BCG Report Highlights Leading African Firms in Local Markets, Including Kenyan Equity Bank
This week, the Boston Consulting Group (BCG) released a report entitled, “How Companies in Emerging Markets are Winning at Home,” which lists the top emerging market companies outperforming global firms in their local markets. These companies have now become the local market leaders, where traditionally large, multinational corporations have dominated. Fifty companies were selected as these so-called “local dynamos:” seven from the BRIC countries (Brazil, Russia, India and China), seven from Southeast Asia and six from Africa. From 2009 to 2013, the revenues of these companies grew by 28 percent annually, much faster than S&P 500 companies, which grew by only 5 percent. The report emphasizes that their growth was not due to cheap labor and low production costs, but instead driven by a focus on innovation and a true understanding of the rising middle-class consumers in their home countries.
The African companies included in the report were: the health administrator Discovery Health and the department store Woolworths in South Africa; the commercial bank Equity Bank in Kenya; the major producer of beef and other agricultural products Zambeef in Zambia; the real estate developer Douja Promotion Groupe Addoha in Morocco; and the commercial bank Guaranty Trust Bank in Nigeria.
In particular, Equity Bank—one of Kenya’s largest banks with approximately 8.7 million customers and $2.9 billion in assets in 2013—was featured for being highly adaptable and reaching out to new customer bases in uncertain environments. For instance, rather than building branches in remote areas, Equity Bank centred its business model on its representative agents, who travel to rural or isolated locations and use mobile phones to facilitate new account applications and provide other banking services. Later in July, Equity Bank is also set to release its mobile banking platform, which uses an innovative “slimline SIM” that can be attached to account holders’ existing mobile SIM cards. However, this roll out has been contested by the mobile money giant, Safaricom, who, in a letter to the Communications Authority of Kenya, allege that the slimline technology will expose its own users and the M-Pesa system to heightened security risks, such as financial fraud—a claim that Equity Bank refutes.
As South Sudan Celebrates the Third Anniversary of its Independence, the EU Sanctions its Top Military Generals
Wednesday, July 9, 2014, signified the three-year anniversary of South Sudan’s independence, which it gained through a brutal civil war against and secession from Sudan. However, this anniversary was marred by continuing violence between the government forces led by South Sudanese President Salva Kiir and opposition leader Riek Machar as peace talks have failed to bring about a sustained resolution to the conflict. Although the South Sudanese government has pledged its commitment to the peaceful resolution of the conflict, Bloomberg reports that the military recently purchased $38 million in arms from China North Industries Group Corp. (NORINCO), indicating a continued interest in resolving the conflict militarily, according to the International Crisis Group.
On Thursday, the European Union (EU) joined the United States in issuing sanctions, including an arms embargo, as well as asset freezes and visa bans against two key South Sudanese leaders: military commander Santino Deng and rebel leader Peter Gadet. Rebel leaders responded positively to these sanctions, especially welcoming measures aimed at “stop[ping] the parties from arming themselves through such deals as the recent NORINCO arms deal with the government of South Sudan, financed by TRAFIGURA PTE LTD, amongst others.”
Meanwhile, the humanitarian situation in South Sudan has further deteriorated, and a famine and health crisis loom, according to international aid organizations. Save the Children has stated that the country is on the brink of a Cholera outbreak as an estimated 2,600 people in nine of the country’s 10 states are infected, and approximately 60 people have died since initial cases were reported in May. The U.S. announced on Thursday that it will issue an additional $22 million in humanitarian assistance to support internally displaced persons in South Sudan and South Sudanese refugees in Ethiopia, Kenya and Uganda.
For more analysis on the sources of the South Sudanese civil war and prospects for peace, please see the recent Africa in Focus blogs: Reconciliation in South Sudan: Three Likely Scenarios and South Sudan: The Failure of Leadership.
The Africa Growth Initiative Explores the Renewal of the African Growth and Opportunity Act
Research Analyst and Project Coordinator - Africa Growth Initiative
As Congress considers renewing the African Growth and Opportunity Act (AGOA) it will be important to consider ways that the legislation could be enhanced to make U.S.-Africa trade more dynamic. Experts have pinpointed trade capacity building and regional integration in Africa as items that could be included in the legislation in a relatively cost-neutral manner to make AGOA more powerful. Join us Monday, July 14 for a conversation with experts from D.C. and Africa on concrete recommendations for the new AGOA legislation. After remarks, panelists will take audience questions. To RSVP, please contact Christina Golubski at email@example.com or 202-797-6247.