKinsey Global Institute|Reimagining economic growth in Afric
59、a:Turning diversity into opportunityThe continents overall GDP growth slowed to 3.3 percent a year from 2010 to 2019,closer to the level in the 1990s.Population growth outstripped poverty reduction,and the absolute number of Africans living in poverty increased by 30 million.More recently,COVID-19 s
60、truck a further blow:the continents GDP contracted by 2.1 percentage points in 2020.Since the start of 2020,the number of people living with acute food insecurity has more than doubled to roughly 200 million.8 While economic growth has regained some momentum as the pandemic has waned,rising energy a
61、nd food prices coupled with a stronger dollar are taxing consumers and presenting challenges for African governments.These include increased civil unrest and rising insecurity levels as well as a funding squeeze that the majority of African countries are currently experiencing.9 At the same time,the
62、 continent must grapple with the longer-term and more permanent impacts of climate change(see Box 1,“Climate change holds risks for Africa and creates opportunities to reinvigorate its economies”).8 Global report on food crises:Acute food insecurity hits new highs,United Nations Food and Agriculture
63、 Organization,April2022.9 Regional economic outlook,sub-Saharan Africa:The big funding squeeze,International Monetary Fund,April 2023.Box 11 For more information,see Green Africa:A growth and resilience agenda for the continent,McKinsey&Company,October 2021.2 For more information,see“The future of A
64、frican oil and gas:Positioning for the energy transition,”McKinsey&Company,June 2022.3 See Green Africa,October 2021.Climate change holds risks for Africa and creates opportunities to reinvigorate its economiesLooking to the future,climate change may pose a new challenge to growth on the continent a
65、s Africa faces the potential for increasing weather-related acute events and sustained threats to productivity.More frequent and severe droughts are expected to affect agriculture and manufacturing.At the same time,rising sea levels and greater storm severity put coastal cities and key infrastructur
66、e at risk of flooding.Today,460 million people,or 36 percent of the total African population,are exposed to at least one form of climate hazard such as drought,heat,water stress,or flooding.By 2050,this number will almost double to 900 million people,or 45 percent of the continents population,in a 2
67、C warming scenario.Large parts of Africa face a loss of labor productivity related to the potential for reduced effective working hours from rising heat and humidity.Impacts will not be evenly distributed across the continent.Extreme precipitation may become more frequent across central parts of Afr
68、ica,while parts of northern and southern Africa could experience drought in eight out of every ten years.Smallholder farmers and pastoralists will experience large impacts of climate change and will need to adopt new practices in livestock management,soil enhancement,and irrigation to adapt.For exam
69、ple,in East Africa,40 percent of the population could be exposed to agricultural drought over the next 30 years.1Beyond rising physical risks,global efforts to decarbonize could affect Africa.The continent depends on commodity exports,including fossil fuels and minerals,for 16 percent of its GDP.Som
70、e portion of this production will be threatened if the world uses less fossil fuels and ramps up demand for sources of energy that produce lower emissions.Under McKinseys“current trajectory”energy transition scenario,global oil demand could peak by 2027 and then decline,and global gas demand could p
71、eak by 2040.If leading countries accelerate efforts to achieve their net-zero commitments,the transition could be even faster.Under such an“achieved commitments”scenario,global oil demand could peak as soon as 2024,while global gas demand could peak around 2030.2 Additionally,mining in Africa emits
72、more greenhouse gases on average than elsewhere in the world,in part due to reliance on coal-generated energy and emissions-intensive underground mining processes.Companies may have to take bold actions to adopt renewables.In combination,these two effectslower demand for fossil fuels and loss of mar
73、ket share to lower-emission producerscould result in$150 billion of lost commodity revenue annually on the continent.36McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityBox 1(continued)4 For more information,see Lyes Bouchene,Kartik Jayaram,Adam Kendal
74、l,and Ken Somers,“Africas green manufacturing crossroads:Choices for a low-carbon industrial future,”McKinsey&Company,September 2021.5 Africas green energy revolution:Hydrogens role in unlocking Africas untapped renewables,Masdar,November 2022;and Roadmap report:Harnessing carbon markets for Africa,
75、Africa Carbon Markets Initiative,November 2022.6 MineSpans,McKinsey&Company,accessed March 2023.At the same time,the net-zero transition also presents opportunities for Africa to benefit.Our analysis identified eight manufacturing opportunities that together could generate up to$2 billion in revenue
76、 a year in total and create 700,000 new jobs by 2030.These businesses include assembly of off-grid and microgrid solar systems and electric two-wheelers,as well as potential and nascent next-generation opportunities such as electric vehicle charging stations and production of cross-laminated timber.
77、4Africa also has the potential to be a supplier of green hydrogen as well as a provider of carbon credits that by one estimate could generate over$100 billion a year by 2050.5 And the continent can be a much greater source of materials needed to support the worlds transition to a low-carbon economy.
78、For example,we estimate that Africa has 93 percent of global platinum reserves,nearly half of global cobalt and manganese reserves,a third of aluminum reserves,and 11 percent of copper and lithium reservesall commodities needed in the manufacture of green technologies such as electric vehicles and w
79、ind-and solar-powered infrastructure.6 The magnitude of these opportunities is unclear as many uncertainties exist,not least the pace of the global net-zero transition and what share of the opportunities the continent can capture.Making the most of these opportunities for Africa will require concert
80、ed efforts to grow new businesses,secure capital,and build technical know-how.While economic growth has regained some momentum as the pandemic has waned,rising energy and food prices coupled with a stronger dollar are taxing consumers and presenting challenges for African governments.7McKinsey Globa
81、l Institute|Reimagining economic growth in Africa:Turning diversity into opportunityBehind the aggregate figures and continent-level challenges,African countries have seen a significant divergence:across a large,fragmented continent with low levels of intraregional trade,there is no such thing as a
82、single African economy.Since 2010,some African countries have sustained solid,even accelerating,growth,while others have experienced sharp declines.Nearly half of Africas people live in countries where annual GDP growth between 2010 and 2019 exceeded 4.2 percent,the continents average growth rate si
83、nce 2000.These countries were largely midsize economies and together accounted for just over a quarter of total African GDP in 2019.Their higher annual GDP growth was accompanied by a higher-than-average increase in investment,exports,and urban population since 2010.These faster-growing countries ar
84、e generally in the earlier stages of economic development,comparatively less urban,and less reliant on mined commodities.Concentrated in East and West Africa,they also export less and have lower levels of per capita investment than the African average.There is no one Africathe continents recent slow
85、down masks divergence across countries8McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityThe other half of Africas population lives in slower-growing nations,which include the continents five largest economiesAlgeria,Egypt,Morocco,Nigeria,and South Afr
86、icaas well as its ten smallest.Together they accounted for almost 75 percent of Africas 2019 GDP.Although these countries typically started the decade with a higher level of investment,exports,and urbanization,their subsequent growth in these areas lagged behind that of the continents more dynamic e
87、conomies.There is no doubt the COVID-19 pandemic and the global slowdown and inflation that have followed affected all African countries.In our analysis,we look at the 201019 period because the tumult of the pandemic years clouds the preceding patterns of economic growth.For instance,annual GDP grow
88、th in 2020 was 1.7 percent compared with 3.3 percent between 2010 and 2019what a difference one year of pandemic can make.Looking at how economic growth has played out across African countries since 2000,we found they fell into the following four clusters(Exhibit 3):10 Consistent growers exceeded Af
89、ricas average growth rate of 4.2 percent a year from 2000 to 2019.These 13 countries,mostly in East and West Africa,accounted for 41 percent of Africas population and 21 percent of its GDP in 2019.Over the past 20 years,consistent growers have had above-average growth in urbanization,in levels of ca
90、pital investment,and in exports,albeit off a low base.They also have had steady growth in per capita consumption,3 percent annually on average.Ethiopia,the largest of the consistent growers,stands out for reducing the number of people living in absolute poverty by 30 million out of a total populatio
91、n of 115 million over the 201019 decade.Rwanda,the second-fastest-growing economy during that period,experienced significantly high GDP per capita growth of 4.6 percent,compared with 0.4 percent on the continent overall.Despite the challenges of COVID-19,more than half of these countries had continu
92、ed to achieve economic growth exceeding the continental average of 4.2 percent as of 2022.Recent accelerators underperformed in the first decade of this century but exceeded Africas average growth rate from 2010 to 2019.The eight countries in this cluster,all but two of which are in West Africa,make
93、 up 9 percent of Africas population and contributed 7 percent of its GDP in 2019.Growth in investment per capita,exports,and urbanization in these countries shifted from below the African average in the first decade of the century to above average since 2010.Aggregate consumption per capita in these
94、 nations grew 2 percent annually on average over the past decade.While the percentage of people living in poverty has decreased,growth was not strong enough to reduce their absolute number,which increased by roughly one million between 2010 and 2019.Six of these countries had economic growth higher
95、than average in 2022.10 The four clusters include 49 economies with complete GDP data for 200019.Djibouti,Eritrea,Sao Tome and Principe,Somalia,and South Sudan are excluded.9McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityExhibit 3Wide variation in e
96、conomic performance across the continent makes it clear that there is no one Africa.McKinsey&CompanyAfricas 200019 average:2 4.2%Real GDP growth,%010864-42-2161412Central African RepublicSouth AfricaLesothoBurundiThe GambiaEswatiniAlgeriaLiberiaComorosMadagascarMauritiusGabonGuinea-BissauSeychellesB
97、otswanaLibyaEquatorial GuineaSudanRepublic of CongoTunisiaAngolaChadNamibiaCabo VerdeNigeriaMoroccoEgyptMalawiZimbabweCameroonMauritaniaSenegalBeninTogoGuineaCote dIvoireMaliZambiaSierra LeoneKenyaUgandaMozambiqueBurkina FasoNigerDRC3TanzaniaGhanaRwandaEthiopiaConsistent growersRecent acceleratorsRe
98、cent slowdownsSlow growers200010 2010191Size of solid-color circles=2019 GDPShares of population and GDP as of 2019 instead of 2020 to eliminate one-of impact of COVID-19.2African average calculated based on 49 economies that have complete GDP data in 200019(Djibouti,Eritrea,Sao Tome and Principe,So
99、malia,and South Sudan excluded).3The Democratic Republic of the Congo.Source:The World Bank;McKinsey Global Institute analysis10McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunity Recent slowdowns outperformed the continents average economic growth in t
100、he first decade,then slowed from 2010 to 2019.These 13 countries include some of Africas largest economies,such as Egypt,Morocco,and Nigeria,and were home to 37 percent of Africas population and accounted for 46 percent of Africas GDP in 2019.The slowing pace of their economic growth over the past d
101、ecade was driven by slower-than-average growth in exports and investment per capita compared with the rest of Africa,even though they had the highest levels of urbanization.These economies account for over half of the continents exports of primary commodities.Between 2010 and 2019,growth in these co
102、untries did not keep pace with population growthin aggregate,27 million more people in this cluster lived in poverty at the end of the periodand per capita consumption growth was stagnant at 0.8 percent a year on average.Slow growers consistently underperformed Africas average growth rate over the p
103、ast 20 years.These 15 countries were home to 13 percent of Africas population and accounted for 26 percent of its GDP in 2019.They range from some of Africas largest economies,such as South Africa and Algeria,to nine of its ten smallest economies.Consistent with their overall growth rate,they had be
104、low-average rates of investment,exports,and urbanization.Due to sluggish growth over the long term,eight million more people in these countries lived in poverty in 2019 than in 2010,and per capita consumption growth was only a little more than zero.Exhibit 3(continued)McKinsey&CompanyCountries share
105、 of Africas 2019 GDP,%Countries share of Africas 2019 population,%794Consistent growersRecent slowdownsRecent acceleratorsSlow growersSource:World Bank11McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityExhibit 3(continued)Economies are grow
106、ing faster in East and West Africa,where investment,exports,and urbanization have increased more rapidly.McKinsey&CompanyConsistent growersCountry-level trends:Recent slowdownsSlow growersRecent acceleratorsInsufcient dataThe boundaries and names shown on this map do not imply ofcial endorsement or
107、acceptance by McKinsey&Company.Not included due to lack of data:Djibouti,Eritrea,Sao Tome and Principe,Somalia,and South Sudan.Source:World Bank;McKinsey Global Institute analysisExport growth,CAGR,%Sizes of circles=exports share of GDPUrban population growth,%Sizes of circles=urbanization rateConsi
108、stent growersRecent accelerators543220009Consistent growersRecent acceleratorsRecent slowdownsSlow growersInvestment per capita growth,CAGR,%Sizes of circles=investment per capita20105152000Consistent growersRecent acceleratorsRecent slowdownsSlow growers00105-520
109、1019Recent slowdownsSlow growersConsistent growersRecent accelerators12McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityThese clusters differ meaningfully in their productivity levels and growth rates.Consistent growers and recent accelerator clusters
110、 are significantly less productive than their recent slowdown and slow grower counterparts,at least for now,as they urbanize and shift employment to more productive sectors.They are and will continue to be less dependent on highly productive natural resources but have nonetheless had higher producti
111、vity growth.Over the past decade,their productivity grew at nearly 3 percent annually,much higher than the 1.3 percent productivity growth rate among recent slowdowns and the slightly negative productivity growth of slow growersthough still lower than the average of 3.7 percent among global emerging
112、 markets.Even within clusters,there was no“one Africa”when it came to productivity,either;productivity levels,particularly among slow growers and recent slowdowns,varied dramatically despite those clusters relatively higher average productivity overall(Exhibit 4).In a stark illustration of no“one Af
113、rica”at work,decelerating growth among recent slowdown and slow grower economies combined to slow the continents growth.Had Africas GDP continued to grow at the pace it achieved from 2000 to 2010,its GDP in 2019 would have been$3 trillion instead of$2.6 trillion.Fully 65 percent of this difference c
114、an be explained by Africas“big three”economies,with Egypt and Nigeria among the recent slowdowns and South Africa among the slow growers(Exhibit 5).Nigeria had the largest impact.Its services sector alone was responsible for 30 percent of the continents slowing economic pace,as its average annual gr
115、owth rate fell from 11 percent in the 200010 decade to just 3 percent from 2010 to 2019.This drop reflects the decline in traderesponsible for one-third of Nigerias services-related GDPattributable to slower growth in consumer spending on goods(from 10 percent from 2000 to 2010 to 2 percent annually
116、 from 2010 to 2019).Growth in other services sectors such as real estate and information and communications technology(ICT)also decelerated significantly over the same period.Egypt made the second-largest contribution to Africas economic deceleration,as its slowing oil and gas production shaved 11 p
117、ercent off growth.South Africas economy grew at a consistently low pace over both decades.Had Africas GDP continued to grow at the pace it achieved from 2000 to 2010,its GDP in 2019 would have been$3 trillion instead of$2.6 trillion.13McKinsey Global Institute|Reimagining economic growth in Africa:T
118、urning diversity into opportunityExhibit 4McKinsey&CompanyEmerging markets category includes middle-income countries as defned by the World Bank.2The Democratic Republic of the CongoSource:MGI Africa Productivity ModelRecent accelerators and consistent growers have lower but faster-growing productiv
119、ity.Whole economy real productivity,2019,$thousandSlow growersRecent slowdowns Recent accelerators Consistent growers02010515AlgeriaBotswanaBurundiCentral African RepublicGabonGambiaGuinea-BissauLesothoMadagascarMauritiusSouth AfricaAngolaCabo VerdeChadRepublic of CongoEgyptEquatorial GuineaMalawiMo
120、roccoNamibiaNigeriaSudanTunisiaBeninCameroonCte dIvoireGuineaMauritaniaSenegalTogoBurkina FasoDRC2EthiopiaGhanaKenyaMaliMozambiqueNigerRwandaSierra LeoneTanzaniaUgandaZambiaEmerging markets averageAfricaaverageReal productivity CAGR by country grouping,%3.12.9200010CountryAverage for country groupin
121、g2.70.63.31.30.30.14McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityExhibit 5Downward trends in Egypt,Nigeria,and South Africa explain 65%of Africas GDP slowdown.McKinsey&CompanyCountry and group decline in 2019 GDP from 2010 projection,%o
122、f total diference1Extrapolated 2019 GDP based on 200010 growth rateSlow growersRecent slowdownsConsistent growersRecent acceleratorsNigeriaEgyptOther slow growersActual 2019 GDPSouthAfricaOther recent slowdownsDifference between 2019 actual growth rate and the extrapolated 2019 GDP based on 200010 g
123、rowth rate.GDP decomposition by sector is estimated using GVANote:Percentages may not add to 100 due to rounding.Source:MGI Africa Productivity Model;McKinsey Global Institute analysisExtractionServicesIndustrialAgriculture3$3.0T$2.6TMcKinsey Global Institute|Reimagining economic growth
124、in Africa:Turning diversity into opportunityAfricas economies are shifting rapidly from agriculture and extraction to services,but productivity still lags behindProductivity reflects the amount of economic output created by each worker.Growth in productivity drives economies,and at the individual le
125、vel,it can translate into higher living standards and well-being.Traditionally,agriculture has dominated the African economy,but African agriculture at large is made up of myriad smallholder farms that are generally low in productivity,though improving slowly.The other traditional pillar of the Afri
126、can economy is the extractive industries,which are highly productive in terms of dollar revenue but employ relatively few people,limiting their economic contribution.Productivity has increased only modestly on average across all sectors of the African economy over the past two decades and is low acr
127、oss the entirety of the African economy relative to peers(Exhibit 6).Productivity measures output relative to input,or the value of goods and services produced divided by the amount of labor,capital,and other resources required to produce them.In this paper,we focus on labor productivity,defined as
