Africa next frontier for Indian companies – McKinsey

India can aspire to quadruple its revenues from Africa to USD 160 billion by 2025 by developing its presence in sectors where India has a unique value proposition and African nations have high needs such as IT services, agriculture, infrastructure, pharmaceuticals and consumer goods, according to a McKinsey report released at a CII event.

According to the Mckinsey report, India can aspire to capture almost 7 per cent of the IT services market, 5 per cent of the FMCG space, 10 per cent of the power sector, and 2 to 5 per cent of the agri-allied services.
However, the report pointed out that to be a true solutions partner, Indian industry needs to continually engage with governments and businesses, proactively surface opportunities through sector and country studies, build an open consortia of interested companies in advance and use funding from low cost countries (like Japan) for large projects where Indian cost of funds is a disadvantage.
Rajat Gupta, Director, McKinsey & Company,  said “IT services, agriculture, infrastructure, pharmaceuticals and consumer goods – these are the key to India boosting Africa revenues 4x to USD 160 billion by 2025”

The report notes that as African nations continue to grow, they need constructive foreign investment. Indian industry, as a “solutions-partner” to African nations, could greatly contribute to their development– creating employment, spearheading talent and skill development, and developing infrastructure. To do so, India can leverage its strengths, such as the experience of setting up successful distribution for fragmented consumer markets, and the entrepreneurial mindset required to navigate ambiguity, the report says.
IT services, consumer goods, pharmaceuticals, automotive, agriculture and infrastructure are sectors where African nations’ opportunity can be complemented by the Indian industry’s strength.

The report also identifies challenges likely to be faced by Indian companies looking to invest in Africa. They include a fragmented opportunity with unfamiliar risks, infrastructure bottlenecks, lack of talent and a nascent financial services sector. Apart from the sector specific initiatives, Indian companies will need to adopt common strategies identified by studying successful and unsuccessful MNC businesses in Africa.