Learning from Emerging Sub-Saharan African Multinationals (Audio Books)

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Multinational corporations still account for a large portion of global trade. Typical references are made to Western multinationals like GE, Unilever, etc. But, a relatively unknown force is growing in Africa Sub-Saharan multinationals.

Sub-Saharan multinationals (those outside of South Africa) grew almost 30% from 2006 to 2009 while, in comparison, growth in the 500 biggest American firms fell below 10% in 2006 and 2007, according to the Pioneers on the Frontier: Sub-Saharan Africas Multinational Corporations by the Initiative for Global Development. American firms revenue growth also was negative in 2009.

Mr. Andrew Alli, CEO of Africa Finance Corporation, says that this trend of Sub-Saharan multinationals expanding into other parts of Africa, and even outside of the continent, is driven by increased political stability, better regional integration, and enhanced economic growth. Providing an insight to other firms looking to expand into Africa over the next five years, Alli says some key trends to watch are the growth of the African middle class and Africa being a key player, like China, in the global value chain.

Some of the expansion strategies into Africa include acquiring businesses, focusing on latent demand (anticipating areas of growth from trends in demand elsewhere), creating beachhead operations (starting with one product line in a new market to establish key channels and reputation), and leveraging partnerships. Jumaane Tafawa, Director of Frontier 100 of the Initiative for Global Development, points out there is a lot other firms can learn from these approaches.

As an example, AICO of Zimbabwe decided to place beachhead operations in Zambia and Tanzania for its seed product line when the political and economic situation in the country stymied business. Now, these operations have set the stage for expansion into other countries on the continent.

Overall, multinationals represent one of the strongest forces on the African continent. Because of their organizational strengths and ecosystems, there are a lot of social issues they can help to address, such as unemployment, health, and education while building capacity within their own systems. And the report notes that investments by multinationals leads to complementary investment, as in the case of US$ 5-$6 billion per country implementation for SEACOM undersea cable infrastructure.

The multinational ecosystem is no panacea for Africas development issues because multinationals have both helped and hindered development on the continent.  However, shifting global realties, e.g., demographic shifts, climate issues, economic disparities, will require multinationals to adapt how they interact in developing regions. Many multinationals have already learned the market benefits of doing so.

Listen to the interview episode.