128、the economic output per worker.This productivity measure is commonly used because it is the most consequential determinant of long-term economic growth.Thus,establishing productivity as the foundation of African economic growth is a key to reinvigorating prosperity and resilience on the continent.A
129、structural shift to servicesThe African economy has been undergoing a profound structural shift to services over the past 20 years,as people have left work in the fields to take jobs in trade and other services in cities.Reflecting that shift,employment in services increased from 30 percent to 39 pe
130、rcent over that period,although in 2019,half of the African workforce remained in agriculture.Exhibit 6Emerging markets include middle-income countries as defned by the World Bank.Source:MGI Africa Productivity Model;McKinsey Global Institute analysisAfrican sectors are less productive than the aver
131、age for emerging markets.McKinsey&CompanyReal productivity,2019,$1,00010,000100,0001,000,000 Whole economyServicesIndustrialExtractionAgricultureChinaRest of AsiaAfricaEmerging markets averageIndiaLatin AmericaMiddle EastLogarithmic scale16McKinsey Global Institute|Reimagining economic growth in Afr
132、ica:Turning diversity into opportunityServices also secured its place as the major driver of the continents economic output,contributing 56 percent in 2019 compared with 50 percent in 2000 as it captured share from the extractive industries,which were hit by the decelerating commodities cycle over t
133、hat period(Exhibit 7).A shift to services is a pathway to increased prosperity trod by many countries,and Africas shift to services closely mirrors what occurred in India.11 Such a transition provides a productivity boost,since service-sector productivity is higher than that of agriculture(though ge
134、nerally less than in the industrial sector).Services create significant opportunities for African countries to boost economic output and job creationbut only if productivity in the sector improves.Real productivity,a measure of efficiency,in the continents services sector was$7,200 in 2019,compared
135、with$8,900 in India,$17,700 in Latin America,and$20,900 in China.In other words,African productivity was the lowest of any region in the world.Nor has it grown since;the sector recorded negative productivity growth of-0.1 percent during the 201019 decade.11 Tianyu Fan,Michael Peters,and Fabrizio Zil
136、ibotti,Growing like India:The unequal effects of service-led growth,NationalBureau of Economic Research working paper number 28551,July 2022.Exhibit 7McKinsey&CompanyAfrica is undergoing a fundamental structural shift to services.Sector employment,%with total jobsGross value added,%with total,$58544
137、99436M265M20192010348M1112000ExtractionServicesIndustrial1Agriculture1.6T976B20192.14T201082000Includes manufacturing,construction,and utilities.Note:Figures do not sum to 100 percent due to rounding.Source:MGI Africa Productivity Model17McKinsey Global Institute|Rei
138、magining economic growth in Africa:Turning diversity into opportunityFrom 2000 to 2010,the services sector in Africa increased productivity by 1.8 percent,and simply returning to that level would increase the sectors gross value added(GVA)by$400 billion by 2030.Additionally,if Africa matched the pro
139、ductivity growth of Asias strongest services hubs,it could add$1.4 trillion to the continents economy,almost doubling the GVA from services today.This would create 225 million jobs by 2030a crucial consideration in the light of Africas rapidly growing workforce.Even on its current trajectory,the ser
140、vices sector will create at least 85 million net new jobs across the continent by 2030,sufficient to absorb almost half of all new labor-market entrants.Productivity has not been uniform across the African services sector.Employment in trade grew most in absolute numbers and accounts for almost half
141、 of Africas service jobs,or some 80 million people across the continent.Yet the trade subsector in Africa,characterized by high levels of informality and fragmentation,has very low productivity by global standards.It has absorbed millions of people who moved out of agriculture and into informal,prec
142、arious,and low-paid jobs.Exhibit 7(continued)The shift to services between 2010 and 2019 occurred across all clusters.McKinsey&CompanyChange in share of employment,201019,percentage points Source:MGI African Productivity ModelChange in share of gross value added,201019,percentage points Consistent g
143、rowers Recent accelerators Recent slowdowns Slow growersAgricultureExtractionIndustrialServicesAgricultureExtractionIndustrialServices-4140-2-120-7160-9170Real productivity,2019,$thousandExtraction52311272Agriculture1232Industrial56101335914Services-4120--418McKinsey Global Institute|Rei
144、magining economic growth in Africa:Turning diversity into opportunityBy contrast,financial and business services are highly productive relative to other services subsectors and contribute the greatest economic value,accounting for nearly a fifth of Africas GVA today(Exhibit 8).This subsector encompa
145、sses banking,insurance,scientific research and development,travel agencies and related activities,and rental and leasing activities.Financial and business services contributed more than one-third of the GVA created by Africas shift to services from 2000 to 2019 but less than 10 percent of the employ
146、ment shift over the same period.Many other services subsectors are suitable for growth locally and globally.Targeted interventions to raise their productivity include increasing digitization,developing skills,and exporting talent.Tourism,for example,is another fast-growing,employment-intensive servi
147、ces subsector that could benefit from such interventions.Africa will soon have the worlds largest working-age population,which could meet the growing global talent shortage via services outsourcing(Exhibit 9).In particular,ICT and digital technologies have transformative cross-sector effects that co
148、uld boost the services sectors productivity overall.The emerging digital transformation taking place on the continent is evident in the vibrancy of its technology start-ups,which numbered more than 5,000 in 2021.Yet ICT infrastructure,access,and usage lag behindonly 14 percent of households had inte
149、rnet access in 2019.Even in cities,half the population does not use the internet.Tackling these digital bottlenecks is a crucial first step because digital infrastructure is critical to improving productivity in the services sector.Africa will soon have the worlds largest working-age population,whic
150、h could meet the growing global talent shortage via services outsourcing.19McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityExhibit 8Africas fnancial and business-services subsector is the most productive,but it employs the fewest people.McKinsey&Comp
151、any34777676763847463024231.42.83.91.22.12.90.60.91.31.42.53.50.30.40.647827Value added,$billionCAGR since 2000,%CAGR since 2000,%Employment,million employeesProductivity,$thousand2000 2010 20192000 2010 20192000 2010 20192000 2010 20192000 2010 20192000 2010 20192000
152、 2010 20192000 2010 20192000 2010 20192000 2010 20192000 2010 20192000 2010 20192000 2010 20192000 2010 20192000 2010 2019Financial and business servicesTradeGovernmentTransportOther services3.27.25.85.74.23.73.43.43.83.43.73.24.36.03.52.43.74.06.34.9Source:World Bank;UN Department of Economic and S
153、ocial Afairs,population division;McKinsey Global Institute analysis20McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityAn opportunity to increase domestic and export manufacturingThe industrial sector,which spans manufacturing,construction,and utilitie
154、s,also presents opportunities to spur productivity.As the continent rapidly shifted to services over the past two decades,the relative size of the industrial sector remained constant,accounting for roughly 12 percent of employment and 20 percent of output.Its share of employment increased in only 14
155、 African countries from 2010 to 2019.One such exception was Ghana,where industrial employment as a share of total employment increased from 10 percent in 2010 to 16 percent in 2019.Nonetheless,the sector had the highest productivity growth of any sector in Africa over that period1 percent a year on
156、average compared with 0.8 percent across sectorsand is the only sector in which productivity growth did not decline over the 20-year period.Faster-growing economies in the consistent growers and recent accelerators clusters in particular benefited from accelerated growth in manufacturing output and
157、the associated boost in productivity.Exhibit 9Includes the Caribbean.Note:Data for 202050 are projected using medium variant scenario.Sources:UN Population Prospects 2022;McKinsey Global Institute analysisAfrica will add 796 million people to the global workforce and be home to the largest and young
158、est population by 2050.McKinsey&CompanyWorking-age(1564)population1.5B0500M1B0ChinaIndiaLatin AmericaEuropeNorth AmericaAfrica20202050Change753M1.549B+796M928M1.111B+183M1.035B855M180M969M814M156M480M519M+39M439M488M+49M21McKinsey Global Institute|Reimagining economic growth in Africa:Tur
159、ning diversity into opportunityThrough increased local manufacturing,countries and companies can identify key products the continent can produce to meet burgeoning local demand,produce for global markets,and,where needed,reduce dependence on imports.For example,apparel manufacturing has increased si
160、gnificantly in Ethiopia to address demand in global markets,while Gabon doubled employment in its wood processing industry from 2010 to 2019.12 Cote dIvoire and Ghana,which together produce more than 60 percent of the worlds cocoa,doubled their share of locally processed cocoa beans from 15 percent
161、to almost 30 percent from 2000 to 2019.They recently joined forces to continue raising the industrys GVA and prosperity for cocoa-growing regions.Additional potential areas will continue to materialize,especially as multinational companies seek to diversify their supply chains.Vaccines are an exampl
162、e of a product where Africa is looking to ensure greater self-sufficiency.They fell under the spotlight during the COVID-19 pandemic when a lack of local vaccine manufacturing capacity left many African countries struggling to procure a sufficient supply of vaccines for their populations.13 To preve
163、nt such shortages,the African Union set up the Partnerships for African Vaccine Manufacturing,with the goal of increasing vaccine manufacturing to meet 60 percent of the continents demand by 2040.Currently there are more than 30 initiatives to support vaccine manufacturing in several African countri
164、es,including Ghana,Rwanda,Senegal,and South Africa.14 Building a robust industrial sector will require investment to increase the capacity of African manufacturing,create jobs at scale,and achieve the industrial sectors full economic potential continent-wide.To unlock the continents potential,Africa
165、n public-and private-sector leaders can also work to realize the full potential of the African Continental Free Trade Area(AfCFTA),which aims to reduce border constraints and increase intra-Africa trade as well as support economies of scale,increase competitiveness,and encourage flows of technology
166、and talent.Establishing more seamless,frictionless,and tighter connections among countries on the continent will ensure that those investments pay off(see Box 2,“Imagining a more interconnected Africa”).Africas industrialization opportunity includes increasing manufacturing output for African market
167、s as well as for export markets beyond the continent.At a global level,Africa accounts for 2 percent of total manufacturing output,but only 0.6 percent of imports of manufactured goods globally come from the continent.If African countries were to match Indias rate of production for domestic markets
168、and achieve its 2 percent share of manufactured goods sold,they would unlock$140 billion in additional economic value by 2030,implying 2.1 percent productivity growth annually compared with just 0.4 percent over the past decade.12 Sourcing in a volatile world:The East Africa opportunity,McKinsey&Com
169、pany,April 2015.13 Andrea Gennari,Tania Holt,Emma Jordi,and Leah Kaplow,“Africa needs vaccines.What would it take to make them here?”McKinsey&Company,April 2021.14 Expanding sustainable vaccine manufacturing in Africa:Priorities for support,GAVI,the Vaccine Alliance,November 2022.22McKinsey Global I
170、nstitute|Reimagining economic growth in Africa:Turning diversity into opportunityBox 2Imagining a more interconnected Africa Africa trades much more with economies beyond the continent than within it.Only 10 percent of imports come from another African country,and 17 percent of exports are going som
171、ewhere else on the continent.By contrast,across the Association of Southeast Asian Nations,or ASEAN,21 percent of imports and 22 percent of exports are intraregional,while in Latin America,intraregional trade accounts for 19 percent of imports and 20 percent of exports.Europe is Africas largest trad
172、ing partner,followed by China,and both trade far more with the continent than its countries trade with one another(Exhibit 10).China is the largest trading partner and has the broadest trade linkages with Africa.For some smaller countries with relatively low overall trade volumes,such as Benin,Repub
173、lic of Congo,Madagascar,and Mauritania,China is the main trading partner.Nonetheless,most trade value goes to and comes from Europe.The sources of intra-African imports are fairly evenly distributed across the continent.In contrast,almost 80 percent of exports of African countries are to countries o
174、utside the continent.With 53 African trading partners,South Africa accounts for 32 percent,or more than$35 billion,of the flow of intracontinental goods,the most such trade on the continent.Nigeria comes in second with more than$7 billion in flows across 51 African partners.For some smaller economie
175、s like Mali,Rwanda,and Togo,the main trading partner is another nearby African country.To increase intra-Africa trade volumes,the most critical value chains can be prioritized based on their potential for import substitution,contribution to economic growth,and inclusivity of women,youth,and small an
176、d medium-size enterprises,as well as feasibility.Agro-processing,pharmaceuticals,automotive,and logistics could deliver substantial value,but significant investment and bold interventions are needed to realize their potential.For example,improving transportation and logistics would require reducing
177、customers delays at borders,increasing the quantity and availability of quality trucks through financing,and scaling cold chain storage and transportation,which are among the priorities of the African Continental Free Trade Area.See exhibit next page23McKinsey Global Institute|Reimagining economic g
178、rowth in Africa:Turning diversity into opportunityReversing the trend and driving a shift in extracted commodities Currently,most African exports are extracted commodities.However,extractive industries,which employ a much smaller workforce than other sectors,saw a sharp drop in the proportion of val
179、ue they added to the African economyfrom 14 percent in 2010 to 8 percent in 2019.Productivity in the extractive industries also declined from 1 percent a year on average from 2000 to 2010 to an average of 5 percent a year in the subsequent decade.This decline occurred in all clusters except for cons
180、istent growers,where extractive industries in Ghana,Tanzania,and Zambia recently increased productivity.Among Africas five most valuable commoditiescrude oil,natural gas,gold,platinum,and iron oreexport revenues grew 17 percent a year on average in the 2000s.However,75 percent of that growth was due
181、 to increased prices.From 2010 to 2019,revenues from exported commodities fell by 6 percent annually on average,with 60 percent of the decline driven by shrinking volumes.For some commodities,this decline was far more pronounced than in the Exhibit 10 1Based on data as reported as of March 2023.Sect
182、ors are approximated using two-digit Harmonized System codes.Source:UN Comtrade;McKinsey Global Institute analysisAfrica trades more with other world regions than itself.McKinsey&CompanyDistribution of imports to and exports from Africa,2021,%,with total value in billions1 Intra-AfricaSources of Afr
183、ican importsDestinations of African exportsEuropeChinaUS Others outside AfricaAgricultureTotalMachineryMedical supplies and pharmaOther sectorsElectronics and electric equipmentElectronicsChemicalsBasic metalsGlass,cement,and ceramicsTextiles and apparelFood and beveragesOil and gas15$123$2312$5610$
184、4384$336$385$454$1413$409$3014$7613$424$69$2318$36Wood and paper productsMining$2$9$371$23$18$3$14$4$30$24$28$85$104$3$23305371724McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityrest of the world.For example,crude oil volumes in
185、 Africa dropped 41 percent compared with an 11 percent decline elsewhere.Natural gas volumes in Africa fell even more,by 59 percent,even as they increased 29 percent in the rest of the world.Nonetheless,extraction remains the highest-productivity sector on the continent as in the rest of the world.I
186、t is not,however,a large employer,and the cyclical and volatile nature of primary commodity prices makes it difficult to base a sustainable economy on this sector alone.Additionally,resource wealth across Africa has not always translated into greater human development,due to the complex connections
187、between resource extraction and governance.Going forward,Africas vast resources will need to better support its growth.Hydrocarbons will continue to be important for the continent,and reversing declining production will be imperative.At the same time,the sector can work to further decarbonize produc
188、tion by changing energy sources used in the production process,increasing efficiency to limit energy consumption in the production process,and attracting significant investment in carbon offsets to ensure net-zero production.To make the most of their significant gas resources,gas-rich countries shou
189、ld focus not only on providing incentives for production and reducing flaring to meet domestic and global demand;they will also need to urgently invest in the requisite infrastructure for transportation,processing,and distribution of these gas resources to support local industrialization and to grow
190、 export revenues.Africa also has many ways of reducing its reliance on traditional extraction to grow its economy and establish more transparent governance of trade in commodities that are newly in demand as a result of the worlds transition toward net zero.It has many of the materials needed for th
191、e journey,such as cobalt,bauxite,platinum,and copper;tapping those stores of value will initially entail securing appropriate access to resources through fair regulation and licensing.Working to ensure the rapid development of low-carbon energy supplies for the extractive industries,particularly met
192、als,will also be important.Capital will be needed for new projects and built infrastructure,while existing operations can be enhanced through local capability building and the transfer of expertise.Such advances also represent an opportunity to train workers with the skill sets for the new economy.F
193、inally,Africa can improve the downstream part of the metals value chain,such as smelting and refining,to increase value added and infrastructure development.Automotive companies,battery OEMs,and other downstream players can play enabling roles through strong partnerships with extractive businesses.I
194、nvesting in automation and digital technologies will further enhance the sectors productivity.15 Achieving the long-awaited African green revolutionRapid growth in the African services and industrial sectors will still leave hundreds of millions of people working in agriculture.Agriculture is the ba
195、ckbone of many African economies,providing more than 70 percent of employment in rural areas,49 percent of the continents total employment,and 15 percent of total value added.The sectors productivity and output improved steadily over the past two decades as millions of workers left for jobs in other
196、 sectors.Over time,the primary driver of agricultural growth has shifted from big increases in the labor force to growth in real agricultural capital stock.Yet African agricultural yields and productivity lag behind the standards of global peers,and action is needed to improve and ensure the livelih
