Report shows Fortune 500 companies rank Johannesburg high as African point of entry
JOHANNESBURG – Africa is becoming increasingly important for the majority of global Fortune 500 companies, according to a new report released by Infomineo (www.Infomineo.com), a global business research company specialising in Africa and the Middle East.
The report focuses on multi-nationals looking at entering, or already present, in the Middle East and Africa region. Overall, there was a 17% increase in the number of companies in MEA in 2016 compared to 2015, with Johannesburg as the leading destination for Africa.
The Infomineo analysis includes the regional footprint of multinationals in the MEA region, the most commonly chosen cities, and the factors which influence the selection of the region, country and city – each element revealing the dynamic growth patterns within the region and a clear trend of Fortune 500 companies establishing some kind of presence in Africa.
In 2016, 196 Fortune 500 companies had established a dedicated regional headquarters in the region. There has also been a marked uptick in companies deciding to cover Africa from outside the region – 38 companies, up from 22, have established a regional headquarters in areas such as London, Brussels and Paris. The leading destinations on the Fortune 500 list include Dubai, Johannesburg, Casablanca, Nairobi, Lagos, and Cairo.
Germany and France are leading in terms of coverage while China has the lowest presence in the region.
Industry type plays a pivotal role in the selection of city and country. Financial services are more likely to base MEA coverage from London, while technology companies are more inclined to Casablanca or Lagos. Automotive and Healthcare tend to have a presence in both Africa and the Middle East, while Technology is more inclined to having a presence from the outside.
Dubai and Johannesburg are the most popular hubs overall, but both Casablanca and Nairobi are rapidly gaining traction and international awareness.
London, which has tripled its number of regional HQs in the region, acts as a proxy for many Japanese, American and Canadian companies doing business in Africa.
Infomineo stated that there are numerous factors which impact an organisation’s selection of a specific city. These include the local market potential, maturity of the industry, existing competitors, political stability and the quality of the employment market, among others. Determining the attractiveness of a location along these clear lines assures the Fortune 500 companies of a stable and profitable investment and significantly mitigates risk. Both Johannesburg and Cape Town feature high on the list of preferred cities.
“Through this analysis, organisations gain a thorough understanding of markets and factors which ensure a steady base of operations from which organisations can expand into the growing MEA market, and establish brand and identity within the growing middle classes” according to Infomineo.