The McKinsey Global Institute in their recent report describes the economic challenges and opportunities in Africa. It highlights the continent's young and fast-growing population, as well as its potential for robust and inclusive growth. However, Africa has faced economic deceleration, with GDP growth slowing down and a significant portion of the population living in poverty. The report emphasizes that there is no singular Africa, as different countries have experienced divergent economic performances. 5 external factors have been identified as the main drivers of change which include:
1 – Shift from Agriculture to Services
The shift from agriculture and extraction to the services sector is noted, with the services sector becoming the major driver of economic output. However, productivity in Africa's services sector remains low compared to other regions. The report emphasizes the need to improve productivity in both the services and industrial sectors, as well as boost agricultural productivity.
2 – Population growth
The population growth in Africa presents both opportunities and challenges. By 2040, Africa is expected to have the largest working-age population in the world. Productive job creation is crucial to sustain this growing population. The services sector is projected to create millions of new jobs, but productivity improvements are necessary to maximize its potential. Similarly, increasing productivity in agriculture, while people move to the services sector, can enhance yields and add value to agricultural output.
3 - Intracontinental trade opportunities
Intracontinental trade in Africa is relatively low compared to other regions, and there is a need to tap into the potential of the African Continental Free Trade Agreement to enhance regional trade and economic integration. Urbanization is a significant trend in Africa, and investment in infrastructure and productivity is required to support the growth of cities and boost economic progress.
4 – Growth for the large entities
Large companies in Africa have the potential to contribute significantly to growth, innovation, and employment. Although the number of large corporations has declined in Africa, there are still opportunities for these companies to increase productivity and create value.
5 – Consumer power
Lastly, the report highlights the potential for consumer spending in Africa, with a growing middle class and rising incomes. Unlocking this potential can stimulate economic growth and development, but efforts to reduce poverty and increase income levels are crucial.
Overall, McKinsey Global Institute underscores the need for improved productivity, investment in infrastructure, and development of key sectors to drive inclusive and sustainable economic growth in Africa.
Our role as Antal International is connecting the best talent to available opportunities for employers to realize the much-needed productivity dividend and value proposition.
Please do not hesitate to connect with me as our office in Kenya is perfectly positioned to tap into human talent across the continent to find the perfect match for any organisation.
To read the full report click here: