The last one or more years has been for Africa, one of its most economically challenging times particularly with regards to businesses of various companies even among its top 250 across the continent.
From a record $948 billion barely two years ago (2015), the combined value of Africa’s biggest 250 companies fell to $764 billion last year (2016) - representing a 19% fall in value.
As if that wasn’t enough, report from an economic survey conducted by Neil Ford indicates that value figure of the continent’s top quarter-1000 companies has fallen even further to $732 billion by this year -2017 : which indicates an approximately 4% fall in the combined value of these leading companies.
Perhaps many factors in various countries, across the continent as well as the global market place have contributed to this sad development.
However, there are some significant contributors to this fall in value for Africa’s biggest 250 companies.
Paramount among them is the persistent fall in crude oil prices which pushed its largest economy, Nigeria into one of the worst economic recession in its history as a country; a corresponding drop in global demand for not just crude oil but hydrocarbons, coal, iron ore, copper, bauxite and several other export earners for the African continent forced the prices of these commodities down as well as a fall in the value of the companies involved in their exploration as a consequence.
Furthermore is the currency devaluation issue: where governments like that of Nigeria engaged for a period into the President Buhari administration in various measures to water-down its currency value in an effort aimed at curbing the influence of corrupt money on the economy.
More so, there have equally been a number of mergers and acquisitions among firms at these top rung. The most outstanding being that of Brewer SABMiller whom in 2016 was the biggest company on the African continent but through an acquisition deal with Anheuser-Busch InBev, officially left the list to be part of what is now the biggest brewing company on the planet.
Other examples of companies that disappeared from the list includes Bidvest and Bid Corporation who broke up into separate firms as well as South32 that also became a distinct enterprise from BHP Billiton.
Despite these developments to the contrary, some market analyst are of the view that the continent has seen its worst: that there are green lights across various African countries at the moment which provides substantial hopes that rapid growth is in sight and will not just boost demand for products and services from Africa’s top 250 companies, but will also result in many middle rung ones entering the league or raise the minimum capitalization for joining the top quarter -1000 as well as the springing up of thousands of start-ups.
One narrative to that optimistic view of a much higher market value for the continent’s leading companies as compared to what has ever been witnessed by the African economy, is the case of Moroccan insurance firm – Atlanta that needed a market capitalization of $327million to take 250th position in the Neil Ford rankings this year against a $295million value that placed the Mauritian firm - ENL Land at the same spot in last year’s survey; clearly indicating a substantial growth from the bottom.
Perhaps we should be more inclined to such optimism in the hope that a more valuable African enterprise means more voice at the global market as well as in the economic decisions that so often has Africa as prey.
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