197、oods of African farmers,who are a mainstay of many economies and remain crucial to the continents food security.15 Acha Leke,Peter Gaius-Obaseki,and Oliver Onyekweli,“The future of African oil and gas:Positioning for the energy transition,”McKinsey&Company,June 2022.25McKinsey Global Institute|Reima
198、gining economic growth in Africa:Turning diversity into opportunityThough Africa remains a net food importer,the trade balance in agricultural products hasimprovedover the past decade.In 2011,the value of net agricultural imports was nearly$30 billion.In 2021,the balance was about$6 billion.Ethiopia
199、,Morocco,and Rwanda have experienced rapid growth of crop outputs,but neither those countries nor Africa as a whole have achieved a green revolution similar to those in China,India,and other developing regions.At less than$2,000 per worker on average,Africas agricultural GVA is the lowest globally,w
200、hich partly explains why so many people are leaving the land to seek better opportunities in the services sector.Although estimates of untapped agricultural land on the continent range from 480 million to 840 million hectares,much of that land is unreachable or heavily forested,so Africa will need t
201、o increase the sectors productivity and learn to produce more with less.Over the past decade,agricultural productivity in most African countries has improved at a rate too slow to close the gap with the rest of the world,exceeding the global average in only eight of Africas 54 countries.Especially i
202、n a context of climate change and geopolitical volatility,the continents slow growth in agricultural output could threaten its ability to feed its people.Our analysis finds that if African countries were to match the productivity growththatIndian agriculture experienced from 1980 to 1990,they would
203、collectively add$200 billion of value to their economies by 2030or$40 billion more than expected at current productivity levels.The impact on food production could be tremendous.For example,analysis by McKinsey suggests that Africa could produce two to three times more cereals and grains than it doe
204、s today,which would add 20 percent more cereals and grains to current worldwide output.Similar increases are possible in the production of livestock and horticultural crops.16How,then,can African countries unleash an improvement in agricultural productivity and the farmer incomes it would deliver?To
205、 start,countries can separate their agricultural growth strategies fromtheirsocial benefits programs.A government-coordinated agricultural growth strategycouldfocus on enabling the private sector to deliver strong economicgrowth andreturns.Social benefit programs for those working in the sector,by c
206、ontrast,couldfocus on initiatives such as direct cash transfers to smallholder farmers to achieve social objectives such as poverty reduction,rural community welfare,food security,and societal stability.To transform and boost food productionand productivity,countries can pursue four strategies.First
207、,countries can maximize output value by aligning production resources and production choices with comparative advantage,shifting to higher-value production and increasing value added via agro-processing.Second,countriescan boost productionby building the right logistics systems to get produce to con
208、sumers.Third,countries can empower“midsize change agents”by enabling farms of allsizesto mobilize through a system of traders and warehouse aggregators.Fourth,African countries,together with the private sector,can develop financial solutions that enable forward contracts and access to futures market
209、sto allow farmers to hedgeagainst falling prices andbring greater price stability to the market.To improve food security beyondthe economic needs ofdomestic and export production,African countries can develop capabilities to evaluate economic and food security trade-offs.This would involve using lev
210、ers other than domestic productionfor example,strategic reserves,hedging,strategic importation and trade agreements,subsidies,distribution systems,social education campaigns,and food-waste management.16 Lutz Goedde,Amandla Ooko-Ombaka,and Gillian Pais,“Winning in Africas agricultural market,”McKinse
211、y&Company,February 2019.26McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityThe future of Africa lies in its vibrant cities.Although 57 percent of its population lived in rural areas in 2019,the continent is urbanizing faster than any other place on th
212、e planet.Since 2000,Africas urban population has grown 3.7 percent,outpacing global population growth of 2.5 percent.Over the next two decades,the continent will become majority urban as more than 500 million people arrive in its cities and create the largest total number of urban dwellers in the wo
213、rld.Urbanization is generally a positive economic force and a crucial driver of economic growth,especially in low-income countries.Cities contribute significantly to overall country GDP and are valuable sites of productive employment opportunities.In Africas largest cities,households earned and cons
214、umed more than twice as much as the rest of Africa from 2000 to 2019,and these cities also had a much lower share of poor households,2 percent compared with 9 percent on the continent overall.1717 Based on a sample of Africas 35 largest cities(excluding Lubumbashi,Mbuji-Mayi,and Mogadishu).These cit
215、ies account for 13 percent of Africas total population and 31 percent of Africas GDP.Africa is the worlds fastest-urbanizing region but depends too heavily on its primary cities27McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityThe number of large Afr
216、ican cities will multiply.By 2040,the continent will be home to 12 cities of more than ten million people each as ten more cities join Cairo and Lagos.Additionally,19 cities will have populations between five million and ten million,or nine more such cities than there are today.18 These 31 cities wi
217、ll be spread across the continent and split evenly among countries across all four clusters.In 24 of them,GDP increased faster than GDP in the country overall over the past decade(Exhibit 11).As a weighted average,GDP in all 31 cities grew 4 percent compared with an average of 3.2 percent in their c
218、ountries and 3.3 percent across Africa over the same period.With cities as with countries,however,there is no“one Africa.”City growth varied across country clustersnot surprising,perhaps,since cities typically drive country-level growth.Within the clusters,there was also wide variation,with some cit
219、ies thriving in spite of a declining national economy and vice versa(Exhibit 12).Cities in consistent grower countries had the biggest gains in GDP and population from 2000 to 2019.They represented nearly 80 percent of the cities in faster-growing clusters that will have five million or more residen
220、ts by 2040.Cities in clusters that grew more slowly than averagerecent slowdowns and slow growersalso expanded more slowly,accounting for roughly 40 percent of cities that will have five million or more residents by 2040.GDP is not growing fast enough in these cities to meaningfully offset their pop
221、ulation growth of 2.7 percent on an unweighted-average basis.As a result,their GDP per capita decreased by 0.1 percent annually over the past decade compared with growth of 2.6 percent a year in cities within faster-growing economies.Fostering accelerated economic growth in these cities is an urgent
222、 priority.We define primary cities in Africa as the largest city in each country.These cities attracted 67 percent of total urban migration over the past two decades.Champions of GDP growth,they also contributed nearly a third of Africas nominal GDP in 2019.19 18 2040 population figures rely on esti
223、mates from Oxford Economics.The basis of population forecasting at the city level is a natural change and net migration model.Birth rate and death rate in a city relative to national figures are projected,and census or historical estimates of population by age as a starting point are used.Then,how b
224、irths enter into the citys population,deaths exit,and people move through the age bands is modeled over time.Finally,migration is added,which is forecast through the economic performance of a city relative to the country.2040 population figures for Lubumbashi,Mbuji-Mayi,and Mogadishu and are estimat
225、ed by extrapolating UN 2035 population estimates to 2040 using the 203035 population growth rate.19 In the sample of 48 primary cities in the data set we use,across time from 2000,the urban wealth scaling exponent(percent increase in log GDP with 1 percent increase in log population)is 1.13,the same
226、 as some studies found in the United States and Germany and just below the 1.15 observed in China.See Lus M.A.Bettencourt,“The origins of scaling in cities,”Science,volume 340,number 6139,June 2013;Lus M.A.Bettencourt et al.,“Growth,innovation,scaling,and the pace of life in cities,”Proceedings of t
227、he National Academy of Sciences,volume 104,number 17,April 2007;Lus M.A.Bettencourt and Jos Lobo,“Urban scaling in Europe,”Journal of the Royal Society Interface,volume 13,number 116,March 2016;Genta Kuno and Pradipto,“Non-trivial relationship between scaling behavior and the GDP microstructure in I
228、ndonesian cities,”PLOS ONE,volume 17,number 11,November 2022;and Joao Meirelles et al.,“Evolution of urban scaling:Evidence from Brazil,”PLOS ONE,volume 13,number 10,October 2018.By 2040,Africa will be home to 12 cities of more than tenmillion people each as ten more cities join Cairo and Lagos.28Mc
229、Kinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityExhibit 11By 2040,Africa will have 31 cities19 more than todaywith more than fve million people.McKinsey&CompanyAfrican cities with more than 5 million people by 2040Consistent growersCountry-level GDP gr
230、owth trends:Recent slowdownsSlow growersRecent acceleratorsInsufcient dataAddis Ababa,EthiopiaKumasi,GhanaAbidjan,Cte dIvoireAccra,GhanaIbadan,NigeriaKhartoum,SudanDar es Salaam,TanzaniaLubumbashi,Democratic Republicof the CongoLusaka,ZambiaMogadishu,SomaliaAlgiers,AlgeriaJohannesburg,South AfricaCa
