How Do African Companies Fare in the World? Comparing Africa's Top 25 against Leaders in Asia, Latin America and the Middle East

African Business, April 2010 | Go to article overview

How Do African Companies Fare in the World? Comparing Africa's Top 25 against Leaders in Asia, Latin America and the Middle East


While Africa boasts some very large companies, it is worth considering them within a global context. Although the market capitalisation of the top 25 African companies is $416.38bn, the comparable figure for the top 25 Asian companies is $1,787bn; the Middle East $362.51bn and Latin America $439bn.

Although the African figure is inflated by the $156.37bn valuation of the top three, dual-listed companies, this seems a reasonable outcome given the size of the region's GDP and its overall importance to the global economy. In comparing the biggest companies in each region, African firms also remain competitive. The biggest firm in Africa is BHP Billiton with a market value of $73.7bn in our survey, compared with regional leaders PetroChina with $270.56bn, Petrobras of Brazil with $110.97bn and Sabic of Saudi Arabia with $65.96bn.

Yet it is worth noting that globally significant African companies are concentrated at the two geographical extremes of the continent: in South Africa and, to a lesser extent, in North Africa. Once these are stripped out of the equation, sub-Saharan Africa's biggest company is First Bank of Nigeria, which is valued at $2.8bn, equivalent to just over 1% of the market capitalisation of PetroChina.

All regions have their national or corporate economic superpowers. China now dominates in Asia, with Japanese firms close behind and Indian companies expected to present a growing challenge over the next few years. Similarly, Brazilian firms fill seven out of the top eight spots in the Latin American table and Saudi Arabian companies dominate the rankings. Yet no other country in the regions under consideration dominates its table to the same extent as South Africa. A staggering 26 out of the 31 highest-valued African companies come from the continental superpower, underlining both its economic strength and the dependence that the rest of the continent has on South African finance. With Pretoria still keen to encourage South African firms to increase their investment in the rest of the continent and particularly in the other Southern African Development Community (SADC) states, Johannesburg can become the engine that drives the African economy in practice, as well as in theory.

It is important to note that the size of an economy's biggest companies is perhaps not the best reflection of the strength of its overall economy. In Western Europe and North America, sole traders and small and medium sized enterprises (SMEs) account for a larger proportion of GDP than large corporations. Although they individually employ fewer people, there are far more of them and so they create more employment overall and can often be more responsive to the economic needs of a nation.

Large companies, just like large projects, generate far more interest because of the sheer scale of their operations and the photo opportunities that they present. Policy decisions taken by Anglo American or BHP Billiton can create or destroy tens of thousands of jobs, while their investment decisions rank in billions of dollars. The day-today evolution of far smaller enterprises may be more significant for a national economy as a whole but are simply not as newsworthy.

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Yet Africa is perhaps not the most dependent on large companies to generate GDP. The heavily regulated markets of the Middle East rely heavily on very large state-owned and private firms to create employment, although this is often a function of their reliance on oil and gas revenues.

SMEs thin on the ground

The entrepreneurial spirit present in much of the continent is equal to that in any other region of the world, yet far too few African sole traders expand their operations to employ other people. Although figures can be difficult to verify because of the scale of the unofficial economy in most African countries, it is the SME class of business that is painfully thin on the African continent but which provides the bedrock for economic success in most of the rest of the world. …

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