Posted by: Armel | May 15, 2009

Are African Businesses Invisible ?


Howcome prominent African businesses still lack the visibility and notoriety enjoyed by other emerging markets companies in India, China, Russia and South America ?

Not for once I am pretending that those economies are equal or similar. The point I’m making here is that when looking at the Forbes Global 2000 list of companies from all over the World. In 2008, their ranking did not include any Sub-Saharan African Country while a couple of them for example, based on the same measurement metrics could have easily made the list in front of many Chinese, U.S, Eastern- Europe, South American, Indian, and Middle Eastern corporations. This year, only 3 Nigerian companies made the list (all Banks).

With the exception of  a few companies in North Africa (Egypt and Morocco), and some others in South Africa, it seems that African Companies continue to remain below the radar when it comes to business media publications such as Forbes. With visibility comes better financing terms and access to needed capital, which is why it is important to showcase those industries and compare them to their peers. But the ranking order can not be considered to be accurate if qualifying companies are simply ignored despite their financial year-end results.

The metrics used for the ranking are on the basis of revenues, assets and market value. With revenues being the most prominent criteria, I have a hard time understanding why are so many large African corporations bypassed by smaller Chinese and US companies with lower annual sales and market values. In 2008, more than 93 African companies with annual revenues over $1 billion were absent from the Forbes ranking. Moreover, an additional batch of 20 companies with over $750 Millions in revenues could and should have been included in that ranking. But just as in the past decade, the darlings are still East Asian, Mid-East, South American and Chinese companies whose revenue sometimes is well below that level.

Are African businesses that invisible ? Really!

Armel Njeunou



  1. Armel,
    Thanks for sharing this interesting article and references, that raise some interesting facts. Regarding your points on the absence of African corporations in the Forbes ranking, I believe the main issue for those who prepared and researched on the ranking is the valuation of those African companies. Like you said the metrics are on the basis of revenue, assets and market value:
    1 – Where do you find such information for African companies?
    2 – Is that information reliable, meaning have the information been audited and approved by truly independent third parties?
    3 – What basis of accounting was used and does that basis allow rankings preparers to properly evaluate African Companies against each other and other foreign firms?
    As you said in your article, there are companies with revenues over $1 billion, but let’s not forget that the taxation sytems in most African countries doesn’t encourage the full declaration of revenues and full disclosures of business deals. I’m sure there are many companies that meet the criterias to make the list, but I’m also certain the cost of properly evaluating them to international standards is higher than its benefits.
    As you must have noticed most of the African companies that made the list are involved in subregional deals and therefore have to abide by international and subregional standards. These standards made them easier to be eveluated by outsiders.

    • @Yohan,
      All those companies do have the obligation to have their books reviewed and audited by firms with worldwide recognition> Big 4’s all have local rep in Africa, so I don’t think that should be an excuse.

      If we are going to talk about the “kind” of accounting rules used or truthfullness of the numbers coming out of those audits, I think it’s safe to say that Emerging and Poor countries do have the most stringent accounting standards and should be commended for it. We all know what kind of standards or lack thereof, were used by leading major accounting firms in the U.S that co-signed some of the largest corporate frauds in history (Enron,HealthSouth,WorlCom) or in India with Satyam.
      African Countries for the most part, are nowhere near all the dangerous modifications of accounting rules that we’ve seen elsewhere (thank God!).

      The visibility is a real concern because as business journalists or reporters, they choose to travel or request documentation from some of the countries they cover extensively. If other reliable publications covering the continent of Africa can get their hands on those files, why can’t Forbes and the rest ?

  2. Invisible? Not really, it depends.

    It goes beyond recognition I think. The issue here is that African companies are not doing any effort to publicly disclose what they’re really worth. Everyone who has ever done consultancy work for a mid-large company in Africa understand what I mean(!) Unless the company is owned or partly controlled by the State or a governmental entity, what would be the use of divulging those results to a non-interested party?

    Don’t forget that the wrath of the taxing agencies awaits privately held companies in most countries, and that’s part of the reason why in countries where there is a well run stock exchange, publicly held companies will have books and quaterly reports available to everyone (as they should).

    That’s where the discrepancy resides in my opinion.

    • @ Steven,
      Just like yohan in the previous comment and you are saying, I do agree with the difficulty of showcasing private companies that are trying their best to remain in the dark because of the tax menace!

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