231、pe Town,South AfricaLuanda,AngolaNairobi,KenyaDouala,CameroonCasablanca,MoroccoDakar,SenegalOnitsha,NigeriaAntananarivo,MadagascarCairo,EgyptAlexandria,EgyptLagos,NigeriaKinshasa,Democratic Republicof the CongoThe boundaries and names shown on this map do not imply ofcial endorsement or acceptance b
232、y McKinsey&Company.Note:Djibouti,Eritrea,Sao Tome and Principe,Somalia,and South Sudan are excluded due to incomplete GDP data 200019.Lubumbashi,Mbuji-Mayi,and Mogadishu are not included in the other cities analyses as they are not included in the Oxford Economics data set.Greater Johannesburg inclu
233、des the city of Johannesburg,Ekurhuleni,and the West Rand.Source:Oxford Economics;UN World Urban Population;MGI Pixels of Progress geospatial data set5M10M10MCircle size=projected populationKampala,UgandaMbuji-Mayi,Democratic Republicof the CongoBamako,MaliOuagadougou,Burkina FasoKano,NigeriaAbuja,N
234、igeriaYaound,Cameroon29McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityExhibit 11(continued)Cities with fastest growing GDP are generally located in countries that are consistent growers or recent accelerators.McKinsey&CompanyReal GDP CAGR over 20101
235、9 for Africas largest cities and their countries,%1.Addis Ababa,Ethiopia 2.Kumasi,Ghana 3.Abidjan,Cte dIvoire 4.Accra,Ghana 5.Ouagadougou,Burkina Faso 6.Khartoum,Sudan 7.Dar es Salaam,Tanzania 9.Lubumbashi,Democratic Republic of the Congo 10.Mbuji-Mayi,Democratic Republic of the Congo 11.Lusaka,Zamb
236、ia 12.Mogadishu,Somalia13.Abuja,Nigeria26.Ibadan,Nigeria27.Algiers,Algeria 28.Kano,Nigeria29.Johannesburg,South Africa30.Cape Town,South Africa 31.Luanda,Angola 14.Bamako,Mali 15.Kampala,Uganda 16.Yaound,Cameroon 17.Nairobi,Kenya 18.Douala,Cameroon 19.Casablanca,Morocco 20.Dakar,Senegal 21.Onitsha,N
237、igeria 22.Antananarivo,Madagascar23.Cairo,Egypt 24.Alexandria,Egypt25.Lagos,Nigeria 8.Kinshasa,Democratic Republic of the CongoCountryCity7.37.87.97.98.09.57.37.26.86.46.05.75.75.64.03.63.12.42.32.22.01.71.36.95.35.55.45.35.24.84.74.64.46.56.16.16.14.34.43.03.15.77.16.67.19.1Lubumbashi,Mbuji-Mayi,an
238、d Mogadishu are not included in the other cities analyses as they are not included in the Oxford Economics data set.Greater Johannesburg includes the city of Johannesburg,Ekurhuleni,and the West Rand.Source:Oxford Economics;UN World Urban Population;MGI Pixels of Progress geospatial data setConsiste
239、nt growersCountry-level GDP growth trends:Recent slowdownsSlow growersRecent acceleratorsInsufcient data3.83.83.03.03.01.61.61.92.64.65.14.63.45.23.03.230McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityExhibit 12Per capita GDP is increasing more rapi
240、dly in African cities that are growing faster.McKinsey&CompanyAfrican cities GDP per capita CAGR,201019,%Based on an analysis of 45 primary cities,which are the largest cities in their countries by population.Average GDP per capita and population growth rates in clusters are non-weighted.Source:Oxfo
241、rd Economics;McKinsey Global Institute analysis5MAverage GDP per capita CAGR for each grouping of citiesCountry-level trendsCircle=1 city,sized by population63-3-60 Consistent growers2.6Kinshasa,Democratic Republicof the CongoAddis Ababa,EthiopiaKumasi,GhanaOuagadougou,Burkina FasoLusaka,ZambiaKigal
242、i,RwandaDar es Salaam,TanzaniaKampala,UgandaNiamey,NigerBamaka,MaliFreetown,Sierra Leone Recent accelerators2.9Abidjan,Cte dIvoireLom,TogoHarare,ZimbabweYaound,CameroonNouakchott,MauritaniaCotonou,BeninDakar,SenegalConakry,GuineaRecent slowdowns-0.7Not shown:Tripoli,Libya-10.7%Cairo,EgyptBrazzaville
243、,CongoNDjamena,Capital of ChadLuanda,AngolaLagos,NigeriaWindhoek,NamibiaTunis,TunisiaLilongwe,MalawiCasablanca,MoroccoKhartouma,SudanSlow growers0.5Johannesburg,South AfricaBangui,Central African RepublicPort Louis,MauritiusGaborone,BotswanaAntananarivo,MadagaskarMbabane,SwazilandMaseru,LesothoBujum
244、bura,BurundiMonrovia,LiberiaBissau,Guinea-BissauAlgiers,AlgeriaLibreville,GabonBanjul,Gambia31McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityAfricas second cities,those with the second-largest population in each country,are generally not nearly as v
245、ibrant or dynamic as their larger cousins.Among a set of the largest countries on the continent,only four of 14 have a second city larger than half the size of their primary city.20 In five countries,the second city has a population of less than 25 percent of the primary citys population.By contrast
246、,in Brazil,China,India,and the United States,the population of the second city is more than 60 percent of the population of the largest city(Exhibit 13).This points to an opportunity for Africas second cities,which today are adding people more slowly than primary cities.On average,the populations of
247、 second cities grew 2.5 percent from 2000 to 2019,while those of primary cities increased 3 percent.In fact,less than half of second cities in our sample were growing faster than Africas continent-wide population growth rate of 2.6 percent.African countries have an opportunity to significantly expan
248、d their second cities.Of course a second city cannot make itself into something it is not:ports,resource extraction hubs,and tourist hubs require significant natural endowments and infrastructure.However,second cities,supported by national governments,can focus on getting the basics of urbanization
249、right by identifying competitive advantages,investing to improve the enabling environment,exploring partnerships to attract investment,planning and building green infrastructure,and insisting on opportunity for all through inclusion of city outskirts and by building affordable housing.A focus on sec
250、ond cities should not divert attention from the reality that many African cities have a need for sustainable investment in essential services and critical infrastructure.Different cities have different critical needs,but in growing urban communities,affordable housing is high on the priority list.Co
251、mpared with other emerging regions,Africa has significant infrastructure gaps,especially in access to electricity,water,paved roads,and the internet.Urban infrastructure supports economic development in powerful ways.The number of African people living in urban centers will double over the next 20 y
252、ears,and critical to the continents ability to accommodate its rising population is the built environment and its supporting infrastructuretransportation,power,water,and telecom systems.However,Africas urban infrastructure is significantly deficient across nearly all infrastructure asset classes.For
253、 example,100 million residents of African cities,or 18 percent of the urban population,lack access to electricity.While countries such as Egypt,Morocco,and Tunisia have attained nearly full urban electrification,in others like the Central African Republic,urban electric coverage is less than 40 perc
254、ent.The gap is even greater in water and sanitation infrastructure and services;66 percent of Africas urban population has no access to such services.A comparative study using satellite imagery found that urban roads in Africa occupy a smaller share of land than in other major urban areas around the
255、 world.Those roads that do exist in African cities are disproportionately clustered near their centers,leaving the outskirts disconnected.Housing is similarly scarce,and more than 60 percent of the continents urban population lives in slums,a figure that tops 90 percent in some countries such as Sou
256、th Sudan.Africas telecommunications infrastructure is a bright spot,with universal mobile phone coverage across all urban areas.20 The 14 countries are the overlapping sets of the ten largest countries by population and the ten largest countries by GDP(excluding Angola,the Democratic Republic of the
257、 Congo,Ethiopia,Libya,Sudan,and Uganda because of limited data availability).32McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityExhibit 13African second cities are undersized compared with primary cities.McKinsey&CompanyCountries secondary cities as a
258、 share of the primary citys population,%1007525050ShanghaiBeijingChinaDelhiMumbaiIndiaRio deJaneiroSo PauloBrazilNew YorkLos AngelesUnited StatesKumasiAccraGhanaPointe-NoireBrazzavilleRep.of the CongoJohannesburgCape TownSouth AfricaRabatCasablancaMoroccoKano1LagosNigeriaOranAlgiersAlgeriaHarareBula
259、wayoZimbabweAlexandriaCairoEgyptSfaxTunisTunisiaNairobiMombasaKenyaLusakaKitweZambiaDar es SalaamArushaTanzaniaDoualaYaoundCameroonBlantyre CityLilongweMalawiAfrican countriesNon-African countriesCloser to primary citys size(right-to-left scale)5MPrimary citySecondary cityCircle size=populationUsing
260、 Oxford Economics defnition of urban agglomeration,Onitsha would include a number of adjacent areas including Agulu,Asaba,Awka,Nnewi,and Ogidi,and would have a population of 6.7 million(45%the size of Lagos).In this instance,weve shown Kano as Nigerias second city as its more consistent with traditi
261、onal defnitions of Nigerias cities.Source:Oxford Economics33McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityIn aggregate,insufficient urban infrastructure prevents African cities from reaping the benefits of scale and agglomeration.The scale of infra
262、structure investment required on the continent is estimated to be roughly 8.6 percent of GDP annually.21 Urban areas require the greatest investment in infrastructure asset classes such as sanitation,with cities needing 70 percent of the overall investment.22 However,significant improvements in how
263、countries invest in infrastructure projects and the impact this infrastructure has on national economies,including on sustainability and inclusivity,is needed to justify such spending.To do more with less,cities can explore private partnerships,introduce investment accountability,assess and manage e
264、xpenses,and embrace technology.To attract private-sector financing in particular,governments and their institutional partners can take decisive action to improve the commercial viability of projects by mitigating political,currency,and regulatory risks and by increasing the number of bankable projec
265、ts.23Implemented with coordination and coherence,infrastructure plans could improve individual welfare and deliver real socioeconomic returns.Each dollar invested in such projects is estimated to add 20 cents to GDP.24 Investing to expand and enhance the productivity of urban infrastructure and attr
