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Multinationals seeking growth opportunities in Africa

Five of world's ten fastest-growing economies are in Africa: Towers Watson

Multinational businesses are increasingly seeking growth opportunities in Africa and view the continent as one of the last frontiers of growth, according to Towers Watson.

At a recent Cass Business School event called Tomorrow’s Africa, Tinashe Muyambo, who leads Towers Watson’s Consulting in Africa (ex-South Africa), said: “Currently five of the world’s ten fastest growing economies are in Africa, and that number is projected to grow. Many multinational companies, including some of our clients, no longer wish to ignore the prospects of providing goods and services to the rapidly growing middle class on the African continent.”

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According to Towers Watson, those multinational companies that are able to establish themselves in market leading positions early will, over the medium to long term, enjoy the benefits of being first movers as African economies continue to grow. It says that it is encouraged to find governments, regulators and key industry players that have a genuine interest in improving their commercial environment through developing partnerships.

Towers Watson asserts that the strength of these relationships and depth of understanding in many markets will play a significant role in realising the opportunities available. It suggests that multinational companies that are not adept at managing this dynamic, that fail to incorporate cultural nuances into their technical process, and are not agile enough to adapt to fast moving markets, will experience a marked drag on returns from their African operations.

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“Countries that multinational companies hesitated to venture into in the past are now experiencing steady increases in foreign direct investment (FDI). Some of this comes from companies that historically have had a presence in Africa predominantly in the energy, resource and agricultural sectors. In addition we are seeing keen interest from hi-tech, pharmaceuticals and financial institutions that are seeking to service the developing needs of a rapidly growing middle class,” said Muyambo.

According to Towers Watson, it will become increasingly important to have leaders and partners that are tuned into the nuances of working in Africa, whether it is the risk and financial management required during new market entry; the execution of M&A activity; or the on-going management of a workforce with rapidly developing needs. The company suggests that those that are able to navigate the changing landscape and build workable relationships with key stakeholders, will find that they are better equipped to enjoy risk-adjusted returns from their African operations.

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