266、acting private capital for infrastructure investment,therefore,are crucial to turning Africas rapid urbanization into the valuable asset it could be.21 Julie Rozenberg and Marianne Fay,Beyond the gap:How countries can afford the infrastructure they need while protecting the planet,World Bank,2019.22
267、 State of the worlds sanitation:An urgent call to transform sanitation for better health environments,economies and societies,World Health Organization and United Nations Childrens Fund,2021.23 For more information,see Kannan Lakmeeharan,Qaizer Manji,Ronald Nyairo,and Harald Poeltner,“Solving Africa
268、s infrastructure paradox,”McKinsey&Company,March 2020.24 The economic impact of infrastructure,McKinsey Global Institute,June 2013.The scale of infrastructure investment required on the continent is estimated to be roughly 8.6 percent of GDP annually.34McKinsey Global Institute|Reimagining economic
269、growth in Africa:Turning diversity into opportunitySt.James beach,Cape TownKejetia market,KumasiBox 31“Deutsche Bank finances the expansion of the Kumasi Market in Ghana,”Deutsche Bank,January 13,2022.Two thriving second cities Cape Town in South Africa and Kumasi in Ghana are two cities that have a
270、dopted policies and made investments that illustrate the opportunities to invigorate Africas second cities.They reflect the divergent growth paths of Africas economies.South Africa is a slow grower,and Cape Towns GDP grew 1.7 percent on average annually over the most recent decade.Kumasi mirrored Gh
271、anas progress as a consistent grower,achieving an average of 8 percent annual GDP growth from 2010 to 2019.Rapid migration combined with high birth rates among their existing populations mean that GDP is spread more thinly,and Cape Towns GDP per capita grew by just 0.4 percent a year on average sinc
272、e the start of the millennium,while Kumasis grew by an average 3.6 percent a year.In Cape Town,publicprivate initiatives have attracted about 20 additional direct flights from major global markets over the past decade,resulting in two million annual foreign tourists in the city and contributing an e
273、stimated 200,000 direct jobsabout 10 percent of the citys total.Its tech sector has attracted investment,and the city is now home to 200 fintech start-ups and data and engineering hubs of global technology companies drawn by its universities and low labor costs.The city has developed a bus rapid tra
274、nsit system to relieve urban congestion and support its investment in tourism,and it generates its own electricity,reducing the impact of national power outages that have depressed South Africas overall growth.Kumasi is rich in mineral resources,including two of the largest gold mines in the world.Y
275、et the city has worked to grow its manufacturing subsector,including textiles,agro-processing,and wood products.And Deutsche Bank has stepped in to support the expansion and renovation of the Kumasi Central Market,West Africas largest market with 12,000 shops and stalls.1 Together with the World Ban
276、k,Kumasi is working to introduce a transit system similar to Cape Towns,which will reduce travelers reliance on the informal taxis and vans called tro-tros,though it will need to extend water and sanitation facilities further from the city center where many of its newest residents live.These two sec
277、ond cities demonstrate how,with similar support from multilateral and private financial institutions and corporations as well as local innovations,many of Africas second cities can capitalize on their strengths to step up economic growth and productivity.36McKinsey Global Institute|Reimagining econo
278、mic growth in Africa:Turning diversity into opportunityLarge private companies have an important role to play in rekindling economic progress in Africa because they contribute disproportionately to growth,innovation,employment,exports,productivity,and taxes.Previous MGI research found that emerging
279、economies with consistently high growth rates had twice as many large companies as other economies.25 The effects of the COVID-19 pandemic,followed by a slowdown in the global economy and rising inflation,have intensified pressures on performance and the need for growth.Africas big companies have pr
280、oven resilient in the face of challenges over the past decade and now are well positioned to grow.Their success and growth will have positive knock-on effects among the myriad small and medium-size enterprises that participate in their supply chains and support the vast majority of jobs on the conti
281、nent.25 For more information,see Outperformers:High-growth emerging economies and the companies that propel them,McKinsey Global Institute,September 2018.Africas large companies have proven resilientand most have considerable unmet potential for growth37McKinsey Global Institute|Reimagining economic
282、 growth in Africa:Turning diversity into opportunityAlready the continents entrepreneurial vibrancy is showing encouraging signs:funding of technology start-ups across Africa increased by 18 times between 2015 and 2021.26 Large companies,too,have grown revenues faster than continent-wide GDP since 2
283、015.On an unweighted basis,these companies grew 3 percent per year on average over that period,a growth rate that rises to 5 percent annually on a weighted basis.2726 For data from 2015 to 2019,see 2019 Africa tech venture capital report,Partech Partners,January 2020;for data from 2020 and 2021,see
284、The African tech startups funding report,Disrupt Africa,2021.27 Weighted by company revenue share of aggregate revenue for companies with more than$1 billion in revenue for which data is available.Africa is home to many large companiesAt least 345 companies in Africa have annual revenues of$1 billio
285、n or more.Collectively they produce revenues of more than$1 trillion(Exhibit 14).About 230 of these 345 companies are homegrown,meaning they were started in an African country,often by a local entrepreneur.Fifty-two of the continents$1 billionplus companies are state-owned enterprises.These large co
286、mpanies operate in all major sectors on the continent,but 70 percent of the revenues they generate come from just six subsectors:oil and gas,mining,retail and consumer goods,financial services,manufacturing,and telecommunications.Data for African countries and cities reveals great diversity among th
287、em,and Africa-level statistics for large companies show similar significant variationhere,too,there is no“one Africa.”Roughly 40 percent of the 345 companies are based in South Africa,a disproportionately large share relative to its GDP.Of the 147 large companies headquartered there,118 are homegrow
288、n while the rest are foreign owned.This suggests an opportunity to expand the corporate footprint in other African countries.An additional 32 percent,or 111 companies,are in other slow grower or recent slowdown economies.The number of companies in the largest of these economiesAlgeria,Angola,Egypt,a
289、nd Nigeriais in line with similarly sized economies around the world such as Brazil,China,and India,but still far lower than South Africas 147 large companies.For example,Egypts GDP is four-fifths the size of South Africas,but the country is home to only 33 large companies,or one-fifth the number of
290、 companies in South Africa.Nigerias GDP is larger than South Africas,but only 23 large companies are headquartered therejust 16 percent of the number of large companies in South Africa.Surprisingly,recent accelerator and consistent grower countriesthose where GDP grew more than 4.2 percent from 2010
291、 to 2019are home to few large companies.The countries in these clusters account for 28 percent of Africas nominal GDP but have only 10 percent of its large companies.This is likely because on a stand-alone basis,these countries are smaller markets.38McKinsey Global Institute|Reimagining economic gro
292、wth in Africa:Turning diversity into opportunityExhibit 14Africa has at least 345 companies with revenues of$1 billion or more,roughly 40%of which are headquartered in South Africa.McKinsey&CompanyNumber of$1 billion+companies by countryConsistent growersCountry-level trends:Recent slowdownsSlow gro
293、wersRecent acceleratorsInsufcient dataThe boundaries and names shown on this map do not imply ofcial endorsement or acceptance by McKinsey&Company.Excluding 54 foreign companies with no particular base in any African country.Source:McKinsey African Companies Database;McKinsey Global Institute analys
294、isSouth Africa147Morocco20Algeria12Nigeria23Egypt33Angola9Kenya6Ethiopia4Sudan1Libya2Tunisia4Mauritania2Senegal3Liberia1CtedIvoire2Ghana4BurkinaFaso1Cameroon2Gabon1DemocraticRepublic of the Congo4Botswana1MauritiusMadagascar3Zimbabwe1Zambia2Tanzania1Togo1139McKinsey Global Institute|Reimagining econ
295、omic growth in Africa:Turning diversity into opportunityRoughly half of large homegrown companies are publicly traded,30 percent are privately owned,and the remainder are state-owned enterprises.The rest of the large companies operating in Africa are subsidiaries of foreign firms,roughly 37 percent
296、of which are publicly traded and the remainder private,including a few state-owned enterprises primarily from China.Compared with other markets,foreign-owned companies have a disproportionately significant role in African countries.They account for one-third of all large companies in Africa and roug
297、hly one-third of corporate revenues as well.Given the relative significance of these institutions,foreign firms could work to become more entwined in the fabric of the African business economy and operate more as homegrown companies than as subsidiaries of global giants.Previous McKinsey research ha
298、s found that winners in Africa often tailor their offerings and business models to the markets where they operate and build local teams and talent pools.28 The ownership structure of companies also varies by sector.Large homegrown and foreign public and private companies are concentrated in services
299、,while state-owned enterprises are more involved in extractive industries(Exhibit 15).28 Dance of the lions and dragons:How are Africa and China engaging,and how will the partnership evolve?McKinsey&Company,June 2017;and Africas business revolution,2018.Exhibit 15Across Africa,the distribution of se
300、ctors varies by ownership.McKinsey&CompanyDistribution of large companies by sector(%)and ownership(#)72 Private106Public52 StateAfrican-ownedWidth=number of companiesWidth=number of companies67 Private42 Public6StateForeign-ownedAllCross-sector includes large conglomerates operating across multiple
301、 sectors.Source:McKinsey African Companies Database;McKinsey Global Institute analysisExtractionIndustrialAgricultureServicesCross-sector100%scaleOwnershipOwnership40McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityPerformance of Africas large compani
302、es varies29 The change in exchange rate by region was calculated as the unweighted average of the percent change of exchange rate(local currency units per dollar)from 2015 to 2021 of countries in each region.Local currency growth rates were higher and,accordingly,resulted in falling growth rates due
303、 to depreciation that took place in most markets.The performance of large companies in Africa varied dramatically between 2015 and 2021,a period that included a global commodities downturn and the onset of the COVID-19 pandemic.Proportionally,the number of large corporations on the continent shrank
304、compared with those in other regions and countries.We estimate that since 2015,Africa has lost 16 percent of its businesses with revenues exceeding$1 billion(only one-tenth of the loss was due to exchange rate effects)and added 9 percent more new large firmsresulting in a net decrease in large compa
305、nies.Some 50 percent of the large companies that closed,were acquired,or had declining revenue were in the services sector,with 19 percent in extractive industries and 18 percent in manufacturing,construction,and utilities.In comparison,Latin America has had a 31 percent increase in large firms sinc
306、e 2015,and China and India,respectively,attracted 57 percent and 30 percent more companies with revenues of more than$1 billion.Nonetheless,the continents large companies in aggregate grew revenues by 4.9 percent annually on average from 2015 to 2021.Certain types of companies,though,performed bette
307、r than others.Specifically,South African companies increased revenues at an average rate of 5.5 percent a year,and North African companies by 4.4 percent a year.Companies in the rest of Africa fared far less well.Their revenues declined by 1.7 percent on average over that period,as exchange rates fe
308、ll.Currency values fell 16 percent on average in South Africa and 80 percent across North Africa,while across the rest of the continent,they fell on average by 189 percent(Exhibit 16).29Additionally,the revenues of homegrown companies grew slightly faster than those of companies in Africa with headq
309、uarters elsewhere,by 5.5 percent and 4.4 percent,respectively.Companies in consistent grower economies increased revenues at a rate of 2.2 percent on average,which was slower than companies grew in other clusters.Revenues of companies in the recent accelerators cluster grew 5.6 percent,those in rece
310、nt slowdowns grew 4.1 percent,and large businesses in slow growers grew 5.3 percent.Across sectors and on a weighted basis,the best-performing sectors were power and utilities,agriculture,and mining,each of which increased revenues more than 10 percent annually on average.Revenues in sectors such as
311、 IT,financial services,and retail and consumer goods grew more than 4 percent.Oil and gas companies,which outnumber firms in all other sectors,faced significant price headwinds and so were an exception as their revenues declined by more than 1 percent annually on average.However,variation in growth
312、within sectors dwarfed variation in growth between sectors,suggesting potential to improve average firm performance across all sectors.In nearly every sector,at least one large companys revenue grew at more than twice the average sector growth rate from 2015 to 2021and sometimes by much more.Similar
313、ly,at least one large company in every sector except healthcare had revenues that declined more than 5 percent per year.41McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityExhibit 16Companies are growing at diverse paces within each sector,but average
314、growth rates remain close across sectors.McKinsey&CompanyChange in companies CAGR by sector,1 201521,%Includes 190 companies with revenue data available for 2015 and 2021.Of those companies,169 remain among Africas 345 companies with$1 billion or more in revenues.Twenty-one others had$1 billion or m
315、ore in revenues in 2015 but their revenues have since declined below that level.Two media frms with over$1 billion in revenue are not shown for low sample size.2Large company sector average is weighted by 2021 revenue share and includes the 190 companies w revenue data available.3Overall sector aver
316、age growth rate estimated based on growth rate of sector value add.Source:McKinsey African Companies Database;Oxford Economics(for value added)20Power and utilitiesManufacturingConstructionConglomerateInformation technologyFinancial servicesRetail,consumer goodsHealthcareTelecommunication
317、sTransport and logisticsAgricultureMining and metalsOil and gasIndividual companyEstimated sector average for all companies3Sector average for large companies242McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityExhibit 16(continued)Compared with 201521
318、 revenue growth.Source:McKinsey African Companies Database;McKinsey Global Institute analysisThe companies with revenue growth faster than the average were disproportionately private and located in north Africa.McKinsey&CompanyDistribution of companies whose revenue CAGR over 201521 was above or bel
319、ow average,%By country-level growth trendBy region in AfricaBy ownershipAbove average717133834SouthNorthWestEastMultiCentral0 0 0 0 0 0 0 0Below average6215162 3 3Above average213445PublicPrivateState0 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 0Below average582220Above average36
320、97418Slow growersRecentslowdownsRecentacceleratorsConsistentgrowersMultiBelow average612733543McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunitySignificant value creation opportunities exist30 The potential to deliver$550 billion in additional revenue
321、by 2030 was identified across seven sectors:oil and gas,retail,telecommunications,banking,manufacturing,consumer packaged goods,and insurance.31 Capturing the revenue opportunity in the mining sector is not straightforward and is highly contingent on certain assumptions(for example,regarding infrast
322、ructure)becoming true.As GDP growth recovers in many parts of the continent,large companies have considerable potential for value creation.We estimate that more than half of the 345 large companies in Africa could increase their revenues collectively by more than$550 billion by 2030 with ambitious s
323、trategies to access new markets,strengthen productivity,and increase operational efficiency.30 Sixty percent of Africas large companies are based in Egypt,Nigeria,and South Africa,so the continents smaller,faster-growing nations represent a promising next horizon for new business growth.While all se
324、ctors on the continent have growth opportunities,companies in the services sector could capture 60 percent of the overall revenue potential,or$330 billion,while the oil and gas subsector could produce nearly one-third,or$160 billion.About 12 percent of the potential,or$65 billion,could come from min
325、ing and metals.31Companies can begin by looking closely at their geographic and product portfolios and prepare to reallocate capital to the fastest-growing countries and cities as well as the highest-return opportunities.For example,opportunities exist to serve both B2B and B2C markets;130 million n
326、ew members of the consuming class will join Africas markets by 2030,making B2C a promising opportunity(see Box 4,“Africa has the potential to unlock more than$3 trillion in consumer spendingbut this will take more than a growing population”).An important enabler of corporate growth will be partnersh
327、ips with stakeholders ranging from African governments to local communities to investors.Successful partnerships will incorporate environmental,social,and governance goals and metrics,helping companies support and enhance the societies they operate in and embrace sustainability and inclusion to prop
328、el growth.To capitalize on those opportunities,companies across all sectors will need to improve their competitiveness.Many of them can adopt leaner,simpler operating models;invest in building capabilities among their future leaders;adopt a digital-first approach to replace legacy systems with techn
329、ology platforms;and harness analytics to identify growth pockets and reduce costs.Across all sectors,five key common levers for growth emerge.First,companies can envision themselves as African champions,creating value first and foremost for Africa and its people.For instance,mining companies could b
330、uild more robust mineral refining and processing operations to capture the full value of the continents natural resources.Second,companies can integrate more into the world.For example,homegrown manufacturing companies could look beyond continental borders to find new markets and cheaper suppliers o
331、r to bring in new technologies.Third,companies can address needs in their local communities more actively.For example,banks and telecom operators can expand access to financial services at the bottom of the pyramid through digital channels.Fourth,companies can work more closely with governments and
332、policy makers,for example in the way that businesses came together to support government effectively during the COVID-19 crisis in countries like Nigeria and South Africa.Last,companies can prioritize the energy transition.For instance,oil and gas companies could work to decarbonize their operations
333、 to meet the worlds climate-change goals and attract increased capital investment.44McKinsey Global Institute|Reimagining economic growth in Africa:Turning diversity into opportunityBox 41 The consuming class is defined as those with daily spending of$11 or more.Africa has the potential to unlock more than$3 trillion in consumer spendingbut this will take more than a growing population Tens of mil